Liverpool and the North West

Choosing the right investment 'target zone'

I originally started this business in Belfast, moving to Liverpool in 2007 (see the About Us section). Before I moved, I was having great difficulty making this 'BMV' business work in Northern Ireland (sourcing distressed sellers willing to sell at a discount). The main reason was because the property market was booming and it was almost impossible to find even a 10% discount.

While i was doing well despite the market (impossible not to when the market is booming) - I was learning more about property and setting out my own goals and expectations from property.

I decided that I would invest in the mainland UK because rents actually covered mortgages, property prices were 'low' in comparison, and there was generally strong tenant demand. This was in comparison to Belfast at the time, where prices rivalled the South East of England, while rents were among the lowest in the UK. Negatively cashflowing property became the norm and an accepted practice (as everyone assumed prices would continue to rise).

When every taxi driver and cleaner (no offence intended) begins telling you about their 'property portfolio' - you know it is time to jump ship. And that is exactly what happened! I guess this illustrated my point about the media and 'popular opinion' - if everyone thinks its a good thing, then by default that means the opportunity has already long since passed...

Anyway. I researched various areas in the UK, wanting to source and build a portfolio within one specific geographic area. It boiled down to a few places in the Northeast, and Merseyside.

Settling on Liverpool and Merseyside

While prices were a bit lower in the NE (which initially attracted me), rents were lower so the yields were actualy very similar. What swung it for me, was the history of Merseyside and Liverpool in particular, and what I felt was the massive potential there, not to mention the large-scale regeneration going on. I felt that like Manchester a decade before, here was another 'sleeping giant', long overdue a renaissance.

I made several trips over, and saw how the city was transforming. Despite it being the 'European Capital of Culture', that was a bit misleading I felt and more the icing on the cake than any real reason to invest. Anyway, Liverpool experienced a short-lived 'mini-boom' in 2003 when the award was announced, and prices had been pretty static by the time I first looked in 2006.

Another reason to be optimistic was the large wards or regeneration zones throughout the city, where literally billions were being spent, and the massive tranformation of the city centre which was fairly drab and run down, with beautiful Georgian buildings looking run-down and shabby, speaking of former glory long since faded. Those heritage buildings are returning to splendour and being put to use, and the city is a UNESCO world heritage site with 2,500 listed buildings (only London has more, despite the fact Liverpool is not a big city). The docks are being regenerated, and now cruise liners are returning to the city's famous waterfront - and cruise liner trade is expect to generate more income and tourism for the city which can already boast great football teams, the Beatles and one of the most popular 'city break' venues in the country.

Having rented and managed property in Belfast, one comparison stuck with me, and that was glancing through the 'property to let' classifieds in the main local paper and comparing this to Belfast. Despite Liverpool being much bigger than Belfast, the 'to let' section was much smaller and ads never appeared more than a day or two. In Belfast there was at least three times more property to let, and from experience i knew that I often had to run an ad for more than a week to get a property let.

The rents were also attractive. Despite house prices being around 50-70% less in Liverpool than equivalent prices in Belfast, rents were actually higher. Another attractive feature was the introduction of the new housing benefit regime (Local Housing Allowance) - which was a government led scheme to encourage private landlords to take up the strain of local aaccommodation pressures, by incentivising landlords through greater achievable rents. The rub was that the LHA would be paid direct to the tenant, a maddeningly stupid idea but typical of New Labour nannyism (apologies to any Tony or Gordon fans out there!). However, I knew there was bound to be a way around this last problem (which i have now found).

Taking the plunge

I decided to start marketing for distressed sellers while still in Belfast, the idea being that I could pick up a few properties and manage them from Liverpool. But within a few months it was blindingly clear that this was going to be much more of a success, and my wife and I decided to move to pursue the business in Liverpool. I quickly bought 27 properties throughout Liverpool and a few outside (Birkenhead and Runcorn).

Since then, the mortgage market has changed dramatically and unfortunately I have been caught up due to excessive borrowing. As a result I now find properties for other investors, which is where Invest BMV came from. As a result i am focusing on finding deals for invetsors. I cannot say I have regretted what i have achieved so far - I only wish I was able to buy all my properties this year and not last - since prices have already fallen, and the discounts I can negotiate are much higher!

Links

To find out more about Liverpool, here are a few links

Invest Liverpool - local gov site
Liverpool - wikipedia entry
Liverpool One - city centre shopping transformation, YouTube video
Spotlight on Liverpool - another documentary