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Research suggests property investors could earn returns of more than 20%

New research has revealed that property investors can more than double the 8% yield the average landlord aims for by making effective use of data.

Investment portal One & Only Pro said that if property buyers source the best deals in the best buy-to-let locations, rather than looking at the return of the whole area, they could secure net yields comfortably above 20%.

The findings by One & Only Pro identified the number of 'diamond' properties in the UK’s top 10 buy-to-let locations. An investment deal is classified as 'diamond' if it receives a score of 10 on the platform. A top score of 10 also means the opportunity has the highest possible chance of rising in value.

The scores are calculated by One & Only Pro's unique algorithm, which covers a range of key factors, data and metrics.

According to the portal’s data, the UK's top 10 buy-to-let investment hotspots are all to be found in the North of England. Darlington in County Durham grabbed top spot for the area with the highest proportion of diamond properties at 22%. 

Research suggests property investors could earn returns of more than 20%The rest of the top five was completed by Bootle (21%), Burnley (21%), Blackpool (19%) and Washington, County Durham (18%).

Meanwhile, the research revealed that former industrial titan Burnley is the buy-to-let hotspot with the cheapest opportunities.

With an average price of just £37,000 for an investment opportunity highly likely to increase in value, the Lancashire town was revealed to be the most affordable diamond hotspot.

Other diamond hotspots with low average entry level prices included Bootle (£53,000), Darlington (£56,000), Grimsby (£56,000) and Sunderland (£63,000).

With regards to returns, the top performing area in the research was Liverpool, with an average Return on Cash Investment (ROCI) of 78.2% for one of the top 10 diamond properties in the city. The ROCI is based on purchasing a home with the best mortgage deal.

Other locations performing well on ROCI included Sunderland (68%), Washington (62%) and Burnley (61%). All of the top 10, meanwhile, registered an average ROCI of over 35% for their top 10 diamond properties.

“It’s shocking that people think buy-to-let is dead or is no longer a good investment as the real data shows something completely different,” Henri Sant-Cassia, CEO of One & Only Pro, said.

“As we can see, investors in Liverpool can earn almost 80% Return on Investment. This figure includes the costs of buildings insurance, a gas safety check, service charges and ground rents and it is all calculated automatically on our website.”  

He added: “With this kind of return, savvy investors could have earned their deposit back within two years. In many cases in the above locations, a property’s mortgage could be cleared from the returns within several years and you’ll then have full ownership over your investment.” 

Sant-Cassia said that, while some people have been delaying decisions due to Brexit, the ‘shrewdest investors could already have earnt enough income to purchase their next property’.

“Where else could you invest and earn returns like this?” he continued. “What’s more, you have the backing of bricks and mortar which will always have some kind of intrinsic value. As we know, stock investments could always get wiped out and be worth nothing.”

One & Only Pro is an AI-powered property investment website which aims to help investors of all levels to source the deal of a lifetime. It currently hosts over 210,000 opportunities, around 9,000 of which are ‘Below Market Value’. It claims that approximately 25,000 listings yield higher than 7%.

Town

% of diamond properties (DPs)

Average price of top 10 DPs

Average ROCI of top 10 DPs (%)

1. Darlington

22%

£56,468.16

36%

2. Burnley

21%

£37,210.92

61%

3. Bootle

21%

£53,277.76

36%

4. Blackpool

19%

£68,286.84

36%

5. Washington

18%

£94,704.87

62%

6. Grimsby

18%

£56,188.11

49%

7. Bradford

17%

£64,681.13

47%

8. Sunderland

16%

£63,055.73

68%

9. Liverpool

16%

£83,454.96

78%

10. Kingston-upon-Hull

15%

£72,159.32

49%

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