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Stagnant house prices and what to offer??

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Hi all,

I am getting my ducks in a row with regards to buying a BRR. One thing that I have noticed with some of the areas I have been looking at is that some properties have not increased an awful lot in value in over a number of years. One property I have looked at sold for £75k in 2007, the agent has listed it for £100k however it is a renovation job and I dont think I would pay more than £80k max, some of the houses in similar condition on the same road have even sold for less than the £75k 2007 price, one sold 12 months ago for £60k (obviously not sure on its condition) . Lots of houses being listed for upwards of £100k however not much seems to have sold at that price recently.

These houses are in an area just outside Nottingham city centre, good transport links etc and lots of investment ploughing into the city.

Questions are:

Is there certain areas that only ever marginally increase in capital value and actually your best bet in these areas is to focus on rental yield? Current rental for a 2 bed in this location is £550 - £600 per month for a well presented option.

Its it possible that they are actually worth more, however due to the recent market over the last 6 months and current situation sellers are yet to achieve those prices? 

in a challenged market, what is a fair % discount to achieve on property, obviously I know as much as possible however sure its a fine line between over paying and on the flip side missing out on something because you went in far too low.

 

Its just seems that the houses are being listed at what the estate agents see the current value at, but not on sales that are listed on land registry.

 

Naturally I am very twitchy about over paying in this climate...and of course if I am investing I want to get the best return I can over the next 5 year through BRR.

 

Thanks 

 

 

 

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I have a grand total of 2 BTL's so am no expert but what you said above resonated with me. 

I live in Pembrokeshire and have just completed on one property there with another (probably) going through. I have noticed that the market is very stagnant here with some property on the market for similar or less than sold for 10 years ago. Obviously these are properties without a seaside location, as a Seaview equals rocketing growth for holiday lets and retirees with deep pockets. 

This hasn't put us off as we are looking for income in the short to medium term. By my calculations, ROI is 10 to 14% on many properties. Therefore what we are doing, albeit with caution, is buying property that seems to be in demand by locals. The thinking is that if buyers like it, we will have our exit strategy covered in 20+ years.

I'll check back in 20 years to let you know if it was successful. Good luck with Nottingham - I lived close by for many, non property investing years. A popular city, with improving transport links and 2 good universities. 

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A house's value is what someone will pay for it. Estate agents generally have a good over view of the market but even they can vary significantly in their appraisal of the value of a property. Add to that the unknown of the vendor's personal circumstances and level of desire to sell and you can see it is tricky.

Land Registry figures do not give the whole story and should be used as a tool not a definitive guide book.

I don't think you can apply a fomula to the discount you can offer, you just have to make an offer that would work for you and see if it works for the vendor.

Some vendors will not sell unless they get what they need / want (possibly a forward purchase or mortgage being the driver) others need to sell at any cost (moving for work or probate property etc).

It is always a good idea to back your offer up with reasons - ie the work needing doing, other sales etc but in the end it comes down to what the vendor will accept.

in the current climate there may not be many houses coming onto the market but those that do may have motivated vendors.

Good luck :) 

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Yeah its a tough one and also at what point to buy in this cycle, is it going to last 3 months, will it be a slower market for 2020 in total, who knows right now

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5 hours ago, ross w said:

The banks have stopped lending above 60% LTV. 

From what I can gather, this seems to be a temporary response to the lockdown, rather than a long-term policy (although, admittedly, nobody really knows how long this madness will go on for). Typically, higher LTV deals (65%+) need physical valuations. These, of course, need valuers. Valuers are not deemed 'key workers', so the vast majority can't carry out the valuation. 

From the perspective of risk analysis, anything <60% and most lenders have automated systems they trust.

I think Barclays have also suggested it is to ease the flow of applications on an over-exerted current workforce of underwriters. They don't have the staff to physically approve applications.

There is also the mortgage holiday to contend with, so that all of the applications for that recourse need processing.

I'd imagine, once the valuers can return to work and they have a healthier and more present workforce, the 65%+ LTV offers will return. Hopefully.

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I could afford to put in 40% I just wouldn’t want it stuck in there for a long period so wouldn’t be a problem if I could pull a % out in the future 

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