Posted by Simon Misiewicz on 2nd July 2013
Are you looking to buy properties at an auction?
Would you like to know some golden nuggets to make even more money from auctions?
Like many property investors I have bought properties in an auction.
Before you get into an auction room you will see a lot of people wafting around their auction brochures, some of them will look professional and others look as though they have come for a day out.
Don’t be fooled, often or not the people with the money are those that are not suited and booted, contrary to belief.
I have been in a situation where emotion takes over.
You hold onto the brochure realising that the bids are slowing down and you think to yourself “yes, I am in” and then you fill with rage and a cold sense of urgent panic as another investor outbids you. “What should I do?” rings out in your head. The answer is to be calm and collective.
If you were thorough in your planning then you should know the number to stop at without feeling any emotion at all.
What planning can you take before you get into the room (1)?
- See the property by arranging a visit with the agent.
- Do your own due diligence of any refurbishment costs and it may be advisable to get a survey done to ensure that you are not paying a straw house or a ship wreck.
- Check “sold” prices and “for sale” prices for similar properties in the area of interest. This will give you a strong indication if there is profit to be had or if you should simply buy from an estate agent(2).
- Ensure you have the finances in place to purchase the property.
Please bear in mind that you need 10% on the day for a deposit (non-refundable) and the remaining 90% usually within 28 days.
- Take proof of ID for the day and have it ready in the morning of the auction.
- Ensure that the numbers stack up against your particular strategy before you enter the auction room and have a definite number that is your maximum. Once this is reached congratulate yourself for not buying an expensive property.
Here are some considerations you should take into account when flipping properties:
- Using limited companies to trade properties, if you are selling multiple houses.
- Impact on personal tax and business tax 40% V 20%.
- Ability to reclaim VAT on refurbishment.
- Selling properties back to another limited company without VAT.
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