Repossessed Houses | Are They Really A Good Investment?

Despite the drop in real estate values since 2007, the long-standing principal that real estate is a great investment still holds true. The only difference between now and then is the fact that investors need to employ a few different strategies if they hope to see maximum returns. Investing in repossessed houses is one of those strategies.

The key to making money in this sort of investment is to know what you're doing. Far too many investors don't know what they're doing, resulting in unnecessary financial losses.

Buying Undervalued Property

Statistics from December 2012 showed residential property values had dropped 20% since their 2007 peak. The trend of low prices continues today. Yet homeowners trying to sell their properties are generally looking for prices that are unrealistically high, making it difficult for the investor to complete standard transactions and still meet investment goals. Repossession properties are the answer.

Repossessed houses are attractive to investors because they can be purchased at below market value. From the outset, an investor has paper equity the day the sale is complete and the title transferred. The equity then becomes leverage that the investor can use to his/her advantage in making future investments.

The key to taking advantage these properties is negotiating the right sale price. A good target of 25% below market value gives you enough room to turn over a property and be ready for rental without while still being ahead financially. From the first day of tenancy, the property begins returning on your investment - a return that represents a higher yield than you can get with other types of investments.

Be Careful about What You Buy

Hopefully we have managed to convince you that buying repossessed houses is a great investment with long-term yield. However, now we must present you with a warning to be careful about what you buy. Remember that by definition, repossessed houses are properties that were taken from their original owners due to lack of payment.

Here are some things to keep in mind:

  • Due Diligence - Investors are often pushed to buy as quickly as possible. That's understandable, given the banks want to get these houses off their books. But don't be rushed. Do your due diligence in order to protect yourself.
  • Hidden Costs - repossessed houses come with plenty of hidden costs. For example, these houses are usually tired and poorly maintained. Some have even been vandalised by previous owners. Make sure you know what you're buying, warts and all.
  • Legal Advice - Limited documentation is part of this type of investment. Documents that are available often only tell part of the story. It's a good idea to retain expert legal advice from experienced solicitor before committing to a purchase.
  • Location - Location is everything in real estate investing. Research areas where you intend to purchase including average property values, average rental rates, reputation of neighbourhoods, access to amenities and so on.

Repossessed houses are an excellent investment option when those properties are used for rental income. Fruitful Property invests over £30,000 every month to find the best real estate investments in the country. Furthermore, we handpick every property offered to our clients to ensure a deal that immediately establishes equity. If you are ready to start making money on real estate rentals, contact Fruitful Property today.

Google+

Nick Hopkinson

by Nick Hopkinson - Property Investment commentator and Fruitful founding director.

ACT NOW
What Next
Rich Dad's Cashflow Quadrant

Rich Dad's Cashflow Quadrant

by Robert Kiyosaki

a compelling explanation of the core financial principles of behind being successful in work, business and investing.

Nick Hopkinson

Winning!

Winning!

by Sir Clive Woodward

exciting and practical insight into the business skills and sports psychology behind how England won the Rugby World cup in 2003.

Nick Hopkinson

The Art of the Deal

The Art of the Deal

by Donald Trump

like him or loath him, Trump shares his story and the drive that created a self-made billionaire, mainly from property.

Nick Hopkinson

FT Weekend Money supplement

FT Weekend Money supplement

essential weekly reading for UK investors wanting to know the best ways to invest and protect their money.

Nick Hopkinson

Renting Out Your property for DUMMIES

Renting Out Your property for DUMMIES

by Melanie Bien

straightforward advise and practical checklists for managing all aspects of your UK rental property.

Nick Hopkinson

Steve Jobs

Steve Jobs

by The Exclusive Biography

inspired stories and life lessons from the man who created Apple and then changed the world twice!

Nick Hopkinson

Winning

Winning

by Jack Welch

sage advice on business and leadership by the arguably the greatest business leader of the 20th Century.

Nick Hopkinson

Previous Next

Fruitful investor, Nick Kendall is on course to reach his personal equity target from his existing properties by 2014, ultimately giving him financial freedom. Here’s how he did…

Nick Kendall

“I have been very happy with the properties which Fruitful brought to me attention as good long-term investment opportunities; four of which I bought for buy to let purposes over…

Philip Groves
read more

got a quick question?

We're here to help! Just fill in the form below and we’ll get right back to you.

Are your investments working as hard as possible?

Earn 15% annual return on your money with off-market bank repossessions.

Access off-market, high yield investment properties.

Act now. Profit from a recovering UK property market.

Fruitful Property Investment
Intrigued call us now
+44 (0)20 7148 5858