What's the catch??

Crashtogether

I've seen a Manchester city centre 2 bed apartment going to auction guide price £85,000 (not by order of mortgagees as far as I'm aware).

I've done some looking on the internet and similar apartments were going for £192,000 in Jan 2008 and down to £190,000 in March 2008. Rental income is pretty solid atm at £650 pcm.

I've ordered the legal info pack, to see if there are any gremlins lurking in the woodwork. But apart from that, can anybody offer any explanation why the guide price could be so low??

globalds

It could be this

kazwookie

Is the flat finished and all in good order?

Have you been for a look round?

Spoken to the neighbours?

Crashtogether

Yes flat is complete, think it was a new build a couple of years ago so won't have had many owners / tenants.

Going to have a look around hopefully early next week, and will try and speak to "local people" then.

Globalds - might be a daft question, but how would credit crunch be directly responsible?

mikthe20

The guide price is pretty meaningless - they just want the bidding to start at at least that. In this case I suspect the reserve price (ie. the minimum price at which the seller is willing to sell) is much higher than the guide. Seen auctions where guide is low but the house still doesn't sell because it didn't meet the (ridiculously high) reserve.

Still, with credit crunch and repossessions the time may well come when such as flat does sell for £85k or less so this could be a possibility if the seller is under pressure.

Trollfever

At £85k what is the yield after maintenance and other costs?

pennylane99

Property price drops 50%
Vanessa Lees asks why prices of an Ancoats development have dropped by half


http://www.propertyconfidential.com/index.asp?Sessionx=IpqiNw86KDbmNwB6IaqiNwA

Estate agent says..“ The reason for the massive drops in price is because most of them have been reposessed and remarketed to sell quickly. Artisan over charged on most of their units initially, as have City Lofts by a good 10%;-20%;. Anyone buying in Manchester should do some thorough research and consider buying resale properties where prices are usually much more realistic, and rental income more likely to cover mortgage costs. Our problem is the sheer number of Irish, foreign and Southern investors buying blind and believing all the developer hype. They have only themselves to blame for not using any of their instinct or intuitiion.”

pinkshoes

The clue will be in the words guide price, and by putting it very low, lots of people (like yourself) will think "ohhhhhhhhh that's cheap, I'm going to go to the auction and bid".

They will hope that one of you will have fallen in love with it, or perhaps researched what identical ones sold at in perhaps January 2008, so if the price keeps rising, so long as it stays a fair bit below the Jan 2008 price, you'll think you've got a bargain.

Crashtogether

intersting read pennylane99. Although that was in an area that needs redevelopment, whilst manchester city centre is already established! Feel sorry for those who bough off-plot!

Snooze

Crashtogether wrote: »

I've seen a Manchester city centre 2 bed apartment going to auction guide price £85,000 (not by order of mortgagees as far as I'm aware).

I've done some looking on the internet and similar apartments were going for £192,000 in Jan 2008 and down to £190,000 in March 2008. Rental income is pretty solid atm at £650 pcm.

I've ordered the legal info pack, to see if there are any gremlins lurking in the woodwork. But apart from that, can anybody offer any explanation why the guide price could be so low??

It's the same story in every city. Over the last 5 years everyone and their brother has been building these city centre "apartments" :rolleyes: because "prices always go up" :rolleyes: and "it'll be the next 'in thing'" :rolleyes: but the reality is that no-one wants to live in 250ft2 of space where the kitchen, lounge and bedroom is all the same room. They couldn't shift them when the market was at its peak so they haven't got a hope in hell of flogging them now and hence why you're seeing HUMUNGOUS price drops because the developers are mortgaged up to their eyeballs and having no income coming in, neither from sales nor rent.

If you're thinking of buying one to rent out and make a profit, forget it. This is the exact reason why they're up for sale now, so unless you've some crazy desire to live in what is basically a box room with a sink, bog and shower cubicle partioned off in the corner, forget the idea right now!!

Rob

Nomad25

Maybe it's a typo and should read £185.?