There was a deal done only last Friday, post auction, where the investor bagged a great bargain. It was a detached freehold property, which had planning to convert into two flats. It was supposed to be sold at the auction, but ended up unsold at the end of the auction.
This investor focuses on unsold lots; a good place to source deals, as the competition has now been filtered out. The strategy is to focus on sellers who actually are desperate to sell and do not have a choice in the matter, and who have just missed the boat.
This is how we bought a property which was advertised initially by the agent at £2.3M. We purchased it post auction for £1.2M. Admittedly, the winds were in our sail for this deal. It was just after lockdown was announced, and there were no visits allowed to the property and therefore no valuations either. It didn’t appear the sellers were desperate to sell but for some reason they wanted it off their books, probably as an accounting exercise, which fuels the bonus for the current CEO.
This investor is a little bit of a detective and reminds me a little of the character Columbo. He managed to research the current owner and discovered he had bought a larger site which this house was attached too, and part of, just a few months ago. It appeared there was a bridging loan taken very recently to a Luxemburg Company, and therefore, the seller placed the property in auction in order to release some equity, to take off the pressure created by the bridging loan.
It seems the concentration and the energy of the seller was focused on the larger site attached to the original deal he had done. It seems this is where they will be getting planning and making the big returns. This house was collateral to the deal, and was excess weight; therefore, perhaps the focus was not kept on the smaller residential element of the deal, to the advantage of our investor.
The property, only next door to this one, sold for £575K just a few months ago. That property was about half the size of this one.
This property was closed for £475K, and also has the added benefit of permission to convert it to two flats. Judging from the pictures there exists the possibility to further convert the pitched roof to add another floor.
Properties in this area of Surrey go for about £600 per sq. ft., this deal was done at £190; about 32% of the value. Therefore, a blinding deal, even allowing for any works required.