by Ed Firmin
Posted on Wednesday, October 7th, 2015 at 10:00
You may have watched TV shows such as Homes under the Hammer and think that buying a property at auction is the way to go if you want to get a bargain investment property to rent out.
There’s distinct advantages, the process is usually a lot quicker and you can get a great profit. But it’s not a case of pitching up at a local auction and bidding, you need to have done a lot of research beforehand.
When you’ve found details of the next auction in your area, then you need to look at the catalogue of properties and study it in great detail. If you see a property that’s to your liking, then, as in the usual way, arrange a viewing. The advice is usually to arrange more than one, perhaps at different times of the day, for example. You may also need to think about taking a builder along with you, to have a look at potential renovations that may need to be done, so that you can get an idea of how much money you need to spend to get it in a rentable condition.
Then do your research on what the market is like in that area, what have other similar houses sold for, and what is the market value of the property likely to be once you’ve done it up, and as it is now. That will help you to work out how much you can afford to bid on it at auction.
There’s also a legal pack available for each property, available from the auctioneers if you ask for it. This will highlight any issues that you need to take into consideration, permissions, subsidence, and any other legalities it’s important for you to know about.
It’s a fast process, from the catalogue being issued to the auction, it’s only usually about 4 weeks. In that time, you also need to have sorted out your finances. If you successfully bid on a property, you need to stump up 10% there and then, and the balance within 28 days, so it’s important to know that you can pay this amount on time, otherwise risk losing the property.
When you get there, take along ID and proof of your 10% deposit. Stick to the plan and try not to get taken in by the excitement, you’ll only regret it later. As long as you have done your research, and you know the upper limit of your bid, you’ll be fine. Take someone along with you if think you might get carried away!
It’s a different way to buy a property, but can be very fruitful. And remember, if you are buying a property in Canterbury that you want to turn into a student house that previously was a residential property, then there may shortly be additional rules to follow; a planning application will have to be submitted to change the purpose of the property.
If you have a property that you’ve just bought that you are thinking about letting out to students, please get in touch for advice, I can help guide you through the process.