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Look To New Homes For BMV Bargains

March 16, 2009Article by Ray Withers

If you expect a distressed seller to be the bloke standing in the corner wringing his hands and sobbing at an auction, then think again. Distressed sellers are desperate to off-load their properties because the bailiffs are beating a path to the door because they are behind with mortgage repayments. The UK property market is flooded with below-market-value property and the sharks are swarming to pick off the best bites.

The odds are just about any property with an estate agent is a distressed UK property , simply because few people can raise a mortgage to buy one. Second-hand property can throw up BMV bargains, but generally comes with the downside of extra cash having to be spent to bring the place up to standard for letting.

A better, distressed property opportunity is more likely a newly built house or apartment that a builder needs to sell…fast.

From the buyer’s point of view, the property is ready to go with very little downtime between purchase and letting and with little in the way of cost.

Most below market value properties are available in most big cities.

A typical development is The Shrubberies Mews Townhouses, in Streatham, London.

Property Frontiers are selling the properties for £300,000 each – £75.000 below a recent independent valuer’s assessment and, according to the builder, more or less at cost price of the land plus build price.

The Shrubberies is an exclusive small, gated community of just eight townhouses. The houses are open plan on the ground floor and have two double bedrooms and a family bathroom upstairs.

They are a short walk from local shops and stations. The City and West End is within easy reach by train.

There are two main options for letting the property.

1. The traditional method of instructing a local agent to seek tenants and manage the property on your behalf. The agent who valued the properties felt they were highly attractive to let although he felt it might take up to two months to find good tenants.

2. The alternative management method is to let the properties via the local council. Property Frontiers are discussing this option with the local authority, who sign five year fully repairing leases. This strategy enables you to completely let go of the property for a five-year period and have the house returned to you, having had any required repairs completed, returning the property in the original state.

Either way, the letting agent predicts gross yields of 6% at £18,000 per year.


Ray Withers

Ray has over 17 years’ experience in the international property market and bought his own first international property investment back in 2002. Aside from running Property Frontiers, Ray has been involved in residential, hotel, student and commercial property investment and development in both the UK and overseas and co-wrote "Where to Buy Property Abroad - An Investor's Guide". As Founder and Trustee of the Frontiers Foundation, Ray is directly involved with many of its projects to ensure they have a direct and tangible impact in individual communities across the globe. He is passionate about property, travelling, scouting out new opportunities and finding time to spend with his young family.
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