Can you really make money from property anymore?

Go back a few years and everybody wanted to get into property. Prices soared. Then along came the recession and lots of people got their fingers badly burned. So you might think property is off the agenda as a biz opp right now.

But really nothing could be further from the truth. As prices in most parts of the country have dropped savvy investors are buying up property as if it was going out of fashion.

Here’s what you need to know though: The secret of making money from property right now is to buy the right property and buy it as cheaply as possible – preferably by looking for bargain repossessions at auctions at well under market value. Here are a few tips on how it all works:

  • Identify the right properties. Don’t go for well presented properties from owner-occupiers. Instead focus on repossessions from banks and building societies.

Look for the give-away signs: Empty, dishevelled properties with taped-over, decommissioned kitchen and bathroom appliances and overgrown gardens often secretly reveal repossessions.

  • Choose a geographical area you’re interested in investing in and focus on it. This way you can become an expert in supply, demand, selling prices and rents there. Areas where people actually want to live, that have good employment opportunities, decent schools and transport links are usually the best bets.
  • Have an exit route in mind before you get started. What are you going to do with your property? For example: Keep it as a buy to let investment, sell it on to other investors, or to an owner-occupier at a mark up?
  • Stay informed. Contact the auction houses who auction property in that area and get on their mailing lists for upcoming sales. Get past sales results and check what properties sold for (or didn’t sell for). Nowadays you can do all this on the Internet.
  • Do the maths. When you see a property decide what you think you could resell the property for, or let it for, then work back from that to decide what your maximum bid should be.

Tip. Investors right now are usually looking for a minimum 10% return on repossessions. In other words, they don’t pay more for a property than ten times its annual rental value. For example, if a flat will rent for £500 a month or £6,000 a year they’ll value it at £60,000 approximately at auction.

  • Check out the property before you decide to bid. When you buy at auction the sale is (usually) final and goes through 28 days after the auction. If you want to get a survey done do it now. Ask for the legal pack and have a lawyer check it out.

Sort your funding out too. Some repossessed properties are going really cheaply right now – for as little as £20,000 in some areas – but if you don’t have the money look at clubbing together with other investors and forming a syndicate.

  • You don’t necessarily have to attend an auction to bid on repossessed properties nowadays. You can sometimes bid online – a good way of avoiding paying too much as well as avoiding auction room jitters!
  • Lastly, here’s a way that really clever investors are making a killing at property auctions right now – from unsold lots.

After an auction check the catalogue for lots that didn’t sell on the day. If you’re interested in the property consider making a really low offer on it. You could walk away with a property that is not only well under the guide price, well under the reserve price but well under the market value too!