Be “Crystal Clear” with the financial side first.
How do you know the right property when you see it?
How do you get the best auction property at the best price?
How do you know which property is right for you?
Do not even think about bidding before you are 100% sure of all the costs involved.
We believe an educated bidder is a smart bidder.
Other factors you need to consider are:
Costs – all costs – especially ones you may not have considered
Key location factors
Whether the neighbourhood is on the up
Determine your budget
The clearer you are on exactly what you want to invest in, the quicker you will find property for sale at auction.
You have to first consider what you can afford before you even think of the range of properties and the location of the house on auction.
Generally you will be looking at financing the property with a 5-10% deposit and also you will have the costs of buying, refurbishment etc to get the property in a condition where you can rent or sell it.
Visit the property
Visit the property at least twice to determine all the costs involved and use professional tradesman to give you three estimates on any work needed. If you cannot view it, do not buy it.
Costs you may not have considered
Examples of costs you may not have considered are major arrears on the property or local authority debts on the property. (see explanation below)
The simple fact is, if you want to make a smart investment decision, if you want to make a profit, you have to buy a property that will give you a profit. Neglecting the costs involved is one way of losing money instead of making it.
Major arrears come into play if the property is rented and the tenants owe an amount of money to the vendor. Once the vendor has sold a property it is relatively difficult for them to get the tenant to pay the outstanding arrears. It is common for the vendor to provide in the contract of sale (Special conditions of sale) a clause stating that the purchaser at auction pays a sum at completion equal to any arrears outstanding. This leaves the buyer in a bad position in that he has paid out in full and has to get the money back from the tenant. The arrears could be uncollectible or might take a lot of effort and time to obtain.
Local Authority debts on the property
When the legal searches are obtained by your solicitor it could reveal a local authority charge against a property. You should be sure that the conditions of sale provide for this.
What to look out for when choosing location:
What to find out when choosing location:
Local Crime rate
Council Tax rate
Is the area on the up?
An attractive property in a sought after area will ensure both strong rental returns and attract ongoing tenancy. It will also be easier to sell, and sell more quickly.
As you want to benefit from as much capital growth as possible, the first rule is to buy in a growth area.
Experts define suburbs located up to 10 kilometres from a city’s central business district as likely to be a growth area.
Have more questions about property auctions? Find “Satu Solution” for you answers.
Don’t pay too much for a piece of property.