The rise of the portfolio investment

It’s fair to say that professional portfolio landlords are dominating the current BTL market as the number of ‘amateur’ landlords has slowly dwindled on the back of tax and legislative changes.

Landlords build portfolios in a variety of different ways over contrasting periods of time. Many professional landlords may have started their journey as more accidental ones but came to appreciate the potential of the BTL sector. Others may have entered this arena with a more structured and scalable plan and then there are some who have the ability to acquire whole portfolios in one fell swoop.

This type of portfolio investment was the focal point of recent research from Octane Capital which highlighted that 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.

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 showed 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.

As with property investment of any kind, there will be a number of pros and cons attached to such a purchase and investors need to ensure that they conduct sufficient due diligence on every property within these portfolios to ensure the scales of profitability tip in the right direction.

The advice process also plays a critical role when it comes to securing the right type of finance to fund such a purchase. Such funding will often be best sourced through the flexibility and manual underwriting processes offered via a specialist lender. And with such products often only available through intermediary channels, this further underlines the value of using a good, professional whole of market adviser.

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