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Manchester/Leeds/Nottingham: advice on my BTL strategy


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Hi everyone, I am a healthcare provider based in Hong Kong. My partner and I planned moving to the UK in the coming 4-5 years. We would like to create some passive income by BTL, and if possible some capital gain, before we come to the UK.
 
I have done some research, and am planning to do some investments in Manchester/Leeds/Nottingham. Here are my plans:
 
Manchester: 
- One to two terrace house with 2-3 bedrooms , targeting rental to family
- Budget 200-250k, to achieve yield ~3% after all, mainly aim for capital gain
- Locations: Stretford, near Stretford shopping centre/ Sale, somewhere near tram station / Prestwich, near Heaton park tram station/ Swinton (not sure where to target yet)
 
 
Leeds:
- terrace houses with 2-3 bedrooms , targeting rental to family
- Budget ~150k-200k, with yield ~4-5%
- Locations: Morley, Pudsey, Farsley, Farnley (as I hear these areas are nice with good transport link)
 
Nottingham:
- Terrace house/ semi-detached house with 2-3 bedrooms,  targeting rental to family
- Budget ~150k, with yield ~5-6%, aiming for high yield+ chance of capital gain
 -locations: Carlton, Gedling, Mapperley
 
 
As I’m new to the UK properties markets, I would like to seek your advice on:
 
1) Is my strategy reasonable? 
2) Are my choices of locations okay? 
3) What kind of things I need to look at while searching for the property to ensure I can let it out quickly? ( I assume the closer to good school/ public transportation/ supermarket the better)
4) How good/bad are the rental demands in those areas, especially Leeds and Nottingham? Usually how long for a unfurnished/furnished house with modernization to be letted? (I know its hard to say but please tell me your experience)
5) Is there any other good/fair locations I should look at for high yield BTL?
6) Is there any good location I should look at in Birmingham and Reading for possible capital gain?
 
Sorry I know that's a lot of questions. I would be very grateful if someone can offer me help and advice.
Thank you so much. cheers! 
 
J
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I can reply to your questions about Nottingham. The areas you are looking at are all good areas for rentals. Your budget is ok - although maybe on the low side. The return on a £150k 3 bed in these areas would be about £650-£700 ppm. If you can spend more you will get more rent.

I wouldn't buy in St Annes (between Mapperley & Carlton) as although properties are cheap the area is pretty rough. I would also be looking for a newer house to ensure EPC C is achievable.

Good luck :)

 

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Thanks for the info! How will you comment on the rental demand in Nottingham? And regarding spending more for higher yield, do you mean spending money in other nicer areas/ to upgrade from terrace house to semi-detached/ to fully furnish the house? 

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I think rental demand in Nottingham is pretty good at the moment.

The areas you have picked are good areas but spending more will allow you to buy a nicer or bigger house - your choice may be limited (particularly in Carlton & Gedling) with a budget of £150k. I have just bought a small 3 bed in Mapperley for £130k but it needs a complete refurbish (£12-15k). Other properties I looked at were around £150 - 175k.

I rent unfurnished - I don't really know what the demand is for fully furnished, but I think most people renting a family home want to bring their own stuff.

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I am actively investing in Nottingham and I can say those areas are great although your now looking at £170k-£200k. That said your rents are higher too. Rental demand is more than good - it is MENTAL in those areas. You will rent them. 

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5 minutes ago, julia urquhart said:

I think rental demand in Nottingham is pretty good at the moment.

The areas you have picked are good areas but spending more will allow you to buy a nicer or bigger house - your choice may be limited (particularly in Carlton & Gedling) with a budget of £150k. I have just bought a small 3 bed in Mapperley for £130k but it needs a complete refurbish (£12-15k). Other properties I looked at were around £150 - 175k.

I rent unfurnished - I don't really know what the demand is for fully furnished, but I think most people renting a family home want to bring their own stuff.

Hi - interested on how a full refurbish is costing you so little. Clearly depends what your doing but ours are higher than this at present - more like £20k. 

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8 hours ago, malmopearce said:

Hi - interested on how a full refurbish is costing you so little. Clearly depends what your doing but ours are higher than this at present - more like £20k. 

It’s a pretty small 1970s house and we do it all ourselves except gas and electric installation.

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For Manchester, you'll struggle with that budget around Sale - just looked on Rightmove and there are 5 houses for sale, most added in the last couple of weeks. Yield will generally be pretty poor, but clearly not something you're looking for. Capital gain will probably be the best of the areas you mentioned. 

Stretford would be my suggestion for a couple of reasons. It's cheaper than Sale, as it's closer to the city centre, but it's still in Trafford meaning grammar schools, which creates a premium over the rest of Greater Manchester. Additionally, there's been a lot of work done on the shopping centre over the last few years to get rid of a lot of it and replace it with open space, which has brought in more independents. They've also just announced more works in the area, so feels like there should be some growth, as it becomes a place to be.

I'd also suggest anywhere else in Trafford due to the schools and areas like Urmston have had really good growth over the last few years.

Swinton has done well recently, as have most places in Manchester or the closest other areas - Trafford, Salford and Stockport in particular. You'll definitely get more for your money than Sale or Stretford, but I doubt you'll get as much capital growth, as it's less of a prime area.

Prestwich is a good area, as are places like Whitefield next to it, but again, you'll get less growth. If you want capital growth, it's either take a risk on the city centre or suburbs from Stockport in the south to Worsley in the west. There's nothing wrong with the areas to the north and east (it's where I grew up) but they just don't grow as quickly. You'll get much better yields as a result, but if you want growth, stick to the south west and particularly family homes, 3 beds, garden etc. The demand to buy is always huge, so you get the growth and a decent family home will always rent when it's so close to England's most important city.

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Hello JohnathanW,

I’m in Leeds right now and can offer a little insight into Morley.

This is a little gem of a town and can say investing in this area of Leeds is a wise move.

Your figures and expectations are reasonable.  There is a bit of competition here when buying and as a result the house prices are being pushed faster than many other areas.

I would recommend going in with a strong offers and don’t dither.

As you know it has great transport links.  It is also a happy and friendly working class family town with good schools.

I have made the mistake of selling a handful of houses over the last few years in Morley instead of holding them for capital gains.

A few cheap houses that come up regular are stone fronted solid wall houses from the early 1920’s   that are a pretty safe buy if they are damp free and have been maintained.  
 

 

 

 

 

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