27/09/2026
The Contrarian Property Investor
I once bought a small block of flats in Liverpool for £20,000, at an Allsop auction in London. Using UK consumer price inflation and taking 2008 as the starting point, that’s the equivalent of about £33,900 today.
The story of how I came to look for opportunities like that begins in Cyprus, in 2008.
I was a property developer there when the credit crunch arrived. Lending dried up. Buyers walked away. The market we had been working in changed completely. At the time, it felt as though the whole world had collapsed.
That experience was really where my book started. It was also where we began thinking seriously about distressed assets, and about what happens when owners need to sell into a market where very few people want to buy.
Hello, I'm Dominic Farrell, and welcome to The Property Auctions Podcast.
Today I want to talk about the contrarian property investor. We've discussed avoiding the herd before. This time, I want to explain where that thinking came from for me, through a couple of purchases, and why I think it matters again today.
I don't expect the next few years to be on a par with 2008. That was an exceptional financial crisis, something I would describe as a generational event like the Wall Street Crash of 1929.
But I do believe there will be opportunities for people prepared to take a different view of particular properties. You don't need another global banking crisis for an owner to want out, or for a good asset to become available at an attractive price.
What being contrarian means
A contrarian investor is willing to disagree with the prevailing view when the evidence supports a different conclusion.
When everyone seems to be running for the hills, you are prepared to stop and look at what they are leaving behind. Sometimes you'll find that their concerns are justified. Sometimes the price has fallen enough to make a property worth investigating.
Warren Buffett expressed the idea in his 1986 letter to Berkshire Hathaway shareholders. He wrote about trying to 'be fearful when others are greedy and to be greedy only when others are fearful'.
That's easy to agree with when you're reading it at home. It becomes harder when the news is dreadful and you're considering putting your own money into something everyone is worried about.
There's comfort in having other people agree with you. If everyone around you is buying, joining them can feel sensible, even when prices have become difficult to justify. When they're selling, you can feel uncomfortable buying at a price that gives you much more room.
The way through that, for me, is to understand the individual property well enough to explain why I want it. If the only explanation is that everyone else hates it, I haven't done enough work.
You can also agree that the economic outlook is difficult and still find a purchase worth making. A seller may need a decision much sooner than conditions are likely to improve. A buyer who can take a longer view may have a useful opening. The two people are working to different timescales.
The Liverpool purchases
That brings me back to the Allsop auction in London and that small Liverpool block at £20,000.
It gives you some idea of the opportunities that became available around that period. Looking back now, the price sounds extraordinary. At the time, you were making decisions with the uncertainty of the financial crisis around you.
And there were other purchases. For example, we bought a block of flats and a plot of land in the Sefton Park area of Liverpool that had gone into receivership. The developer sadly could no longer continue to operate. I negotiated with the receiver, who was based in Manchester, and my offer was accepted at the 3rd attempt.
We still hold that block today. The income has been tremendous, and the value has gone up several times over.
That is a much more useful example than simply saying you should buy when people are frightened. It shows what can happen when you acquire a property at a favourable price and continue to own it over many years.
When fewer buyers are competing, you may have more scope to negotiate. And the price you agree stays with that investment. If you acquire the same rental income for less money, the numbers improve from Day 1, assuming the other costs remain the same. That is why I pay so much attention to the purchase. A good decision at that stage can continue to benefit you for a very long time.
I also think you have to be fair about hindsight. We know how that investment turned out. At the time, we couldn't look forward and see today's income or today's value.
You hear people talk about the opportunities in 2008, 2009, 2010, 2011 and 2012 as though the decisions were obvious. They weren't. Buying the right property mattered, and so did being able to hold it. Someone who ran out of cash before conditions improved could have had a very different experience.
That's one of the lessons I take from that period. Your finances have to allow your investment enough time to work.
