Buying A Repossessed Property

Buying repossessions (or “corporate sales” as agents prefer to call them) can give you access to property at bargain prices. You then renovate it and sell at a decent profit or rent it out and obtain a positive yield. But you need to be aware of the pitfalls so as not to undermine your property investment strategy.

Repossessed properties are generally offered at below market value prices and can be identified with the help of estate agents or found at auction houses. And if you are a cash buyer you will have access to the best bargains. If not then you must at least have funding in place as the seller will need to see proof of funds before even considering an offer.

A property isn’t automatically a bargain just because it’s a reposession. Always establish previous property sale prices and visit the property so you can calculate what you will have to spend before you can resell. Work out the true renovation costs and there may be little margin for profit. Allow 20% contingency on your costs before making an offer.

The bank in possession of the property must seek to obtain the highest price possible and they will never take a property off the market. If they accept your offer, you can still be gazumped at any time up to exchange of contracts. As an investor there is a ceiling to what you can pay and still make a profit so expect to be gazumped because it can and does happen often. The bigger the bargain, the more chance you will lose it. Emphasise to the seller that you need to complete quickly. Make sure you use a solicitor who act fast.

It’s also wise to remember that you will no doubt have utilities bills where supplies may need to be reconnected. And also note that departing owners may leave the property stripped and/or vandalised. This happens frequently with repossessed properties.

Repossession purchases are seldom as easy as people may think. But be careful and know what you are getting into and there are bargains to be had. Get it wrong and you can get in a heap of trouble.


A New Way To Invest In Property

Another great deal from The House Crowd. We’ve just launched our new peer to peer lending product designed to allow investors to invest in UK HMO’s, or houses of multiple occupancy, and receive great rewards.
The investment pays 7.5% net on the amount lent to one of the SPVs (Special Purpose Vehicles) that buy a specific, traditional property which will then be converted to a HMO generating a high yield. This enables us to pay our investors a 7.5% return whilst generating a decent profit margin.
Loans to the SPV are ultimately secured against the value of the property. There is no other debt on the property so lenders will have first call on monies when the property is sold.
The minimum Investment is £5k and investors have the opportunity to request their capital back at any time after 18 months on 3 months notice. Find out more.
This latest innovation is nothing new for the House Crowd, who have  already blazed a trail for new ways to invest in property by virtue of being the world’s first crowdfunded property investment vehicle.

Avoid The Pitfalls When Buying Property At Auction

Unless you are a seasoned auction attendee, you’re bound to feel nervous when visiting a property auction. They can be very busy and austere places indeed. And the amounts of money concerned also contribute to make the whole ordeal pretty scary. We all worry that we may end up accidentally bidding and ending up buying a multi-million pound property that we can’t afford. Needless to say that doesn’t really happen!

Everyone knows you can pick up some great bargains at property auctions, but you can easily end up losing money unless you are careful. Here are some tips for making the best of your property auction experience.

1. Do Plenty of Research

Of the many auction companies around the UK, some deal only with local property whilst others offer properties nationwide. Some only offer commercial properties, some residential, some both. And certain auction houses are strong in particular locations and for particular types of property.  Find out beforehand which deal in the types of properties you want to buy.

2. Find out how it all works

Before you start bidding, make sure you know how everything works. Check out the catalogue carefully and in plenty of time and do full due diligence on the properties you fancy including going through legal packs, viewing the property and setting a maximum price you will pay. Speak to the auctioneer if you have any questions and make sure you are confident about the auction process.

3. Understand the Legals

Before you bid, always ask a legally qualified person to review the legal pack. There can be all manner of legally binding conditions and restrictions attached to a property such as covenants and you must be aware of all of these.

4. Setting your limit

There is lots of info online to allow you to see what similar properties have sold for in the same area. Or ask a local estate agent for guidance. Once you know what you need to bid as a maximum, get it in your head and stick to it. Whatever happens, never bid above the limit you have set.

5. Don’t Buy Unseen.

If you can’t see the property before the auction, be suspicious. There may be valid reasons why a viewing may not be possible, for example if the property is tenanted, but there are obviously things that may also be hidden in this way. If you really want a certain property, ignore what the seller says, pluck up the courage and go and knock on the door and ask questions.

6. Before And After An Auction

Remember that there are opportunities to pick up a bargain either before or after the auction and you are at liberty to make an offer at any point. When properties have failed to reach their reserve price, seller expectations may have been modified so it can be a good time to make an offer. They’ll also be saving the cost and hassle of going through the action process another time.

So make sure you do your homework. If you are careful and don’t get carried away, there are some real bargains out there. But remember the old adage. If something looks too good to be true, it probably isn’t what it seems.

2013 Boom in Residential Development Projects

More good signs in the housing sector as the value of private residential property development projects is showing a double digit year on year increase. The number of projects starting on site is up 15.2% compared with the same period in 2012.

The figures from construction industry analysts Glenigan indicate that the UK construction sector has seen a rise of almost 1.9% in new build projects commencing in the three months to May 2013. And these improvements are firmly led by growth in the private housing sector.

Gains have been focused in London and the South East, but increased activity in Yorkshire and the South West in April are further signs of a recovery. And a number of £100m+ private housing projects will give those behind the Government’s Help to Buy and NewBuy schemes further cause for positivity.

Affordable Housing Issues

The Department for Work and Pensions has released a report highlighting the potentially negative impact Article 4 Directions on the growth of affordable housing.

The report findings suggests that the introduction of the Article 4 Directions have restricted planning permissions for Houses in Multiple Occupation (HMOs) and obstructed the provision of affordable housing in the private rented sector. The report also suggests that property investors and buy to let landlords are reluctant to develop their HMO/multi-let portfolios due to the impact of Article 4 planning restrictions in some areas.

The RLA have previously voiced opinions to scrap Article 4 Direction and is now set to consult with the government on the findings of the report and will strive to look into what this will mean for local councils and landlords.