The whole concept of investing in below market value properties came about due to lack of demand from NORMAL buyers. Lack of demand for property resulted in the property investment model changing. The old model pre-2007 was:
Put down 10-15% deposit, buy, remortgage and then buy more!
It was great. Then the credit crunch hit in 2007 and the model was:
Get 25% discount, buy, then buy, then buy more, then buy, buy ,buy, BUY!
No longer was the investor having to find 25% deposits as this could be factored in due the hard bargaining that had gone on. Awesome.
However I think the end is nearing. 2010 will result in a new model. Now I do not know what this model will be but I suspect it will be a hybrid of the two models above and will last only a year.
The model will be:
Put down 10-15% deposit, get a 20% discount, buy, remortgage and buy more!
So there will need to be some cash input from the investor. The reason being is demand for property has picked up. Down valuations are no longer a risk for us as surveyors are optimistic now.
If an 80% or 85% buy to let mortgage comes out then you will be able to do no money down but until then there will be a cash input needed I reckon. If you get something 25% BMV I would jump at it!
So my advice to you is go out there and raise some cash. I think you can get loans, credit cards and overdrafts. I did it back in 2000 to get where I am today. Unfortunately this method is no longer applicable to me as I would want to raise at least a million which is not possible this method. But if you need a quick £50k (nifty fifty!) then going to your high street could be perfect. £50k can buy you 5 to 8 properties.
Then you will be able to capture all the top deals that are around 20% BMV.
If you want to speak to one of my team please call 0870 990 3205.
Posted on: 16th Dec 2009