You may be reading this at work on Monday morning thinking there must be any easier way of making a living.
I can tell you there is. I secured my financial freedom at the ripe old age of 37. It didn’t happen over night though. A decade of hard work aided by a housing boom eventually secured me the financial FREEDOM that I so desperately wanted. How did I achieve this?
Landlords make their money when they buy, not necessarily when they sell. That is to say that a landlord’s secret to making a fast and substantial profit is by buying their residential investment property at below what would generally be considered Market Value.
A landlord should therefore always be an opportunist by instinct. When looking for a new investment property they should look to view many properties before they are likely to secure the right residential investment property at the right price.
Opportunities of the credit crunch
Like any so called financial crisis one person’s misfortune is likely to be somebody else’s golden step up.
I myself have bought several properties from motivated sellers:
executors selling deceased persons property
one individual who’s business was ‘going down the pan’
a repossession
a husband selling after a divorce
a man who needed to move back to Scotland
All these have turned out to be great property buying opportunities.
In the press I have recently seen several stories featuring firms who specialise in buying properties from distressed sellers often before they are repossessed or because the owner needs the money to pay off other debts. These companies often offer to let the property to the former owner once they take possession. I examine below some of the techniques involved in securing below market property from motivated sellers.
Techniques for landlords buying from motivated sellers
The techniques involved in highlighting motivated sellers are not difficult but do involve some work by the landlord. In essence the more work a landlord puts in, the better the opportunity they are likely to uncover.
A motivated seller is a property owner who needs to sell fast and therefore are likely to be prepared to sell their property below it’s true value. Motivated sellers are likely to want to sell for a number of reasons; some of the common ones are as follows:
The owner has died and the residential property is sitting empty.
The relatives or the executor is just looking to get rid
The owner has some financial problems and therefore needs to sell to raise funds or pay off a debt
The owner needs to move quickly because they are relying on the funds to secure another property
The owner just wants rid so that they can move on – they are emigrating or involved in a relationship break up
The secret for any landlord looking for a motivated seller is that they need to get as close to the sellers to find out what motivates them so that they can arrange the deal that best suites their circumstances.
A motivated seller will often become more motivated to sell the longer the sale process has been going on for and also at certain times of the year from December to February when the market is at its quietest and buying interest the lowest.
How can a landlord locate these motivated sellers?
There are a number of ways a landlord can identify motivated sellers. This is where the greater the effort of the landlord to unearth a property investment bargain, the more chance they will be able to source one and the better the investment opportunity they will unearth will be:
1. leaflet drop- identify a target area for potential properties and then post leaflets advertising to buy property and rent them back to the owner who becomes your tenant.
2. estate agents- contact all the local estate agents in the area that you want to buy in and let them know that you are looking for bargains and that you are a potential cash buyer of residential investment property. Even if you just have a forward buying facility you should be able to flush out some bargains. Remember it is persistency that gets results – make it clear to agents that you want to buy now and that you as the landlord have the resources. This way you as a landlord should get the pick of the bargains.
3. advertise – landlords should look at advertising in the local press, a small add in one of these should generate some potential leads
4. networking – tell as many people as you know about what you do and that you will look at any property at the right price – the message soon gets around
5. newsagent windows – a card in the window of a local newsagent is likely to be seen by a surprising number of people
How do I negotiate a bargain?
All this is likely to generate considerable potential opportunities that you as the landlord will need to follow up. Where off market situations are involved, i.e. ones where the property is not on the market through an estate agent; always look to ascertain what the circumstances are of the buyer before mentioning a price. Remember, the old adage ‘he who mentions the price looses’. Always start low with any negotiations and then work up, it is virtually impossible to get the best deal the other way round.
The rest is up to you as the landlord to use your negotiating skills to secure a property investment bargain to start or add to your buy-to-let investment portfolio.
I have no problem with sourcing a property bargain. I do however know of an increasing number of companies that specialise in buying properties from distressed sellers. The sellers are often vulnerable people in difficult emotional, economic situations and not always the ’sharpest knives in the block’. The companies that specialise in these acquisitions often exploit the frailties of these unfortunate individuals. I have the financial muscle and the experience to do this but one reason I will never be a property billionaire is that I don’t want be a property vulture. I would always encourage landlords to do all they can to be a property hawk and hunt down a residential investment bargain.
