Should the Buy-to-Let Investor Consider a PUP for His Investment Portfolio?
What kind of property should the buy-to-let investor consider for his investment portfolio? Should he only think about houses with a sound structure and excellent visual characteristics? Should he mull the possibility of purchasing and letting a PUP? Perhaps, he should only think about purchasing brand new or relatively new properties.
Well, the idea of purchasing newer properties is going to limit his potential for investment in obvious ways such as lack of availability and cost. Obviously, selecting properties that are in need of some fixing up is going to open some doors for the buy-to-let investor. In the first place, he will have some negotiating room on the purchase price since the property is in need of superficial repairs. Should the property be in need of more than superficial repairs, even more wiggle room exists for renegotiating a contract of sale.
However, when the buy-to-let investor considers the purchase of a PUP, he quite possibly limits his ability to find the proper financing even though he might very well have a strong negotiating position when it comes to the purchase price of the home. A PUP or previously underpinned property can be a bit of a challenge when it comes to locating a lender who is willing to take on the risk and challenge of financing such a property. While the previously underpinned property can bring a greatly reduced price for the buy-to-let investor, the danger of continuing structural damage can be risky at best.
Buy To Let Mortgages Down
Landlord Mortgages says the number of buy to let mortgages on the market has fallen by 55% since the start of the credit squeeze dropping from under 3500 to less than a 1000.
The Bank of Scotland withdrew part of its buy to let mortgage range due to the mounting pressure from the extra business because of lenders leaving the market.
Large amounts of mortgage applications also forced the Royal Bank of Scotland and Natwest to increase the minimum deposit landlords will be required to pay. This figure is now 25% of the property value as opposed to the 15% it used to be.
