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Top 5 tips for building a property portfolio in Liverpool (3 min read)
1. Choose Your Investment Vehicle
This is a general tip, no matter where you choose to invest. Before making your offer - you first need to decide on your long term investment plan - are you purchasing a single property or are you planning to invest in a few over the years, building a portfolio? These questions have a massive influence on your ability to offset your interest from your revenue and therefore have an immediate effect on your taxes.
→ Pro tip: if you are in the Higher Income Tax Rate, you should consider setting up an SPV Limited Company rather than purchasing your property under your name.
If you are looking for the perfect balance between high and low risk, between low yield (e.g. investments in London) and high yield (e.g. HMO in Liverpool) - follow the BRRR model. BUY below market value, RENOVATE and add value, RENT to a decent tenant, preferably family that would not leave after six months, REFINANCE and release 60%-90% of your equity, REPEAT and do it again with the money you released. Liverpool offers plenty of opportunities for both first time and savvy investors to invest and follow this model.
→ Pro tip: make sure your end value, i.e. your property value after you added value, is above £90,000 else it will be challenging to receive the finance you need from the lenders.
3. HomeBuyer Report
You will find plenty of old properties in Liverpool, some of which are not in good condition. It is therefore imperative to make sure you have a HomeBuyer report carried out by a surveyor to assess the value and condition of your chosen property. This report will highlight any significant defects.
→ Pro tip: sometimes you can leverage on the report of the surveyor to do 'Gazundering' - subsequently reduce the offer just before exchanging contracts, claiming that you have now discovered several more issues which were not known to you when you first submitted your offer.
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Liverpool is split into more than 60 different postcodes, all starting with the letter L. In general, the top-performing postcodes in terms of yield and those that have the most potential for strong capital growth are L7, L9, L10, L11, L13, L14, L15, L21 and some parts of L4.
→ Pro tip: note that every area in Liverpool, even if considered to be known as the right area may have some specific streets that you must keep away from. Any area may have streets with a high crime rate or other surrounding issues which you might not notice on a Rightmove ad or a Google street view. You can always check the street you are looking at on streetcheck.co.uk and get more comprehensive insights.
5. Yield Calculation
Most of the estate agents, sourcers, and anyone trying to sell you investment will usually not calculate the expected yields and ROI as they should, making you believe that you will make much more money than in reality. The key is to work out the actual NET yield and this can be done by adding up ALL of your expenses in purchasing the property (so not just the purchase price) while taking off ALL of your actual and possible expenses over the course of one year. For example - Letting and Management costs, Building Insurance, Landlord Licenses and Certificates, Service Charge, Ground Rent, a vacancy of 5% of your yearly rent, repairs and unexpected another 5%, accountant and reporting fees. Only by calculating your actual net proceeds and dividing them by the total amount paid you could work out the real return and compare it to other investment alternatives.
→ Pro tip: the city centre is broadly covering L1, L2 and L3 and while it is generating high gross rental yield, the net yield achieved in this area is not always the highest as the majority of the properties in the city centre are leaseholds and therefore result in high service charge and ground rent which are significantly reducing the net yield achieved.
6. Bonus Tip - Asking Price
It is the price that the vendor is hoping to achieve for their property, and it is essential to highlight the word HOPING. In most cases, you should not offer the asking price and should at least start with 15% to 25% below. You will probably lose 9 out of every 10 properties you've given an offer, but if you do it systematically you will, and that's a fact, have success at some point and when you do, what's there more to ask?
→ Pro tip: Estate agents may tell you that they’ve received higher offers or that the vendor will not consider your offer - do not take these comments at face value and keep your strategy in place
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About BellaBertie Real Estate Investments
BellaBertie Investments is a unique real estate investment advisory firm dedicated to the development of residential property portfolios in the United Kingdom. Our services include property acquisition and asset management, building carefully designed portfolios and delivering tailor-made investment strategies.
Our firm offers a one-stop-shop for international investors looking to enter the British property market or UK based individuals who do not have the time or experience to invest, providing yield producing properties and growth opportunities. With our proprietary research tools and our deep network of brokers, developers, and investors, we source the most attractive residential property deals for our investors.
We founded BellaBertie Investments with the desire to enact change in the way UK property assets are bought and managed for foreign investors. After seeing the marketplace as clients ourselves, we decided that there was a better and more streamlined way to invest.
Our team is made up of three seasoned entrepreneurs who have founded and operated businesses across the property, hospitality, art, and technology industries in five different countries. Our multifaceted experience best ensures that we can take on the property market both as insiders and as outsiders with a unique point of view. Property is not static and is heavily influenced by the local environment, liability, and urbanisation trends. We pride ourselves on being tapped into these streams, enabling us to best serve our investors' needs.
What we offer: Hands-off investments
We believe that no two investors are alike. To this end, we personalise each and every portfolio to the needs, desires, and goals of our clients. At the beginning of the investment process, we ask and listen: What are your financial goals? What is your time frame? What is your degree of tolerance for risk?
Accordingly, we then go out to the market and find relevant assets for you, providing in-depth market research and analysis, enabling you to best choose the right property for your needs. We accompany you through the entire process from start to finish, ensuring your ultimate success in the UK property market.
Don't just take our word for it
BellaBertie are a joy to deal with. At each and every step of my purchase, from the start to the finish, they were there to hold my hand and lead me through the whole process. Very professional and knowledgeable, Daniel is to be recommended. This is definitely NOT your typical sourcer, Daniel is thoughtful, polite, straight talking and honest.
Kathy Broock, London, UK
I needed to renovate my house before it was put on the market for renting and I also needed someone who could manage the work on my behalf. Daniel found top quality builders to carry out the work. Communication was excellent, enabling the whole process to run smoothly. Daniel then found me the most suitable tenants. Reliable and excellent service. Highly recommended.
Charlie Morrison, Florida, USA