A PropTech firm says buy to let investors could earn in excess of double the eight per cent yield most aim for, if they used data effectively.
One & Only Pro - a website that uses Artificial Intelligence to calculate potential appreciation and rental yields - says the key is for investors to use data to identify hotspots for the strongest returns, rather than wider areas.
The site has spotted 10 ‘diamond’ locations, where investors have the highest possible chance of a strong return based on scores calculated by its unique algorithm.
All are in the North of England, with Darlington in County Durham taking the top spot with the highest proportion of diamond properties at 22 per cent.
Then come Bootle and Burnley, both on 21 per cent, Blackpool on 19 per cent, and Washington in County Durham at 18 per cent.
When it comes to returns, the top performing area is Liverpool with an average Return on Cash Investment - or ROCI - of 78.2 per cent for one of the top 10 ‘diamond properties’, secured on a favourable mortgage deal.
Henri Sant-Cassia, chief executive of One & Only Pro, says: “With this kind of return, savvy investors could have earned their deposit back within two years. In many cases ... a property’s mortgage could be cleared from the returns within several years and you’ll then have full ownership over your investment.
“While some people have been delaying decisions due to Brexit, the shrewdest investors could already have earned enough income to purchase their next property.”
He continues: “Where else could you invest and earn returns like this? 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 find the deal of a lifetime. It already hosts over 210,000 opportunities, almost 9,000 of which are Below Market Value, with almost 25,000 listings yielding higher than seven per cent.
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Fatal flaw in this automotive system. It assumes rent is paid on time all the time and no arrears. Unfortunately in many of these locations tenants are on HB or UC. I won’t go into more detail as anyone in the business knows these pitfalls. Look at the reality on then come up with a ‘real net’.
We do state it is a "potential" Return On Investment. If things are done well we do not see why these returns are not achieved.
For Premium members properties in areas which could be the most challenging in terms of tenant profile are flagged up.
However, our HB/UC tenants payment record are similar to working professionals.
Such stats are all very well but most LL obviously strive to achieve potential returns.
That is why they are in the game.
Few manage this as that niggly little real world always gets involved especially in areas where HB tenants are prevalent.
Citing what a potential might be is all very well but is usually not achieved.
Real world potential is far more realistic.
You could be managing everything swimmingly and then a tenant loses a job and goes on HB.
A Council introduces Selective and Additional Licensing.
That real world will then reduce potential.
Just like S24 and possibly rent caps.
So nothing is certain with potential.
So use as a topline figure but know that rarely will it be achieved.
If LL do achieve this they should thank their lucky stars but should always plan for that potential being less than that theoretical figure.
That real world has a nasty habit of getting involved and upsetting potential!!
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