Many investors use property auctions to purchase houses for rent. The benefits of auctions are that completion times are quick, there is no house buying chain and prices can be low. To successfully use auctions for property investing there are several things for you to consider before bidding.
Firstly, research must be done. You need to view the property and find out if
there is sufficient demand for the type of property from tenants and that rent levels are high enough for you to make a profit.
Property will come with a legal pack that could have terms and conditions and this must be downloaded and studied. The auctioneer may also have terms and conditions that you need to be aware of.
It is important to review finances. You will need a 10% deposit to secure winning property bid, and the other 90% will need to be paid within 28 days. You may need a bridging loan for this until more long-term finance is available. Talk to a bridging broker who will be able to tell you if you are likely to qualify for a bridging loan.
At the auction, you will need to provide proof of your ID and have a 10% deposit available. If you cannot attend the auction you can have someone bid on your behalf. You may also be able to bid by telephone or online.
Buying investment property at auction is a sound strategy provided you are aware of what is involved.
