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  • Distressed Assets Team

Fear and Greed Drive Markets - A Real World Example From Yesterday


Fear and greed are sentiments that drive markets, whether real estate, stocks and shares, Bitcoin, or any other market where profits (and losses) can be made by trading.

 

 

Understanding the psychology of buyers and sellers, whether they act as individuals or part of a herd, is a crucial skill in navigating the complex world of markets.

 

A small illustrative example is a property we acquired yesterday for a client.

 

Liverpool

 

In Liverpool, the sweet spot for a freehold house is £55,000 to £65,000 (sometimes as high as £70,000, depending on condition and location), and £65,000 to £75,000 for a three-bedroom house (£80,000 depending on condition and location).

 

The gross yield is always double digits. Anything less means you are overpaying in the current market or buying retail (estate agents) rather than wholesale (distressed assets).

 

This target property is a two-bedroom terrace with an EPC C, a new (ish) boiler (2020), a new kitchen, and a new consumer unit. It is a rock-steady buy-to-let with an excellent tenant, albeit with a below-market rent AST (under-rented).

 

In a previous auction, we offered £65,000, but the seller rejected it and wanted £70,000. We walked away and it did not sell.

 

In this auction, we offered £60,000 which was rejected, but the auction house passed on our comment that we would not bid at the live auction.

 

The seller then offered to sell at £62,000, which we accepted.

For fear of missing out ‘on the best possible’ price, the seller lost £3,000. Our patience meant we did not overpay.

 

The property ticks all of the boxes and the tenant is excellent with no arrears.

 

Double-digit Yields

 

The gross yield is 11.3% at the current rent, and at the market rent, it would be above 12%.

 

Distressed Assets Workshop 18th May 2024 -

Central London and LIVE online 

 

I will cover the psychological side of property investment at our Distressed Assets Workshop in Central London this coming Saturday. It will also be LIVE via Zoom.

 

The day runs from 10.00am to 5.00pm and then there is an opportunity to gather in the bar afterwards to continue the discussions.

 

Details can be found here:

 

 

Come and join us in person or online.

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