The most popular areas for bulk buying ready-made property portfolios

Experienced property investors are spending an average of £1.2 million to quickly bolster their property investments by buying full portfolios rather than single properties, according to research from Octane Capital.

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Property Reporter
15th August 2022
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These portfolios have usually been gradually pieced together by another investor before being sold as a job lot. For the selling investor, it provides an easy and fast way of offloading a number of properties, while the buying investor is able to rapidly scale up their portfolio in one fell swoop.

The latest figures show that when purchasing such a portfolio, investors are doing so at an average price of £1.2m. With these ready-made property packages coming with an average of 6.4 bedrooms, that’s an average cost of £196,000 per bedroom. This offers an average yield of 2.9% on these ready-made portfolios.

London is the most active area of the market when it comes to the purchase of ready-made property portfolios, accounting for 18% of the national total. However, the capital is also home to the highest price per bedroom with portfolios containing an average of 3.6 bedrooms at a total average price of £2 million meaning each bedroom cost £556,000. As a result, a ready-made investment portfolio within the capital comes with an average yield of just 1.4%.

In the West Midlands, investment portfolios cost an average of £1,027,722 and contain an average of 5.1 bedrooms, which works out as £201,000 per room, and in the South East, investors pay £1.4 million for an average of 7.7 bedrooms, equivalent to £178,000 per room.

The most affordable investment portfolios can be snapped up in England’s North East where investors are paying a little over £1 million for portfolios that contain an average of 9.7 bedrooms which works out at just £104,000 per room. As a result, the North East is home to the highest yield for a ready-made investment portfolio at 4.5%.

In Yorkshire & Humber, the average portfolio costs £1.1 million for an average of 10.1 bedrooms meaning each room costs £106,000, with the second highest average yield at 4.4%.

Hardly surprising then, that demand is apparently high, as the North East and Yorkshire & Humber account for the lowest proportion of available portfolio investments, accounting for 2% and 7% respectively of the national total.

Jonathan Samuels, CEO of Octane Capital, commented: “Portfolio investment offers advanced investors a far quicker path to scaling their portfolio and, as is often the case when buying in bulk, doing so can result in securing a greater level of value per unit.

"But it’s also the convenience of this approach that appeals to many, allowing them to acquire multiple properties in a single transaction.

"Doing so also allows them to complete any modernisation and to bring these homes to market within a similar timeframe so that they can start to earn a consistent return across the board.

"Of course, not all investment portfolios are created equally and investors should ensure they carry out the proper due diligence on each and every property to avoid purchasing a bad batch.

"Even a singular bad apple amongst an otherwise strong portfolio can tip the scales of profitability in the wrong direction.”

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