When it comes to building a diversified property portfolio, many investors consider a reversionary property investment. Especially beneficial for the medium and long-term, a reversionary property is a good option as it offers a host of advantages. The fact that its unheard of for property prices to decline 50% below their current value makes investing in a reversionary property worth considering.
What is a reversionary property investment?
A reversionary property offers potentially high returns. Reversionary property investing refers to the process where an investor purchases the reversionary interest in another persons property, typically their home. This means they are purchasing the rights to own the property upon the death of the owner or when he vacates. In short, the property reverts to the buyer.
Types of reversionary properties
There are two types of reversionary properties: tenanted and untenanted. Tenanted is when the homeowner stays in the premises while untenanted is when the seller isnt residing in the house. In the second type, the buyer can choose to rent out the property.
How do you obtain a reversionary property?
In a reversionary property investment, you simply buy a residential property from a homeowner at a significantly discounted price usually around 50% of its value, depending on the sellers age and the propertys location and features. Payment can either be made through cash lump sum or in monthly instalments or a combination of both. When payment has been handed over, the homeowner continues to reside in the property as a