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Property investors may be switching strategies

Many property investors have based their business on purchasing residential and commercial property for rent, and then benefiting from capital growth as the value of their properties increases over time. However, a February 2018 guest blog on notes that some could be changing their strategy to concentrate on refurbishment projects.

During the second quarter of 2017, for the first time since 2015, refurbishment was the main reason for requiring bridging finance according to the Bridging Trends report. While the demand for refurbishment loans dropped a little in the rest of the year, it still represented a high proportion of bridging loans.

These figures indicate that property developers are shifting to a strategy of refurbishing existing buildings using bridging loans. The refurbishments add value to the property, which can be sold at a profit and the bridging loan repaid. There have always been developers operating this business model, but the high number of refurbishment bridging loans indicate that more property investors are now adopting this tactic.

Interest is charged on bridging loans only while they remain repaid. If investors can complete refurbishment work quickly and soon find a buyer, it is possible a good profit can be made.

Some investors put their properties for sale at auctions. That way, even if the property is sold at below market levels, property auctions sales must be completed within 28 days, so the investors can receive their money from the sale quickly and move on to their next refurbishment project.

A bridging loan broker can find a suitable bridging finance lender to enable investors to finance property renovation.