Having a reason to disagree
Howard Marks, the investor and cofounder of Oaktree, put it very clearly: 'You can't take the same actions as everyone else and expect to outperform.'
He also makes the point that departing from the crowd can produce worse results if your judgement is wrong. That is worth remembering alongside the quotation.
For a disciplined property investor, the useful question is what you've understood about this particular purchase. Perhaps you've established the actual cost of a refurbishment that has frightened other buyers. Perhaps the legal position is clearer once a solicitor has examined it. Perhaps your ability to complete fits the seller's circumstances.
Those are reasons you can investigate. You can check documents and ask questions. You can also discover that your first impression was wrong.
A receiver selling a building does not, by itself, tell you that the building is cheap. You still need to establish its value and understand what you're taking on. The seller's circumstances may create the opportunity, the property and the price have to justify the purchase.
I'd want to know what could prevent the plan from working. If the answer is a major refurb or renovation, can I fund it? If borrowing is needed, is the finance actually available? If a sale or refinance takes longer, how long can I carry the costs? Those questions make it easier to judge whether the opportunity works.
Why I am looking again now
So why bring this up now? Because I think the coming years could offer some very worthwhile opportunities for astute investors, even without anything approaching the scale of 2008.
The current figures show why broad statements about the property market aren't enough. Rightmove's September report puts average new seller asking prices 0.8% below a year earlier, although they rose 0.7% during the month.
Meanwhile, the Office for National Statistics estimates that average UK private rents rose 3.8% in the year to August.
These are different measures, covering different markets. Asking prices tell you what sellers are seeking. They don't tell you what a particular house will sell for, and a national rent figure won't tell you what a tenant can afford in your street.
But softer asking prices alongside rising rents give me a reason to look more closely. My view is that some individual purchases could offer attractive income for the money required to acquire them.
I've recently written about reconsidering leasehold flats, including a purchase I'm working on where my figures show a projected net yield of 37%. That's a projection, and it depends on the income and costs working out as expected.
With a flat, the lease, service charges and potential major works can make an enormous difference. I want those understood before allowing an impressive percentage to influence the decision.
The broader point is that I'm prepared to revisit properties I might previously have passed over. As the price or circumstances change, the decision can change as well.
Putting the idea into practice
If you want to approach the market this way, start with an area and a type of property you can understand properly. Familiarity helps you recognise when something deserves attention.
Work out the full amount you'll have committed by the time the property is ready to earn. Include the purchase, the transaction costs and any work. Then calculate the income after realistic running costs, and examine what financing and tax leave for you net.
Allow for an empty period or a bill arriving at an inconvenient time. If the purchase needs every assumption to work perfectly, I would question whether the price gives you enough room.
AI can help organise the research and identify questions to investigate. We've covered that in earlier episodes. I use it to help with the research, alongside the legal advice, inspections and other professional input the purchase needs.
There is also a human side to this. Owners sell for all sorts of reasons. You can respect their circumstances and still negotiate a purchase that works for you. Being straightforward about what you can pay and when you can complete is useful to both sides.
You won't always agree a deal. That is part of it. Having a different view doesn't mean you must act on every property you investigate.
When I think back to Cyprus in 2008, I remember how suddenly things changed. That experience led me to look much more closely at distressed assets, and eventually to write about what I had learned.
The Liverpool purchases showed me what could come from that approach. The Sefton Park block is still part of our portfolio today.
I believe there will be further opportunities over the coming years for investors who understand what they are buying and have the means to see it through. The results will depend on the decisions they make, and there will be purchases that don't work out.
So when the next discouraging property headline arrives, have a look at the actual opportunities in front of you. Find out what is being sold, why it's available and whether the price makes sense. You may reach a different conclusion from the people around you.
Thanks for listening to The Property Auctions Podcast. I'm Dominic Farrell.
For dates of my next Property Auctions and Distressed Assets workshop in London and Live Online take a look at our website at distressedassets.co.uk
Bye for now.
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