Buying an investment property in Manchester will give you great returns but where exactly in the city is it best to invest? Today, we’ll be comparing the city centre with the south and asking what the pros and cons are for each area.
As always it depends on your tenant profile and your goals with regard to yield and growth. It depends on your exit strategy… and you might find that with city centre property you could end up being locked into a deal in a way that won’t happen to you in the south.
Video Transcript
The question we’re dealing with today is regarding buying an investment property in Manchester and whether South Manchester is a better bet than Manchester city centre.
The question is from Dr Syed, who asks…
“Dear Rob, hope you’re well. My name is Dr Syed and I’ve just seen your video, The Best Places to Invest in Manchester.”
We have a few more videos on this site and on our YouTube channel about buying an investment property in Manchester. Take a look and we hope you find them useful.
The question goes on…
“I’m looking to buy soon and I’m a first-time buyer. I know that you have previously said that South Manchester is good. What do you think about South Manchester as opposed to the city centre? I’m open to suggestions as to where I should be buying an investment property. I know there are areas of the city centre that are good. However, in which areas do you think house prices are going to appreciate more in value? I look forward to hearing from you. Dr. Syed”.
Rob Jones Answers Your Questions
- Should I Use My Deposit to Buy One House or Two?
- What Kind of Contracts do Property Sourcers Need to Use?
- Property Sourcing | What Should My Finder Fee Be?
- What Is The Best Way To Work Out Rental Demand?
- How Do I Go About Raising Property Investment Finance?
- Is Investing in Property with only £20,000 Realistic?
- What Are The Property Growth Areas Of Manchester?
- How Do I Find Repossessed Property To Buy in London?
- Should I Invest In South Manchester Or The City Centre?
- How Do I Evict A Tenant? (Section 8 Notice to Quit)
- How Can I Buy a House Without a Mortgage?
- What Exactly Is Property Due Diligence?
1. Investment Property and Goals
The answer here is not straightforward as it depends on your aims, goals and criteria. To help you focus on this we have a video on goal setting which I suggest you watch to help you map out what it is you are looking to achieve.
You need to be thinking in terms of your tenant profile (that’s the kind of person you want renting the property) and you want to consider the potential for capital growth that the property offers.
Manchester city centre is very different to South Manchester. Not only for the average tenant profile but also for potential rental yield (the cash flow element when you’re looking at buying an investment property)… and of course the potential for capital growth across the two areas of Manchester is very different as well.
*** Read more about investing in Manchester here ***
2. Buying an Investment Property in Manchester’s City Centre
Investing in Manchester city centre can vary a lot from development to development. You could be looking at one particular block or flat that looks good on paper but when you start to factor in service, maintenance and management charges then the rental income for that property can become less and less appealing. Indeed, once you factor in all the charges on properties such as this you can find that your cash flow has, in fact, become negative.
Although the idea of buying an investment property in the city centre of any city (Manchester being no exception) might be appealing it doesn’t always make sense. You have to look at the figures carefully to make sure your investment is not about to turn cash flow negative. I’m not saying that this is true across the whole of Manchester city centre. There are of course specific locations and developments that perform quite well. What you need to do is focus on the returns you are looking to generate first and then work backwards to select investment properties that that fit with your aims and goals.
What Are The 7 Best Places To Invest In Manchester and the North West?
Thinking about investing in Manchester or close by? This is our list of the 7 best locations to invest in the north-west.
- Salford
- Tameside
- Manchester City Centre and South Manchester
- Wigan
- Chester
- Warrington
- Wythenshawe
3. Buying an Investment Property in South Manchester
One of the advantages to South Manchester is that this area may give you more options for resale, that is if you wanted to re-sell the property. When you compare like for like, in the city centre of Manchester, the majority of buyers of city centre apartments are investors or individuals looking have home ownership in the location. There is often less sales activity than there is in markets such as in South Manchester where we’re looking at more traditional, say three-bedroom, semi-detached, property. With these types of property, there is simply a wider range of people wanting to invest. There are your typical aspiring homeowners. There are investors, developers, refurbishment companies all willing to invest in this type of property. This isn’t necessarily the case when it comes to city centre developments.
So simply from a supply and demand point of view, if you’re looking into buying an investment property that you can flip or resell down the line the when comparing like with like South Manchester is a much better place to invest in than the city centre.
4. The Seven Golden Rules of Property Investing
Either way, whether you’re looking to Manchester City Center or South Manchester area for buying an investment property there are seven key things to consider. We call these the seven golden property investment rules. This is really a checklist of things to take into consideration when you’re looking into buying an investment property.
- The Area
- Tenant Profile
- Rental Yield
- Potential for Capital Growth
- Exit Strategy
- Potential to Add Value
- Achievable Discounts
So you want to be thinking, not just in terms of the rental tield and the area, but also about your perfect tenant and your exit strategy.
5. Putting it Together
So, back to what we touched on before. South Manchester might be easier to resell when the time comes.
Manchester’s city centre might attract the tenant profile that you’re looking for.
If you’re looking for young professionals to rent your house then parts of the city centre might be more suitable than the South Manchester area.
What you need to do is to put your goals first and map out what you want to achieve. Look at rental yield and at the growth – take all of the 7 Golden Rules and examine them one by one – and maybe then the answer will reveal itself.
But if you’re still keen on Manchester’s city centre for buying an investment property – whether that’s Spinning Fields, Castlefield… where ever it might be – and you want further advice, then don’t hesitate to drop me a line at rob@propertyinvestmentsuk.co.uk and I’ll be happy to expand on what I’ve said here or offer further advice.