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james champkin

Have I made a mistake investing in Liverpool?

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Hi all,

Earlier this year I purchased two BTL apartments in one of the iconic (but controversial!) Mann Island buildings in Liverpool. I'd been looking to invest in property for some time, researching my options extensively and eventually decided that Liverpool was the right location for me, as despite living near Milton Keynes I was already fairly familiar with the city and so remote investing didn't seem so daunting. The prospects for capital growth also seemed very good and the yields were great.

Both of my apartments are tenanted and are achieving good rental yields. However, a lot of the tenants in the building seem to be international students (including both of mine) who are subsidised by their Governments to study in the UK. My slight concern is - although it is by no means a student development - whether this factor might limit capital growth on the apartments over the years ahead?

Any thoughts welcome!

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This is actually really interesting because I have been looking (and procrastinating) about doing exactly the same in Liverpool for years.  I am fascinated that you have done it, and indeed I was told the same, that a lot of the tenants are foreign students who are subsidised by their Governments.  There are also a lot of apartments taken by foreign business companies for their staff...however, having had a snoop around lately with this idea in mind, I don't think these foreign students are like our domestics ones!  The buildings seem very quiet and well looked-after...I just need to take the plunge...

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Thanks for your reply! I looked at a number of apartments around the city before settling on Mann Island for a variety of reasons. I'm very happy with the yields, sourcing tenants doesn't seem to be a problem, and the tenants themselves seem to be very good.

My only concern - after listening more to the Property Podcast where Rob and Rob always advise avoiding student pods for investments - is whether the fact that the tenant base seems to be dominated by overseas students may limit future capital growth potential of the apartments. What does everyone think?

Thanks, James.

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I take your point, and as buy to let investors, we are obviously interested simultaneously in rental yields and long term growth, and especially in these areas, I think one, certainly of their points is, that the area and naturally the market becomes flooded with identical investment opportunities ergo money-out becomes difficult if you wanted to sell in the near future.  I think it depends on how you are looking at the investment:  for me, I intend to keep mine long-term, and I guess when you're looking at this type of investment, that's what you have to bear in mind...

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Hi James,

First off, I think you've made a great decision investing Liverpool! 

Some data points for you:

  • The amount of private investment pouring into the city at the moment is absolutely staggering: between 2017 and 2018 it was up 279%+ (Manchester's was down -6% for comparison). One of the biggest examples of this is the £5.6bn Liverpool Waters development; we were shown around the site by the lead developer and saw the future plans for the area on VR goggles - it's going to be incredible...
     
  • To your point about international students, the retention rate of Liverpool's four universities is 10% (and rising), as graduates are drawn to the low cost of living vs. quality of life and the rapidly increasing number of businesses relocating to the city (Baltic Triangle is particularly hot with tech startups for example). As such, every year there will be an increase in domestic/naturalised Millennial/Gen Z graduates who can fill the demand for you properties over time. We actually haven't had many of our clients let their properties to international students at all - the demand from locals is massive (see next point).
     
  • Liverpool has a historical under-supply of property, a fact which is only getting worse as Liverpool's population continues to explode; this means that the pool of generational renters is going to keep expanding, while low supply and high demand will drive up house prices.

I could wax lyrical all day so I'll stop now haha. I genuinely don't think capital gains are something you should worry about over the long term, especially with your apartment being in prime city centre. If you look at Manchester as an archetype for what regeneration can do to house prices, it's a no-brainer to me that Liverpool will do as well (if not better), over time. 

 

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"jonathon said: First off, I think you've made a great decision investing Liverpool! I run a sourcing firm, and we're encouraging all our clients to invest in the city and are doing so ourselves - my business partner and I are completing on a block of six flats this week.

We're finding amazing off-market deals for our clients and they're having tremendous success with them, ranging from £50k BTLs to £30m GDV land deals"

jonathon, from what I see, your 'limited company' website (nice BTW) lots of sparkle, that you've been in business about one-year & I don't see any projects or properties for sale, completed or which you have brokered.

would you care to comment?

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Sorry for the delay in replying - didn't have "notify of replies" on. Of course; we've already had this discussion in another thread, so answer linked below.

On 10/10/2019 at 2:12 PM, REinvestor said:

"jonathon said: First off, I think you've made a great decision investing Liverpool! I run a sourcing firm, and we're encouraging all our clients to invest in the city and are doing so ourselves - my business partner and I are completing on a block of six flats this week.

We're finding amazing off-market deals for our clients and they're having tremendous success with them, ranging from £50k BTLs to £30m GDV land deals"

jonathon, from what I see, your 'limited company' website (nice BTW) lots of sparkle, that you've been in business about one-year & I don't see any projects or properties for sale, completed or which you have brokered.

would you care to comment?

From the other post: 

 

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On 10/10/2019 at 12:11 PM, Locoinvestor said:

Hi Jonathan, this is really interesting and has galvanised my decision to stop dilly dallying...you say you have off-market deals ranging from £50k...what does that actually mean?

Thanks.

Hi Loco,

By off-market I mean that we're in the fortunate position that, due relationships we've built over time in the city, we get access to/offered first dibs on deals that aren't listed on online portals. It means we don't deal with competition and thus get great prices and often quirky property.

Some examples of deals that have come our way recently:

By "ranging from £50k" I meant that in Liverpool you can buy houses for £50k (particularly in places like Bootle) without too much trouble. You can really get your investment pot to stretch while earning solid returns, as the rental market is buoyant!

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1 hour ago, jonathanwm said:

Hi Loco,

By off-market I mean that we're in the fortunate position that, due relationships we've built over time in the city, we get access to/offered first dibs on deals that aren't listed on online portals. It means we don't deal with competition and thus get great prices and often quirky property.

By "ranging from £50k" I meant that in Liverpool you can buy houses for £50k (particularly in places like Bootle) without too much trouble. You can really get your investment pot to stretch while earning solid returns, as the rental market is buoyant!

@ jonathon, that makes perfect sense, thanks again for pointing that out.

so why not use a sourcer to do the leg work for the novice  'wannabe' property investor' or even an experienced investor ... all for a small cost of doing business, saving T&E.

for those wanting to do it the hard way, there is always the internet, searching & searching for properties, contacting agents, effortless time spent, costs involved along with the effort to try to find that 1/100 right deal.

disclosure: I do not currently use, nor I am endorsing using a sourcer, simply stating 'there is always another way' that may work for some folks.

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