Building your property portfolio:
For those who already have a property portfolio, adding to it with repossessed or Below Market Value (BMV) property can be hugely successful for a number of reasons. The main reason for this is the experience. Experience is clearly beneficial when investing in anything, property included. For example, knowing what to look out for when viewing properties, being aware of signs that indicate value, knowledge of possible renovation methods and experience in the negotiating period are all valuable skills. But because repossessions and many BMV property sales are different to generic property sales, these different areas of experience can be priceless when it comes to investing in these type of properties. Repossessions are sometimes on the market for a matter of days, so decisions have to be made fast. You may only view the property once, therefore being pro-active is essential, which is where the experience can really provide the edge. Furthermore, having the tools required to value the property quickly minimises chances of being gazumped, which is more likely to happen when bidding on repossessions.
Property Discounts from Off-Plan Investments:
Off-plan developments are a great option to find below market value property. This is when an individual has the opportunity to purchase a property during, or before, the construction phase.
As house prices in the UK are still rising, developments are made in areas with particularly high rental yields, where experts anticipate property prices to rise in the coming years. For instance, these can be up and coming areas, or places that have generated recent investment to help improve the area. The properties are sold in advance of completion, and can therefore be bought at a significant discount.
Other advantages with buying properties still in the development phases include lower deposits, the ability to re-sell at a profit prior to completion, a variety of choice as well as capital growth.
But why repossessions?
Naturally, if someone was to ask your thoughts on repossessed houses, you probably wouldn’t think about investment opportunities. You’ll probably be more likely to think about an individual experiencing money issue, which can lead to them being behind in mortgage payments, eventually resulting in their property being repossessed. This is in no way a positive outcome and is a very unfortunate situation for an individual to find themselves in. But if you then think about the now empty property that needs to be sold fast, by a seller who knows very little about it and feels no sentiment towards the house, you may quickly realise how these properties actually offer very promising investment opportunities. Depending on the sources you look at, repossessions usually can be sold for 20-30% below market value, therefore there is strong evidence revealing repossessions as being good value for money.
You may have been warned by property experts that when you view a property, do not get fooled by an impressive paint job. This indicates that some sellers can try and hide, or take attention away from, issues that lower a properties value by giving it an impressive paint job. The suggestion that you may bid on the property with a quote you have formed with the idea of it being a modern property, only to then realise there was hidden damage or structural issues with the property after contracts have been signed. So considering this, in many cases this warning is actually accurate and a good bit of advice. Conversely, you should not be distracted by some mess or wear and tear when viewing a repossessed or BMV property, as they may still hold good value. Repossessions are sold how they are left, therefore there’s usually no opportunity for the seller to make it look more presentable to possible bidders or to try and take attention away from issues with the property. So your attention may go straight to a patch bailiffs have left, or mess on the floor, but actually, if you look past all these many repossessions can hold great value through having a solid structure, and great renovation potential.
To read more about property investment check out our knowledge hub, or sign up for free below with your property investment requirements and we will be in touch!