Reversionary property investing is where an investor buys the reversionary interest in someone else’s property, usually their home. This means they are buying the rights to own the property when the owner dies or leaves. This means the property reverts to the person that buys it.
By unlocking the value in their home in this way, they convert from owner to tenant. The tenant can stay in the property, possibly gaining a monthly income or cash lump sum. The current owner is granted a lease that lasts the rest of their life.
When an investor buys a property in this way, they are usually getting it at a discount of around 50% or more. This discount is in effect a single lump sum payment for the whole time it is anticipated the tenant will live in the property.
The tenants continue to live in the home as if it was their own. It is the responsibility of the tenant to maintain it.
One of the advantages of being an investor in this way is that the tenants are totally liable for all outgoings, maintenance and insurance. Whereas with buy to let property the landlord has lots more responsibility.
As soon as the property is vacated possession reverts to the investor.