….a guide to buying rental property at auction.
As more and more people turn to property as a key feature within their long term investment plans, ‘buying at auction’ is becoming increasingly popular.
Encouraged by TV programmes such as ‘Homes Under The Hammer’, first time property developers and buy to let landlords are turning to auction houses in an attempt to secure properties that provide a good long term rental income.
The obvious appeal for buyers is to ‘bag a bargain’ from amongst the very wide range of properties that go ‘under the gavel’ at various auctions throughout the UK.
But to maximise chances of success, would-be investors need to be prepared and follow a few basic rules before plunging into an auction purchase.
Property specialist Mark Stephenson who owns the Belvoir lettings and property management office York, Thirsk, & Selby, says: ”One of the main benefits of buying an investment property at auction is that the process is very quick as both the purchaser and the seller agree to complete the transaction in a few weeks. There are no ‘chains’ involved.
“It is also possible to buy a property with a tenant already in place – providing an instant income as soon as the purchase is completed.”
Before proceeding, Mark’s advice is: “You should never buy a property that has not been researched thoroughly. I would always advise viewing a property and having a professional survey done prior to the sale.
“The desirability and tenant appeal of the area it is located in, plus any obvious repair or maintenance issues required to bring the property up to a rentable standard, should always be taken into account before you start bidding.”
Before attending auction, buyers should do their homework to find the most appropriate national or regional auctioneers offering the kind of property they are interested in.
Most auction houses can be found via a quick internet search and many will market upcoming lots on property portals such as Rightmove and Zoopla. Local lettings specialists such as Belvoir will also be able to offer advice and will often know of forthcoming auction dates and venues.
They will also be able to provide an objective, professional opinion on the area, the street, the type of tenants that would be suitable and the anticipated rental levels that could be achieved.
Mark adds: “We are always happy to advise landlords on potentially sound property investments – whether acquired from auction, or other sources.
“At auction it is important that potential buyers have their finances sorted out in advance. They also need to take into account any costs incurred on searches or legal enquiries before bidding.
“One of the biggest challenges when buying at auction is to stay calm and not get carried away with the bidding process. By gathering in advance as much research and information as possible, you will be able to set your own limits for any lots you are interested in.”
Belvoir recommends the following at a glance guide for anyone looking to buy at auction:
- Research the local market
- Budget for renovation costs
- View the property and have a professional survey carried out in advance
- Set a realistic budget – and stick to it
- Find out what ‘rental return’ the property could achieve
- Visit an auction in advance to observe and understanding proceedings before bidding
- Arrive in plenty of time to assess the competition
- Stay calmTry national as well as local auctions
- Make sure finances are in place prior to auction day Remember that you will have solicitor and surveyor fees, possibly stamp duty. plus the auctioneer’s fee and the cost of any repair work that may be needed
- Get advice from an independent lettings or property specialist
- Bid beyond the limit you have set for yourself
- Buy a property you have not researched
- Enter the bidding process too early – it could push up the price
- Get emotionally involved Bid in overly large increments
Dorian Gonsalves, Chief Executive Officer of Belvoir, adds: “All current trends suggest that there will be a growing number of people considering property as a key part of their investment strategy this year.
“Throughout our national network of over 160 offices, we have local experts who specialise in offering a full professional service to existing landlords and investors – many of whom started small and have gone on to build sizeable property assets.
“We can also pass on our depth of knowledge and experience to anyone entering the sector for the first time. Just contact your local Belvoir office for an initial, no obligation discussion.”