Remember how I told you about negative bubbles and how they blow up in your favour? If not refresh your memory by clicking here.

So why do negative bubbles exist?  There is really only one answer to this: We live in an imperfect market!

There are a limited supply of funds offered to us from the lenders so they have to make a choice – do they lend to:
1. An investor that is unaware of superior markets such as Hull in this example and lend to him to buy a lower yielding property in a more conventional and favoured area OR
2. To a private individual who wishes to buy a property in an area that is not considered ‘low value’ OR
3. To an investor or private individual that wishes to buy in a low value area

Usually lenders opt for either 1 or 2 and forget out about 3.  This is because they think their money is safe within a property that is valued more than a ‘low value’ property, typically £60,000.  This is very short-sighted and to be honest a plain stupid view of property lending.  But this is where people like me succeed.  There are some lenders, although be it a handful, lend on properties of ‘low value’.  If you buy low down enough then the only way is up!

Speak to your broker about low value lenders.  If your broker isn’t fluent in these type of lenders then speak to my broker, Liz Syms at Connect IFA.  If you still believe in high value properties then tomorrow I will show you how to profit from high value properties.

Ajay.

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Posted on: 26th February 2008 @ 14:21:00