How to Buy Repossessed Property Successfully

Buying UK repossessed property has become increasingly popular in the last decade. The number of properties being repossessed has continued to rise and shows no signs of stopping in the near future.

The increase in the price of property and the price of living has meant that many homeowners are struggling to meet their financial commitments.

How can you as a property investor profit from this situation and help homeowners at the same time? This article will help you to understand the ins and outs of how to make money from repossessed homes.

Advantages & Disadvantages of Buying Repossessed Property

Here are just a few advantages and disadvantages of buying repossessed property.

Advantages

• You can sometimes pick up properties very cheaply
• They are some times ideal candidates for sale and rent backs. Some altruistic property investors actually use sale and rent backs as a way to be a good Samaritan and help vendors stay in their own homes.
• If you are buying it directly from a vendor, you are generally in the driving seat with the sale because they will probably need to sell quickly and therefore will not have time to go down the normal sale through an estate agent route.

Disadvantages

• If you are buying the repossessed property directly from the vendor, you will need to take steps to insure that they are solvent at the time of purchase, otherwise you could end up having to pay fees and the difference between the price you paid for the property and the full market value, to any trustees that come chasing you in the future.
• Because the vendor would probably have been experiencing financial hardship for sometime, the condition of some properties might be poor. To bring them up to standard, significant renovation and refurbishment might be required. (However, thankfully there are many more repossessed properties that are maintained well.)
• Buying Repossessed properties can sometimes lead to you being branded as someone who takes advantage of vulnerable people. You need to be prepared for friends and family to initially have a negative view of what you do for a living.

Where to buy Repossessed Property

Below I have listed a few of the main places that today's property investor tends to find repossessed property.

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1. Auctions - Historically this has been (and still is) the place to buy property that has been repossessed.
2. Lead Selling Companies - There has been an increase in repossession lead selling companies or individuals. If you go on to any main property investing forum in the UK and type in "repossessions" as your search term in their search box you will probably come up with a bunch of companies advertising leads for sale.
3. Your Own Marketing - If you do leaflet dropping or adverts in the newspaper, this should bring you some decent repossession leads. People that are at the end of their tether and have tried all the other routes will call the number on your leaflet, often as a last resort.

How to Stop Repossessions

Repossessions can be stop at almost anytime. This includes if a vendor calls you and says they are due in court the next day.

You would normally stop a repossession by using the N244 application from, what this form essentially does is it cancels an eviction warrant and generates an emergency court hearing.

If the N244 application form has been filled out well, then at the hearing it is often possible to suspend the possession order. At this stage the vendor maybe able to make an arrangement to pay the debts and any arrears or be given a realistic times scale to sell the property.

Where to Get More Information

There are some pitfalls that you need to make sure that you avoid when buying repossessed property, especially if you plan to do sale and rent backs. These deals can be great, but they can also be disastrous.

In our property investment guide we go into more depth about property repossessions and what you need to do to protect yourself and the property, so that you don’t have trustees or a legal team come knocking at your door trying to claim some of the property, because the person you bought it off has subsequently become bankrupt.

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