What’s Best? Ready-made Property Portfolio or Innovative Finance ISA?

Research by peer-to-peer investment business easyMoney reveals that London is the hotspot for investors who are looking to purchase ready-made property portfolios - although yields are higher elsewhere.

easyMoney has looked at the current availability of ready-made property portfolios for sale across Britain, analysing their locations, the average number of properties contained within each portfolio, average sale price, and subsequent rental income potential. 

Ready-made property portfolios are usually targeted at experienced investors. They are often put together and placed on the market by other investors and provide purchasers with the chance to buy multiple assets in a single transaction. It is common for the buyer to go on to collect rental income from the portfolio. 

The analysis reveals that there are currently 884 portfolios for sale in Britain at an estimated average price of £1.2m. The average number of bedrooms per portfolio is 6.9, which means the average price per bedroom is £180,429. 

If a purchaser is hoping to generate rental income from their new portfolio, they can expect an average yield of 3.4 per cent based on an average monthly rental value of £507 per bedroom creating a total portfolio income of £3,494 per month.

A regional analysis shows that London is Britain’s hotspot for ready-made portfolios with 166 currently for sale. This is equivalent to 19 per cent of the national total.

The average portfolio price is £1.97m and the average portfolio size of 4.9 bedrooms - the smallest of all regions - with the expected rental yield for London just 2.1 per cent. This is second only to Wales as the lowest in Britain.

In the South East, the average portfolio costs £1.4m; in Scotland the price is £1.2m; and in the East of England it’s £1.1m.

The most affordable region is the East Midlands where portfolios cost an average of £879,012. This buys investors an average of 9.2 bedrooms which is the second-most of all regions, and results in an expected rental yield of 5.7 per cent which is, again, the second-highest across all regions.

The only place where yields are higher is Yorkshire & Humber where an average portfolio size of 11 bedrooms and an average purchase price of £898,415 means landlords can expect impressive yields of 6.1 per cent.

“Property investment is extremely popular due to its reliable returns over the long-term and the repeated monthly rental income available in the short-term. Most investors start their journey with a single buy-to-let property, but for those who are looking to take the next step, ready-made portfolios can be the perfect option as much of the ground work has already been done, and it’s much faster than building a portfolio piece by piece” explains Jason Ferrando, easyMoney’s chief executive. 

“Of course, buying a portfolio requires the investor to have large amounts of money up-front, and the ongoing requirements after purchase can be a lot for some investors to deal with, forcing landlords to work very hard for their monthly yield. That’s why lots of property investors are instead choosing to put their money into Innovative Finance ISAs (IFISAs) which essentially enable investment across a wide range of property projects and opportunities, while maintaining a hands-off approach.”