I have been dealing in distressed assets for over 16 years, and anyone who has read my book will note that the Credit Crunch and financial crisis were the catalysts for awakening me and others to the fact that there is no better way to invest in property.
You buy in-built equity on day one. That's the crucial difference between buying retail (estate agents, Rightmove, Zoopla) and wholesale (distressed assets).
For instance, my wife bought a block of flats with a large plot of land near Sefton Park, Liverpool, for a fraction of the value. It was purchased directly from receivers in Manchester. I pitched about three offers until we arrived at a price that matched their spreadsheet. Receivers don't necessarily want top dollar for real estate, only the numbers which satisfy the debt plus costs. The block and land are worth considerably more than my wife paid, and the yield is incredible.
Why do properties go into receivership?
There are many reasons why properties and developments go into receivership, but the main reason is that the owner or developer has failed to keep up payments to lenders.
We often see properties in receivership. Recently, three blocks of flats, ranging from 57 to just six apartments, presented an opportunity for the astute investor.
Dumping
Sometimes, companies sell many properties at once, not necessarily in receivership but wanting to bring cash onto the balance sheet. These moments present opportunities. The last time I saw this in Liverpool was at the end of 2022. It's happening again.
These transactions carry risk, but as long as you understand it and take appropriate risk-reducing measures, then 'dumping' presents a fantastic opportunity.
Some Distressed Assets clients reading this blog are beneficiaries of dumping.
Contractors - Beware the Sharks
One of my memorable purchases was a block of flats initially bought by an investor in London. He instructed a contractor to refurbish it but ran out of money. He raised more finance and then instructed another contractor, and it happened again. We bought it at auction and still own it.
I was reminded of this story yesterday when I viewed a property that was 80% completed. No one bails out of a project at the 80% point unless some disaster has happened. In most cases, contractors either rip off naive investors or have failed to calculate the refurbishment costs. Yet again, this is an opportunity for an astute investor.
If you wish to learn more about buying properties from receivers and seizing opportunities, then join us on Saturday 6th July 2024 in London, or LIVE Online.
The LIVE online initiative has been incredible and shows the reach of the internet. Recent workshops have seen people from all over the UK and Ireland as well as overseas, notably the Middle East and Africa.
The next one is a first - investors in the US and Australia - it will be either an early one, or late on for them.
Book Now - Tickets for the in-person event or LIVE ONLINE can purchased here:
Property Investment and Sourcing 1 DAY Intensive Workshop | Distressed Assets
See you on the 6th July 2024
The in-person event has limited seats available
This is a day that will change your view of property investment and possibly your life—buy wholesale, not retail! |