How to identify high-yield investment properties in Manchester

Are you an aspiring investor? Then, you’ll want to make sure you’ve done your research to ensure that you can make good decisions and get a great return on your investment. In this blog, we’re letting you know how to identify high-yield investment properties in Manchester. 

What are high-yield investment properties? 

High-yield investment properties are properties with lower purchase prices that still generate a great rental income. There are many reasons for this, such as work completed on the property after purchase. 

As an aspiring landlord, these kinds of properties are a great thing to aim for. They open the door to more opportunities for you as a landlord. 

Why choose Manchester? 

We support all investors and landlords in Manchester as we recognise the fantastic benefits that the area presents. Manchester is the Northern Powerhouse and has experienced a lot of development in recent years. 

Rental homes are often affordable, and local developments are helping to increase rental prices, allowing for a better return on investment. Manchester is a prime location for property investors compared to other major cities in the UK. 

Proper research is crucial when choosing an investment property. This will enable you to make a successful property investment. 

Understanding the average rental yield

Rental yield refers to the amount of money you can earn from a property. You will usually be given two figures for this: a gross and a net rental yield. Here’s how to calculate these figures. 

• Gross Yield=(Annual Rental Income Property Purchase Price)×100
• Gross Yield=(Property Purchase Price Annual Rental Income​)×100
• Net Yield=(Annual Rental Income − Expenses Property Purchase Price)×100
• Net Yield=(Property Purchase Price Annual Rental Income − Expenses​)×100

In Manchester, a yield of 6% or above would be considered a high-yield investment property. 

Choosing where to invest in Manchester 

There are so many impressive areas of Manchester that you might choose to invest in. The good news is that different areas of the city appeal to different demographics, allowing for even more investment opportunities for you. 

The City of Manchester is often popular with students and young people, whereas others may choose to settle further outside the city centre. Here are some of the high-yield areas in Manchester. 

• Salford Quays: Popular with young professionals
• Northern Quarter: High demand due to nightlife and amenities
• Fallowfield: Ideal for student rentals
• Ancoats: Regeneration hotspot
• East Manchester: Affordable housing with good growth potential

Universities, including the University of Manchester and Manchester Metropolitan University, have contributed greatly to the success of Manchester's investment properties in recent years. The city has excellent transport links to the rest of the country, and each area offers great amenities. 

Which properties have strong rental yields, and who uses them? 

When choosing to invest in properties, you should also complete research into which types of properties often perform well. Of course, it also depends on your investment goals. At Parello, we will work closely with you to establish your goals and help you reach them through Manchester investment. 

Houses in multiple occupation

These properties are shared, but not typically by students. Each tenant will pay their own monthly rent, which often leads to higher yields. These tenants may or may not know each other beforehand. This arrangement may also be known as a house share and often appeals to tenants as they may be able to save money. 

Student accommodation

Manchester is full of student accommodation options due to having many universities nearby. The good news for student accommodation investors is that there is always consistent rental demand. These homes are typically bigger and close to the city centre, as these aspects will appeal to tenants who are currently studying in Manchester. 

Buy-to-let properties/apartments 

Buy-to-let apartments are popular with a wide range of demographics, including students, couples, friends, and even families. This means that there is often a high tenant demand for this type of property. Apartments can also be found in many places, such as city centres and local neighbourhoods. 

Analysing Manchester property market trends and property values

Before you decide to buy an investment property, you need to analyse the Manchester property market trends. It can be useful to compare property and rental prices and research the demand in the area. 

It can be helpful for buy-to-let investors to look into current and future regeneration projects that may appeal to potential tenants. Many property investors are choosing Manchester when looking into the UK property market. The average house price in Manchester is £253,000. Be sure to monitor average property prices around the UK before making any decisions. 

How to calculate costs and profitability

Ultimately, the goal of an investment property is to make money through rental income. Here are some key costs to factor into your calculations. 

• Mortgage payments
• Property management fees - read our blog on average property management fees. 
• Maintenance and repair costs
• Insurance
• Legal and tax expenses (stamp duty, income tax on rental income)

To establish an accurate estimate of profitability, you must calculate the net yield over the gross yield. 

Many investors forget to check these costs and struggle financially while waiting for their property to provide an income. It’s worth noting that you may be waiting a few months or longer before the property helps you make any money. 

Read our blog on common mistakes for Manchester property investment and how to avoid them. 

Leveraging local expertise of the Manchester rental market

At Parello, we are your local experts in Manchester property investment. We can support you with all aspects of property investment, from assessing your goals to sourcing the perfect property. We also have access to a range of tools to identify high-yield investment properties in Manchester. 

Once you’ve found a property, we can also support you with property management in Manchester. We’ll help you find the right tenants, manage your property, and offer advice every step of the way. 

By assessing the market, researching areas, calculating yield estimates and utilising expert advice, you can find high-yield rental properties for your investment portfolio. 

Are you ready to invest in Manchester, North West? Contact our friendly property investment company today to get started.