Ready-made property portfolios, typically assembled by experienced investors, offer a way to acquire multiple properties in one transaction. They’re especially appealing to seasoned investors looking for immediate rental income streams.

Recent research by easyMoney, a peer-to-peer investment firm, sheds light on the state of these portfolios across Britain and compares their performance to Innovative Finance ISAs (IFISAs). They’ve scrutinised various factors such as location, portfolio size, sale price, and rental income potential.

Key Findings:

1. Market Size and Value: There are 884 portfolios for sale nationwide, averaging at £1.2 million each. The typical portfolio consists of about 6.9 bedrooms, translating to an average cost of £180,429 per bedroom.
2. Rental Yields: Investors can expect an average yield of 3.4%, based on a monthly rental value of £507 per bedroom, culminating in a total monthly income of approximately £3,494.
3. Regional Hotspots: London emerges as the prime location, with 166 portfolios (19% of the national total). However, the average yield in London is a modest 2.1%, just above Wales, which has the lowest yield in Britain.
4. Affordability and Returns: The East Midlands offers more affordable options with higher yields. An average portfolio in this region costs about £879,012, offering a yield of 5.7%. Yorkshire & Humber tops the list with an average yield of 6.1%.

The Appeal of Portfolios

Jason Ferrando, CEO of easyMoney, highlights that ready-made portfolios are a fast-track option for expanding one’s property holdings, bypassing the time-consuming process of building a portfolio piece by piece. However, the significant upfront investment and ongoing management demands can be daunting for some investors.

The Rise of Innovative Finance ISAs

Innovative Finance ISAs (IFISAs) present an alternative for those seeking a more hands-off investment approach. These ISAs allow investors to diversify across various property projects without the need for direct management.

Why IFISAs?

IFISAs offer a blend of property exposure and ease of investment, making them a compelling choice for those who prefer not to engage in the day-to-day oversight of a portfolio. They provide a broader range of investment opportunities across the property sector, often with less upfront capital required compared to purchasing a whole portfolio.

Which Option is Right for You?

The choice between investing in ready-made property portfolios and IFISAs depends on your investment goals, available capital, risk appetite, and desire for involvement in property management. While portfolios offer direct control and potentially higher yields, IFISAs provide diversity and ease.

Considerations for Decision-Making

1. Capital Availability: Ready-made portfolios require substantial capital upfront, whereas IFISAs can be more accessible with lower initial investments.
2. Risk Tolerance: Direct property investment involves more risk but also the potential for higher returns. IFISAs spread the risk across various projects.
3. Management Involvement: If hands-on management isn’t your preference, IFISAs offer a more passive investment route.
4. Long-term Goals: Consider your long-term financial objectives. Are you seeking steady rental income, or are you more interested in diversified, potentially more speculative investment opportunities?