A Masterclass In Value Property Investment – 7.9% or 15% Yield?
Thursday 22nd May 2025
A Masterclass In Value Property Investment – 7.9% or 15% Yield?
One of my Distressed Assets Investors Club mentees achieved remarkable success at auction this week. Her story is a powerful reminder that even a novice investor can outperform seasoned professionals with the right training and strategy.
Auction houses exist to serve sellers, aiming to achieve the highest possible price. I’ve worked closely with many auction professionals over the past 17 years, and while the real estate industry has its share of mediocrity, there are many truly exceptional individuals in this space.
We're Not Buying Homes, We're Buying Boxes
As buyers, however, our goal is the exact opposite; we want to pay as little as possible. That’s where strategy, patience, and experience make all the difference. Auctions are not about emotion; they are about logic, discipline, and calculated decision-making. We’re not buying homes, we’re acquiring income-generating assets, or boxes as I call them.
Boots On The Ground
I train my mentees through hands-on experience, not theory. We view properties together, evaluate them, and make informed decisions based on real-world insights and market data. There are no PowerPoint slides; just practical, boots-on-the-ground learning.
This mentee had missed out on a few opportunities in recent months, but she never overpaid, and that discipline is a win in itself. Success in property investment often means walking away.
At the most recent auction, we watched as many lots soared well beyond guide and reserve prices. A two-bedroom terrace in Liverpool needing work sold for £114,000, madness, unless you’re the seller. We had exited the bidding in the low £80,000s. While others chased postcodes, my mentee looked elsewhere and found true value.
She negotiated post-auction and secured a well-maintained, tenanted two-bedroom freehold house in a good area. Her very low offer of £55,000 was accepted at £60,000, well below the reserve.
In the military we would call this approach the Intelligence Preparation of the Battlefield - we actually set this deal up long before the auction and just waited for our moment - then attacked.
Both this property and the £114,000 terrace achieve the same market rent, £9,000 per annum. But let’s do the maths:
Yield on £60,000 purchase: 15%
Yield on £114,000 purchase (which requires works): 7.9%
That’s not just a win; it’s a masterclass in value investing. And the upside continues: the property likely qualifies for a potential grant and is expected to refinance very well.
As Warren Buffett famously said:
“Price is what you pay, value is what you get.”
Oh, and one more thing, my mentee isn’t a UK national. Yet she outplayed the locals at their own game.
Well done, S.
Property Sourcing Liverpool
Property Auctions
The Distressed Assets Investors Club
