For investors, repossessed houses can provide a potentially lucrative opportunity. Those who can’t afford to keep up payments on their houses are at risk of losing them and in the current climate, this is an unfortunate reality for a lot of people. This does mean that potential investors can potentially pick a very good quality property for far less than you would usually pay, though. This article explains a little more about investing in repossessed houses and what you need to know.
Potentially Great Value
Buying a repossessed property can mean you get a fantastic building for a great price. Many investors use this type of purchase as a buy to let opportunity. Renovated and reconditioned homes can be let to groups of students, families with lower incomes and other people who may need to cohabit, rather than living on their own. Houses of multiple occupancy provide potential landlords with the opportunity to generate a steady amount of income from several tenants. Because repossessed houses are generally cheaper than other properties on the market, any renovations or repairs can often be covered without eating into your profits too much.
Pitfalls and Mistakes
Though repossessed houses are undoubtedly a potential gold mine for the savvy property investor, they are not a guaranteed way of making money. Like any property, you will need to consider all of the usual factors such as the local area statistics, the type of tenant you expect to rent to and of course any potential repairs and developments you may need to make. Underestimating the cost, time and potential repercussions of things like fitting a new kitchen or bathroom can be extremely problematic. Before being lured into a false sense of security by the astonishingly low asking price, consider how much work you will need to do on the property to get it up to a good standard. Similarly, look into other factors such as the crime rate in the area, access to public transport and local amenities as this can all affect how much people will be willing to pay for rent.
Why Are Repossessed Properties Cheaper?
Generally, repossessed houses sell for up to 30 percent cheaper than others on the market. This is because although the agents involved in the sale have an obligation to get the best possible asking price for the previous owner, they generally don’t make any significant changes to the property itself. This means any damage or wear and tear won’t have been addressed and the house is sold “as is.” It is often accepted that buying a repossessed house means that you will need to carry out some work or repairs or that there may be other factors that have led to the reduced price.
The key to making money from a repossessed house is to make sure you fully understand what you are paying for before you agree to a sale. Always check how much work needs to be done and do as much research into the area as possible to avoid any unwanted surprises.