Many investors will assume that London is the best place to buy ready-made property portfolios and enjoy the best yields - but a new study shows that the region with the highest yield potential is elsewhere.
Ready-made property portfolios are collections of properties that are sold together as a single package.
They are usually aimed at advanced, experienced investors who want to acquire multiple assets in one transaction and generate rental income from them.
Now easyMoney has analysed the current availability of ready-made property portfolios for sale, looking at the number, size, price and rental income potential of the portfolios in each region.
The study found that there are currently 884 portfolios for sale, with an estimated average price of £1.2 million.
'Property investment is extremely popular'
The chief executive of easyMoney, Jason Ferrando, said: "Property investment is extremely popular due to its reliable returns over the long-term and the repeated monthly rental income available in the short-term.
"Most investors start their journey with a single buy to let property, but for those who are looking to take the next step, ready-made portfolios can be the perfect option as much of the groundwork has already been done, and it's much faster than building a portfolio piece by piece."
He adds: "Buying a portfolio requires the investor to have large amounts of money up-front, and the ongoing requirements after purchase can be a lot for some investors to deal with, forcing landlords to work very hard for their monthly yield."
Ready-made portfolio has an average of 6.9 bedrooms
According to the study, each ready-made portfolio has an average of 6.9 bedrooms, which means that each bedroom costs £180,429 on average.
The study also calculated the potential rental income from these portfolios, based on the average monthly rent of £507 per bedroom.
The result is an average monthly income of £3,494, which translates to an annual yield of 3.4%.
However, the study also revealed significant regional variations in the availability and affordability of ready-made portfolios.
London is the leading region, with 166 portfolios for sale, accounting for 19% of the national total.
However, these portfolios are also the most expensive, with an average price of £1.97 million, which is almost 60% higher than the national average.
This means that only the wealthiest buyers can afford to invest in London’s ready-made portfolios, which may also have lower yields due to the high property prices.
The smallest portfolios in Britain
London also has the smallest portfolios in Britain, with only 4.9 bedrooms on average and the rental yield is also very low, at 2.1%, which is better than Wales (2%) but worse than any other region.
The most expensive portfolios are in the South East, where they cost £1.4 million on average.
Scotland and the East of England follow, with £1.2 million and £1.1 million respectively.
The East Midlands has the cheapest portfolios, with an average price of £879,012.
This allows investors to buy 9.2 bedrooms on average, which is the second-highest number in Britain.
The rental yield is also high, at 5.7%, which is only lower than Yorkshire and Humber.
Enjoy the best yields
So, if you want to invest in a ready-made property portfolio AND enjoy the best yields, then you need to head to Yorkshire and Humber.
Here, easyMoney says that investors will enjoy the best rental yield in Britain, at 6.1%.
This is because the portfolios are larger, with 11 bedrooms on average, and relatively affordable, with an average price of £898,415.
Buying a ready-made property portfolio
The managing director of Accommodation for Students, Simon Thompson, said: "There are good reasons why an investor should look at buying a ready-made property portfolio and understanding the yield from the investment is crucial.
"One of the big attractions is that most of the hard work in building up a portfolio has been done but the investor still needs to ensure they offer quality homes to be proud of.
"And, of course, there will be lots of landlords looking to leave the private rented sector (PRS) in the months to come so this will be a popular property investment area."
He added: "There's still a lot to recommend investment in the UK's PRS, especially in the student accommodation sector, because rents and demand are high."
