For those directly affected, repossession is both devastating and a personal tragedy.
But for an investor it presents an opportunity to invest near the bottom of the property market cycle at prices substantially below market value with strong yields and positive cash flow.
Not so long ago the topic of conversation around many dinner tables was "Buy-to-Let" and the next property hotspot. Now it is firmly about distressed assets, particularly UK bank repossessed property. Everyone loves a bargain and those property investors with a contrarian view to the prevailing opinion are spotting significant long-term value and snapping up great deals.
One such route for these value investors is via auction. Many auction houses up and down the country are booming but buyers should be aware that not all repossessed properties are suitable investments and many come with a lot of legal and financial baggage.
Distressed Assets, a Liverpool-based company, makes offers on only a tiny proportion of the auction properties researched by its team of analysts, brokers and solicitors.
"From each catalogue of around 400 lots we offer only 2% of the auction properties to clients after the initial sift, desk research, financial analysis, viewings and legal due diligence. Our strict investment criteria rule out the remaining lots," said Dominic Farrell, director of Distressed Assets, at an investors’ seminar in Liverpool.
"Many novice investors compete to ‘win’ at auction with their eyes wide shut, naively hoping for the best, having completed little if any legal and financial due diligence. Some may not even understand that exchange of contracts takes place as the hammer hits the gavel and completion on the deal can be as short as 14 days."
Although property auctions are normally the preserve of professional investors, Farrell believes that companies like his can assist homebuyers and investors alike to compete on equal terms with the experts and benefit from significant discounts to open market value.
"Distressed Assets, with its team of analysts, solicitors and financial advisors, provides a bespoke service for investors making use of many years of collective experience in property investment and development, property law and financial services.
"For-time poor investors, this is the low risk route to secure a distressed asset for future wealth generation. This is the best time in decades to invest in property for the long-term."
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