A Huge Discount to Market Value - Why?
Friday 16th May 2025
A Huge Discount to Market Value - Why?
Last weekend we held a very successful Distressed Assets workshop in London, where I had the privilege of meeting incredible people, all eager to enhance their lives and deepen their understanding of property auctions and genuine off-market deals.
The event brought together participants from the UK, Ireland, Europe, Nigeria, South Africa, India, Pakistan, Hong Kong and Dubai, with many joining LIVE ONLINE. Remarkably, just three days after the workshop, an online attendee from Sweden was in my car, viewing auction properties. That’s what Tony Robbins would call taking massive action and consequently, this person will be hugely successful.
This week, we contacted the tenant of a property that had been overlooked at a recent auction. During the workshop, I explained the reasons behind its lack of interest, but to me, it represented a significant opportunity, as it did for one of my mentees based in London.
We secured the freehold property for a substantial discount compared to a similar property just a few doors away, which was listed on Rightmove at 71% more. Another comparable property sold for 50% higher in 2022, and today it would match the 71% example. A quick check using a well-known subscription-based property resource indicated that we acquired this asset with a substantial discount.
If you've read my book, you know I'm not the biggest fan of online automated valuation tools and take the ‘valuations’ with a pinch of salt. However, I do appreciate the convenience of having all the relevant data collected in one place.
The Key Takeaway
The value achievable in the world of distressed assets can be remarkable if you know what to look for. In this instance, many passed on the opportunity due to a lack of knowledge, experience, or perhaps confidence. The property does have its challenges, but they’re easily resolved, and we’re even in the process of applying for a free grant that may cover some improvements. What's not to like about free money?
From a rental perspective, the return is well into double digits at market rates. For my mentee, this marks a fantastic first acquisition. As I often say, you can't live on equity. There’s little value in sitting in front of a laptop on a Saturday night counting equity when bills start arriving on Monday morning. You need income for school or nursery fees, living expenses, holidays etc..
Net rental yields are crucial, the higher, the better, and every acquisition must reflect that. The average gross rental yield in the Northwest of England is 7.2% (Rightmove), so to be ahead of the game, you need to target at least 10%, ideally much more. Anything less, and you’re likely overpaying and in terms of opportunity cost, making a loss.
Buy wholesale, not retail
Enjoy the upcoming weekend.
Property Sourcing Liverpool
Property Auctions
The Distressed Assets Investors Club
