UK BMV

Our 4 golden rules when buying UK property are:

Always secure your profits on entry of the purchase = Buy below market value

 Always have positive cashflow = Good yields and rental profits

 Use structured finance = Basic leverage from mortgage against purchase price

 Add value wherever possible = refurbishment, conversion, extension or planning etc.

Problems with Below Market Properties?

One of the big issues with buying BMV property in the UK is that lead generation companies tend to cover the all of the UK. This is great on the surface, but really what this means is that their leads come up anywhere and the only criteria used to market them are the fact that the vendor is willing to sell at a discount below the RICS valuation. Often the properties are not visited.

The RICS discount can be great, but the properties are pre-defined and they do not get chosen,; meaning they are unable to chose the area they operate in, which ultimately means they are unable to offer vetted rental options from long standing relationships.

Rentability is of the most important factors and should the property not be easily rentable it often boils down to the property being situated in a low rentable area or in a poor state of repair so refurbishment work has to occur before a decent rent/yield can be obtained, but this just dilutes the discount and makes a real discount much less than 20% after costs.

The second significant issue with UK below market property is the speed that the deals arise and the time the a potential buyer has to complete due diligence on the deal. Most companies or property sourcers have a database and when they are able to secure ‘a deal’ the lead is distributed to their database. This could be anywhere from 1000 people to 30,000 + investors. Regardless of the number of people the lead has been offered to, any potential buyer is up against many other buyers therefore drastically reducing the time to carry comprehensive due diligence. An investor runs the risk of passing up some good opportunities or risking money by going ahead in a pressurised form.

The risk in purchasing from a lead generation company is generally with the buyer not the vendor, therefore should problems arise with the valuation survey, down valuation, declined mortgage, no structured finance, or structural problems with property the buyer will not get a refund from the company.

To buy the best property investments in the UK the client will have to buy in an area that isn’t his home and is in an area that he doesn’t know too much about. This means that the client will have to find professional partners to rent their property, complete maintenance work and manage the property. This can be daunting and the property world is full of sharks so clients often only want to buy property in the area they know, close to them where they know the partners who can they trust. However, this severally limits the client to buying property in one area and not the best investment with the best discount, yield and potential growth.

Summary

With our extensive client relationships we are forever being asked to deliver below market value UK properties with genuine discounts and high yields. ABBi are very proud to say that we have been successful in securing a long pipeline of very attractive discounted properties throughout the UK.

Our services for this product covers everything from selecting, financing, structuring and letting of property investments and in particular distressed property investments on behalf of clients.