Liverpool is fast becoming one of the UK’s hottest destinations for property investment. With a vibrant culture, thriving nightlife and ever-increasing popularity among students and young professionals alike, demand for rental accommodation is sky high.
For buy-to-let landlords, the city presents some fantastic opportunities to generate impressive rental yields. But how exactly should you go about implementing a successful property income strategy in Liverpool?
We take you through everything you need to know to start reaping the rewards of rental property investment in one of the North West’s most dynamic cities.
Choosing the Right Liverpool Neighbourhoods
One of the keys to buying profitable rental property is location. You need to purchase in neighbourhoods where demand is strong and rents are high.
In Liverpool, some of the most popular areas for tenants include:
City Centre
With its wealth of shops, restaurants, bars and attractions, the city centre is highly sought after by young professionals and students. Areas close to the universities, hospitals and financial district tend to see the greatest demand.
Ropewalks
Just south of the city centre, this vibrant area offers great transport connections and a buzzing nightlife scene. The Georgian architecture is also a big drawcard.
Sefton Park
Surrounding the city’s largest park, this leafy suburb appeals to families and young couples looking for green space. It’s located just 30 minutes from the city centre via public transport.
Baltic Triangle
Formerly run down, this creative district has transformed into a trendy hub populated by independent boutiques, microbreweries and hip eateries. Warehouse apartments with original features are very popular.
Albert Dock
Along the historic waterfront, the striking converted warehouses here attract those who want to immerse themselves in Liverpool’s maritime heritage. It’s also a walking distance to major attractions.
Thorough research is vital to pinpointing the most profitable postcodes. Analyse rental prices, local amenities, transport links and tenant demographics before deciding where to buy.
Choosing the Right Property Type
Along with location, the type of property you purchase is crucial in maximising your property investment returns.
- Apartments – Modern city centre apartments with high-end finishes are ideal for young professionals who want to be close to work and entertainment. Studios and one-bedrooms tend to rent quickly as they are affordable and low maintenance.
- Terraced Houses – Found in neighbourhoods like Sefton Park, these classic two-up two-downs appeal to both families and share houses. Victorian and Georgian terraces with period features like fireplaces, coving and bay windows rent well.
- Warehouse Conversions – With exposed brick walls, beamed ceilings and oversized windows, converted warehouses in up-and-coming areas make trendy loft-style rentals, especially for students and creatives. The industrial chic vibe commands top rents.
- New Builds – Sleek, purpose-built rental developments with shared amenities like gyms and roof terraces can achieve premium rents, and often offer discounted purchase prices for investors. Low maintenance costs also boost yields.
- HMOs – Properties converted into houses with multiple occupancy can provide room-by-room rental. They offer higher yields as you collect multiple rents each month, but require greater management.
The right property type for you depends on your budget, target tenants, expected yields and appetite for hands-on maintenance. Research what’s most in demand.
Financing Your Rental Property Investment
The key to financing a profitable rental property is to use other people’s money! Here are some options to consider:
Mortgages
Buy-to-let mortgages allow you to leverage the bank’s money to purchase the property. Look for lenders who accept higher loan-to-values of around 75-80% and rental income coverage ratios of 125-150%. This gives you more flexibility.
Bridging loans
Useful for securing a property quickly at auction and refurbishing it before getting a normal mortgage. The rates are higher but the terms are short, providing temporary financing.
Joint ventures
Pool your resources by partnering with other investors to buy larger multifamily buildings or blocks of units. Split the mortgage payments and profits based on your percentage of ownership as this allows you to buy more.
Business loans
Some property developers offer discounted purchases to investors in return for a share of the rental income over a set number of years. The investor gets a lower entry price while the developer gets an ongoing income stream.
Crowdfunding
Borrow from multiple investors via peer-to-peer lending platforms. This allows you to tap into private capital for your deposit or renovations. You pay interest to the lenders over a fixed term.
The ideal financing mix will provide you with the cash to buy while minimising your own capital outlay through mortgage leverage.
Maximising Your Rental Yields
With Liverpool offering some of the highest rental yields in the UK, you want to optimise your property investment returns. Here are some tips:
- Add value through refurbishments and renovations that make the property more desirable to tenants. This allows you to increase rents.
- Keep maintenance costs low by attending to repairs promptly. Happy tenants stay longer.
- Raise rents gradually each year in line with market rates, but don’t price yourself out of the market.
- Take advantage of high demand periods like summer and look for corporate clients who pay above market rate for short periods.
- Consider holiday letting over peak tourism seasons to maximise income. Use a management company to take care of bookings and cleaning.
- Convert larger properties into HMOs to benefit from multiple rents each month rather than relying on a single tenancy.
With the right asset in the right area, plus smart management, high yields are achievable.
Handling the Tenant Management
Managing your rental investment property and tenants is key to minimising voids and costs. Act as a hands-on landlord if you have time, taking charge of maintenance issues and communicating directly with tenants. It’s also a good idea to hire a lettings agent to handle viewings, tenant vetting, inventories and collecting rent while you focus just on property upkeep.
Additionally, use a full property management service to take care of every aspect, from marketing to maintenance and everything in between.
The Benefits of Full Property Management
For busy investors or those with multiple properties in Liverpool, handing over day-to-day management to a full service agency offers many benefits:
- Marketing – The agency will photograph your Liverpool property, create listings on major portals, promote it via social media, organise viewings, and screen tenant applications.
- Legal Compliance – They will ensure all safety certificates, landlord registrations, tenancy agreements, deposit protections and other paperwork is in order. Staying on top of changing regulations yourself is difficult.
- Maintenance – They will coordinate all repairs and maintenance with approved contractors and tradespeople, as well as supplying emergency call-out services.
- Rent Collection – Rent will be collected on your behalf and credited to your account on time every month.
- Inspections – Regular inspections ensure tenants are looking after the property. Issues can be addressed before they escalate.
- Vacancies – The agency will work hard to minimise void periods between tenancies.
- Tenant Relations – Let the professionals handle all communications and disputes diplomatically to avoid headaches and tribunals.
So if you want the income without the stress, hand your portfolio over to the experts. The small management fees pay for themselves in time savings and peace of mind.
Investing for the Long Term
While Liverpool presents opportunities for short-term gains through capital growth and high yields, it’s a market with long-term investment potential too. Population and job growth, urban regeneration projects, expanding infrastructure, and Liverpool’s growing fame as a tourism and cultural hub all point to strong prospects.
By buying in promising neighbourhoods and holding your assets for the long run, your properties will continue appreciating in value and producing ever-increasing rental income via market rent rises. So get in early while prices are still relatively affordable, and you’ll reap the rewards!
Partnering with 53 Degrees for Hassle-Free Rental Income
Juggling all the tasks involved in managing an investment property portfolio can quickly become a headache. Marketing vacancies, screening tenants, handling maintenance issues and ensuring regulatory compliance – it’s a full time job!
That’s why partnering with a professional property management company like 53 Degrees Property makes so much sense. Our team of experts will take care of everything, while you sit back and collect your monthly rental income.
Our marketing tactics and local area expertise means minimal voids between tenancies. The team also coordinates maintenance and repairs with reliable contractors, so you can relax knowing your obligations as a landlord are being handled.
One of 53 Degrees’ biggest advantages for investors is our guaranteed rent scheme. This provides you with complete peace of mind by delivering a fixed monthly income, even when the property is vacant. Contact us today for an initial discussion and quote.
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