Despite occasional downturns, the residential property market represents a huge and dependable opportunity for anyone seeking income and growth, even over relatively short periods.
But it’s not always easy to secure a good deal. In areas where property prices are spiralling ever higher, buyers may pay a premium for flats and houses that don’t command commensurately high rents. Equally important, anyone buying into a rising market could find that prices stagnate or fall back shortly afterwards. Although history suggests the value of the asset will rise over time, any softening in the market in the short-term reduces the opportunity to sell quickly at a profit.
So one of the secrets of investing in residential property is to buy as cheaply as possible in areas that are nonetheless economically strong enough to underpin medium and long-term growth while supporting a reasonably buoyant rental market. Thankfully, even in the UK – where demand outstrips supply – it is still possible to secure competitively priced assets.
Distressed sales probably represent the most obvious source of relatively cheap properties. On an individual level, houses come up for sale when their owners fall into arrears with mortgages over a period of time and the bank or building society takes possession. In these circumstances, High Street lenders tend to sell cheap to get the property off their hands as quickly as possible. But the distressed sale market also includes whole developments or complexes that are divested at fire sale prices when developers or builders get into financial trouble.
These circumstances are certainly unfortunate – particularly in the case of individual owners – but by the time the property comes onto the market, the die is cast and the matter is in the hands of the bank that has implemented the foreclosure. From an investor perspective, foreclosures represent opportunity.
Spotting Up and Coming Areas
Fifteen or twenty years ago, you could stand on some of London’s high points and look down on a city where wealth was expanding East. The most obvious sign was the proliferation of towers in Canary Wharf but there was also a huge amount of transport infrastructure being laid down.
And of course, there was a knock-on effect. Areas of East and South East London that had once supported only modest property prices began to experience a boom. Good news for those who had bought into these areas in advance of the upturn.
The bigger point is that it may be possible to spot ‘up-and-coming’ areas ahead of time. This requires research or at least an awareness of developments in a particular area or region. Identifying future hot spots may also be as simply as making inquiries at local estate agents.
Research can also help you to identify regions where prices are relatively low – and perhaps stagnant or falling – while demand for rented accommodation is, nonetheless, high. There are huge regional differences across the UK property market and these can be exploited by investors.
As an alternative to the phone or estate agent visits, you can wear down some digital shoe leather by searching real estate websites. These will enable you to filter properties in terms of price, size and location and perhaps also locate bargains.
Meanwhile, it’s always worth remembering that the more deals you look at, the more likely you are to find an opportunity that fits your investment criteria. It’s a matter of keeping a close check on everything that is happening locally, regionally or across the country. Again, research is crucial.
Be Prepared to Deal
Once the sale of property or development goes public, the chances are there will be rival bidders. Buyers who can keep their ears to the ground and find out about opportunities before they come to market have a better chance of securing a bargain than those who go into competition with other buyers. Those who move ahead of the pack by approaching owners privately, may be able to strike good deal.
The Route – City wealth club Solution
But here’s the problem. All of the above require a degree of time and commitment that most professional people don’t have at their disposal. Researching a market is time-consuming, but unless you put the work in, it’s unlikely that you will identify the best deals.
The Route – city wealth Club provides a solution in the shape of a team of property industry professionals who have a comprehensive knowledge of the UK market. Route Members can take exclusive advantage of the team’s skills to find investments that offer high returns across the country. In addition, The Route offers advice on mortgage options.
Find out more by telephoning The Route on 020 3141 9040
Become a Member
There’s a good chance you already know one or more of our Members through your business network. If you’d like to find out more about how we can help you grow your assets faster, and with less risk, please get in touch.