Picking the correct city by price range for your buy to let investment.
As with any investor working with your broker on the best cities within your budget will help you achieve the best possible returns.
Which is the best city to invest in? The answer as with most things is significantly more complex than the question. While cities like Manchester and Birmingham are seeing returns which are allowing investors to increase their asset value significantly, outskirts of these cities as well as Liverpool, Leeds and even Bradford are delivering returns which may be as beneficial for you.
One important phrase to think is 'never be so stuck on something great that you miss out on something better' and to be realistic with your returns. One significant issue we come across at Baron & Cabot is clients being stuck on a price point or a city which is unattainable for their investment level, or novice clients expecting high yields for core city centres like London, Birmingham or Manchester.
Understanding the trade off of capital growth and yield is important. A high yield tends to reflect a higher risk, no developer will sell a property so low that it gets a high yield without needing to.
So understand what you have available and realistically what you can buy, whether yield is more important than capital growth for your new buy to let investment.
Equally look at area's with your broker which have real reasons for growth. These may deliver lower yields immediately but if there is a new tram station or HS2 there may be a real logical case for growth. If the area is perfect now and full of business and people you are likely to see lower yields, and area which will be like this in 5 years may be a better option for you.
For low value purchases with high yields in normal residential settings, towns outside major cities may be favourable, or cities such as Bradford which still have low acquisition costs with good yields. Alternatively look at not just the HS2 line itself but area's which will be connected to that via tram networks, Sheldon or Soilihull in Birmingham are highly priced area's for savvy investors.
If you prefer lower yields but mature markets, Birmingham, Manchester and slightly higher yield spots like Liverpool and Leeds may be a focus point. Long term gain may be found in Earls Court, Digbeth or Liverpool Waters.
Each have their own price points and reasons for growth, below are some ideas of focus area's for yield or growth depending on price point:
Under £100,000
Bradford - High yields with potential growth
Stockport - Medium yield and growth
£100,000 - £150,000
Sheldon/ Soilihull - High potential growth strong yields
Liverpool - High potential growth strong yields
Leeds - Strong growth, good yields
£150,000 - £200,000
Manchester - Mature market high potential growth
Birmingham - Mature market high potential growth
The most important factor is to speak with your advisor and discuss with them the research which they have on each city, both past and future, and post code information.
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