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Sunday 29 March 2009
The buy to let market might seem to be in decay as rents and house prices drop, but professional investors who have enough capital believe that there are plenty opportunities on the market.
Some property agents offer blocks of flats for private investors with a 40-50% discount. Some properties are providing gross rental yields of 10%. In London, yields vary from 5 to 8%, while in some peripheral areas they reach up to 10.5%. Many agents claim that experienced investors tend to re-enter the market, mainly because the profit from other assets is extremely low. Also, low property prices mean that once the prices start to grow, investors will be left with significant capital. The cheapest deals are offered for new developments, which can be explained by the fact that a lot of deals agreed earlier tend to collapse. Buyers agree to lose their deposits and break the deals as they cannot find proper financing. Professional investors, in their turn, can afford themselves to buy the whole block of flats, which is often offered by developers with a 50% discount simply to recall the cash back into their businesses.
Although such fire deals are not endless, there are still some opportunities for professional investors. The best deals are expected to stay on the market for the next 3-6 months. It should be noted that such deals are often a matter of days, because there were cases when investors purchased 50-150 properties at once.
Also, investors are looking for properties that are already being let as the rental income has decreased and many tenants, as well as inexperienced landlords are trapped in payment arrears.
Private investors who do not have enough capital might pay close attention to various funds that are emerging in London and other cities. |
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