Cashing-in on unlikely investment properties

Faced with a plethora of investment property choices, it's easy for an inexperienced investor to overlook a chance for a respectable return on investment that appears unpromising at first sight. An example of a 'hidden' opportunity would be a property that's been on the market for some time. If it is structurally sound and would benefit from refurbishment, it could offer good prospects of increased value and rental income after completion of works.

So the old saying 'one person's difficulty is another's opportunity' is true for the property investor when a vendor needs early completion. You, the investor, are in a prime position to purchase at an advantageous price, the basis of the deal being a purchase price under market value in exchange for early completion.

If you've got the refurbishment budget right, the profit potential is worthwhile. So where's the catch? Clearly a completion promise must be kept, which might seem problematic. However, The Money Centre has a solution. By arranging a pre-agreed line of credit via The Money Centre, a Forward Buying Facility allows you to make an offer at less than market value based on a firm promise of early completion. The criterion is track record. Typically, a successful applicant has at least three years' experience and three or more investment properties.

Here's how it works - the following case study is a real one:

• Property on the market for £365,000+;
• The vendor was leaving the country;
• The property would benefit from refurbishment;
• The original sale fell through: undue delay from the highest bidder in a tender;
• Our client could proceed quickly, so negotiated a good price;
• The property purchase price was £335,000;
• The estimated refurbishment cost was £40,000 - getting this right is crucial;
• The purchaser's estimate of the post-refurbishment value was £550,000, yielding a potential gain of £175,000;
• The surveyor agreed with the projected value;
• The Money Centre was able to calculate the maximum borrowing based on projected future rent as opposed to current rentability;
• The client obtained a mortgage offer of £440,000, based on borrowing 80 per cent of end value of which 85 per cent was released to his solicitor for completion;
• All the client had to do to obtain the remainder was get the surveyor's confirmation that refurbishment was satisfactorily completed - a cheque for the remainder was then sent to him.

Case Study

Paul & Jenny Trumper went to a Money Centre workshop in Leeds. Whilst living in Kent they had a large number of properties in Stockton-on-Tees . As a result of the workshop The Money Centre put in place a £1m Forward Buying Facility. This was agreed just after the New Year and was well timed for our clients who were looking to purchase a number of new builds in Kent and take advantage of builders' discounts. They have been able to purchase seven properties with this facility.

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