The auction houses have started sending out their catalogues for the late January and February sales. Personally I prefer the online versions as I can also download the legal pack if it’s available when they first release their upcoming lots.
The legal pack is a collection of documents which are relevant to the property you are at looking at. These are important documents which you need to scrutinise as they are usually prepared by the vendors solicitors. If, after viewing a property and it meets my buying criteria I decide to” bid” I will ask my solicitor to go through the documents just in case I have missed something. It’s easily done …
I’ve so far found 3 properties I’m interested in and eliminated a fourth as it didn’t meet my criteria. This particular one was of non-standard construction which could give you problems should you wish to refurbish and sell on. A private buyer could have a problem raising finance as not all mortgage lenders will consider lending to this type of build.
Personally I prefer to avoid these properties as there are always other deals around which can give you the same returns. However, this particular one was interesting as the potential rental yield was very high at around 14%. Although tempting I remain committed to my business plan which is why I dropped it from my viewing list this week.
As with any other business you need a plan and a process to achieve your end result. This is especially important in property as mistakes can be very costly. The trouble is buying a property is a slow process – even through the auctions. You have to wait for the lots to be released usually around 3/4 weeks before the sale, go through the legal pack, do your research, attend the viewings, crunch the numbers, arrange finance if needed and provide all bidding documentation required by the auction house. You then have to attend the auction and try to secure the property below your maximum bid. This is a numbers game in itself which is why I like to identify at least another 2 properties I can bid on.
You must never, ever go above your maximum bid or you risk ruining your business plan and buying criteria. There are always other deals to be had but you might have to wait another month or more to find them. Unfortunately this is a business which can’t really be fast-tracked but get it right and over the long term it could make you wealthy.
We’ll talk again next week when I’ve been on some viewings.
Trevor
