The type of property investment strategy that Sourced Capital’s borrowers choose to embark upon is often very much location dependent. It is essential for borrowers to consider their exit strategy and their target market and their wants first before they even start looking at any properties.
Standard buy to let investments / Flips for singles, couples and families
One/ two bedroom houses and new build buy to let apartments, for example, tend to fare better in urban areas, like large towns and cities. That’s because they’re often preferred by young professionals and couples, who enjoy being within close proximity to restaurants, bars and other nightlife entertainment spots. An example project which a Sourced Capital borrower is currently working on is the office conversion to apartments in High Street, Hull, or a similar project is the Observer Building, Wigan.
Families, on the other hand, are more likely to choose a larger house with three to four bedrooms, a garden, and somewhere in a far quieter, suburban location. They will also be looking for key amenities, like nearby parks, good schools, and decent transport links into the town centre. Low crime stats will also feature highly in their search. Wellhouse Lane, in Sheffield, was a project that was repaid to investors in 2020, which is a perfect property for family living – subsequently the property got snapped up the same day it went onto the market.
Retirement complexes and holiday homes
Developments such as care homes, luxury retirement apartments or holiday homes are also strategies that some developers may focus on, especially those that are tucked away in rural locations like the countryside, or smaller seaside resorts. Having said that, you will also find these in the form of serviced apartments, in cities popular with tourists for weekend breaks. This includes London, Edinburgh, Newcastle and Glasgow.
The Exchequer Grange project in Bournemouth, had the potential to become care accommodation, but since the borrowers have decided it would make a perfect serviced accommodation investment and have changed their exit strategy. The property in Scarborough, Columbus Ravine has recently had a video update which shows the ins and outs of this serviced accommodation refurbishment project which is on the market to investors.
Upmarket serviced apartments for young professionals
Cities are also popular with property investors looking for high yielding investments. New build serviced apartments in London, Manchester, Liverpool, Edinburgh, and Glasgow have all done well in this respect – especially those located in newly-regenerated docklands areas, where there are clusters of employment such as IT hubs and media centres. But Birmingham too, with its proximity to the capital and improved commuting links via HS2 is proving lucrative for investors, as is Reading, Norwich and Bristol.
HMOs for students and young professionals
Houses of Multiple Occupation (HMOs) fare well in cities where there are universities nearby. The likes of Oxford, Cambridge, St Andrews, Glasgow, Edinburgh, Cardiff etc. all meet a student’s expectations – although modern student pods are another investment opportunity that many overseas investors are looking into today. There are two reasons for this; firstly, HMOs in the UK are very heavily regulated and many local authorities are rejecting applications for HMO licenses if they believe there are already too many of these in a particular location. Secondly, students themselves tend to veer towards the more modern purpose-built pods.
HMOs can, of course, have young professionals as tenants. London, in particular, is a city where there are thousands of such properties – but then house and apartment prices in the capital are too high for most young professionals and couples to buy, so they are often forced to rent in shared houses. And while a shortage of housing remains, this will continue to be the case.
Lea Road, in Gainsborough, has been a project that Sourced Capital borrowers have been working on to convert a 4-bed terrace into a 6-bed HMO. There is a demand for high quality rooms in the area, with limited competition, making the area a perfect fit for this strategy. Now that the borrowers have completed the refurbishment, their next step is to rent the rooms. This way they can achieve a commercial valuation so that they can refinance and keep the property all within the loan term.
All mapped out
We’ve mapped out some of the Sourced Capital projects to show you that our borrowers are spread all across the UK. You can see our current projects in blue and the projects in the pipeline are in orange. The Sourced team are working hard in the background on the due diligence of new projects, with some great ones coming soon. Keep an eye out for updates and when projects will be available by signing up to our emails or keep an eye on our social media channels.