I still think it’s possible for a landlord with hard work to be able to; source buy-to-let investment bargains, build a property portfolio, secure their financial freedom and still to be able to sleep at night.
Chris Horne is an experienced landlord and property professional who now runs the website Property Hawk, a site aimed directly at UK Landlords. The site incorporates free property management software that enables landlords to track all their financial data relating to their portfolio. It allows users to print tenancy agreements and other forms FREE FOREVER. The site generates a real time rent book for each property as well as calculating a landlords tax liabilty. The service is totally free to use at propertyhawk.co.uk
Article Source: http://EzineArticles.com/?expert=Chris_Horne
This article is based on predictions for the UK property market in 2009. Its goal is to help property investors who invest in the UK to have a better understanding of what is happening in the property market so that they can make educated decisions on where and how to invest.
Property Prices in the UK
Prices will most likely continue to fall throughout 2009. If your investment strategy has previously been based around capital growth, then you seriously need to rethink. Property investment strategies that are based mainly around capital growth will most likely struggle over the next few years. The financial market is very unstable at the moment, so if you were planning on using the equity in your properties as money to live on, then you are in for some lean times ahead.
That said, if you buy now you can pick up bargains that are significantly below market value (BMV) and therefore you will be locking in great capital growth for yourself for the future.
Keep in mind that not all areas and all types of property are dropping in price at the same rate. You need to know your own investment area because you may well be in an area where prices are not dropping at anywhere near the national average or in an area where certain types of properties are actually holding their value reasonably well.
Rental Yields and Values
This is a difficult one because on the one hand, in many areas rents are going up and the demand is high, because many people can either not afford to buy or don’t want to buy in the current economic climate. Yet on the other hand, there has been a big increase in the amount of homeowners who have not been able to sell their own property and who have decided to rent it out instead. This has meant that in certain areas there has been an oversupply of rental properties to the market and as a result rental prices have remained stagnant or even been forced down. These trends will probably continue in 2009 and the majority of areas will probably see an increase in rental yield, while some may not see any increase at all.
The Problem with Financing Your Property Investments
Even though interest rates have being cut, lenders are still being selective about passing on any cuts, and even when they do pass on cuts, they are being very picky about whom they pass them on to. 2009 will probably be a year when the people the banks love, will be able to prosper and the people that don’t quite fit the banks profile and criteria will struggle, unless they can find away of getting around their funding problems. Investors that are having difficulty getting funding will need to think laterally and consider doing things like joint ventures with investors that the banks do like to lend to.
Many banks are currently viewing full-time professional property investors with large portfolios as high risk and as a result are reluctant to work with them. Hence, it is sometimes the full-time investor that needs to seek out the smaller investor to work with as well as vice versa.
Which Property Investors Struggled and Which Ones Thrived in 2008?
Property investors that relied on releasing equity and capital appreciation as a main part of their strategy have struggled. Those that coupled this strategy with buying new build or off-plan properties are currently going through a desperate time, if they are still investing at all.
Cash or equity rich investors that have been involved in property investing for a number of years probably did well through 2008. Even though the value of their pre-2008 portfolio might have dropped, their ability to still buy property at hugely discounted prices will probably have made up for the shortfall.
Property investors that historically focus on monthly positive cash flow producing properties, which where bought at below market value, are the ones that currently have the biggest smile on their face. Many of these investors are now looking at better rental yields than they have had for years. They are looking forward to another year of potentially increasing the rents they charge their tenants and increasing their rental yield at the same time.
What Types of Property Investments to Focus on in 2009.
It’s time to get back to the basics of buying BMV cash flowing properties in the right areas. Now is always a good time to buy property if you learn the fundamentals of how to buy cash flow positive properties, in the right areas, at the right price.
Don’t be afraid. There are even new builds that have now legitimately been reduced in price so much, that the figures actually stack up. Auctions are also becoming places where, just like the good old days, you can once again pick up bargains.
Don’t get burnt as an investor buying property in 2009. Visit the investment property guru website to pick up your property investing guide, and make 2009 your most successful year ever.
Article Source: http://EzineArticles.com/?expert=Carlton_Johnson
