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Property auctions & remortgaging & refurb

 
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sully




Joined: 12 Jun 2006
Posts: 418
Location: Manchester (for 7+ years) ... far away from sunny Qatar

PostPosted: Sun Mar 05, 2017 4:30 pm    Post subject: Property auctions & remortgaging & refurb Reply with quote

Has any1 bought at a property auction?
Has it gone well or gone bad?
We're in v early stages of thinking of trying this. We've inherited a (mortgage free) property that we'll rent with an agency. We're looking in to borrowing 70% ish on this property to fund an auction purchase.
We'll then refurbish the property with a view to either rent or sell once completed. I'm working part time, will project manage (novice 1st timer) & do the basic DIY decorating , with specialists to do the proper jobs.
Pointers in the right direction would be useful & appreciated, along with warning & 'potholes to avoid etc. Experiences most welcome.
It may well be a non-starter & never get beyond a plan (pipe-dream etc).
Cheers
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Nobbie




Joined: 24 Jul 2006
Posts: 4394
Location: Wilmslow

PostPosted: Mon Mar 06, 2017 10:43 am    Post subject: Reply with quote

The people I know who are good at this have the cash to hand to buy outright and lots of contacts in the trade. They don't bother with surveys and just get a mate in the trade to give a quick opinion. Buying with a mortgage means arranging up front and paying fees for surveys etc.

There isn't any money in just buying and giving it a 'makeover' unless you're just buying into a rising market, when you can just sit on the property, do nothing and still make a profit.

You need to buy a property with development potential, but then you're competing with people who really know what they're doing and can turn round a property quickly.

Think you might get caught by extra Stamp Duty on second homes when you buy unless you set it up as a business, but then getting a mortgage for a business is more complicated.

With auction properties you have to know what you are looking at in the legal pack or get a professional to review it as there can be all sorts of issues in there that explain why it is at auction and will preclude you from getting a mortgage on it.

Basically, unless you know what you are doing, it's a mugs game nowadays as everyone thinks they're a property developer after watching a few episodes of homes under the hammer filmed in a booming market. The money is in buying properties with structural or legal issues and having the knowledge/experience to sort these out quickly/cheaply before selling on.
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snowie




Joined: 06 Nov 2007
Posts: 730
Location: derby

PostPosted: Mon Mar 06, 2017 1:35 pm    Post subject: Reply with quote

your loan to value is a bit high @ 70% but workable.
read the legal pack
view the property (twice if possible)
set a limit & do not exceed
look at the property & the type of tennant/s you will get.

i also have prefer commercial properties which are great once let as they tend to look after themselves.
i also have several bungalows that i rent out to older people or disabled people plus older bungalows tend to be on larger plots that can have potentional building plot/s or you can turn the bungalow into a house.

going with an agent to manage the property is a sure fire way to loose money, they take all the cream. if you cannot be bothered to look after the place yourself i would suggest you go down the commercial route.

its all about the yeild, 10%+ is good but beware with rents rising there is concern that the goverment will put rent controls in.
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Jgav




Joined: 06 Dec 2016
Posts: 170

PostPosted: Thu Mar 09, 2017 10:49 am    Post subject: Reply with quote

The most important question would be what are you objectives for investing this money into property?

There are plenty of other ways to invest assets which are safer and also provide a decent return. Putting cash into stocks and shares ISA invested in passive funds which re-invest profits is a much more stable, less risky and still profitable.

To put it another way, if you wanted to take a 100k pot would you put it into a single company or would you want to diversify and invest in multiple companies to diversify? If you answered 'diversify' why would you take all of this money and invest it into a single property where lots could (and probably will) go wrong. The other point is that the government keeps tinkering with multiple home owners rights, taxes etc. and making it very unattractive.

p.s. none of what I have written constitutes advice.
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The_Exile




Joined: 15 Aug 2013
Posts: 846
Location: The flat lands out East

PostPosted: Thu Mar 09, 2017 12:44 pm    Post subject: Reply with quote

A friend does this - very profitably.

He shys away from traditional investment properties - multiple bedrooms etc - leaning towards one bed small and VERY cheap. He also favours housing benefit claimants over private tennants. He has a handful of properties, the tennants are all on housing benefit and his rent is set at or just below the property limit for the local authority based on the number of rooms. One beds are often unpopular with investors and buyers alike so can be picked up mega cheap.

Local authorities will not pay the rent directly to you unless the tennant is in arrears of over one month - so put a contractual clause of two months upfront in the lease and this circumnavigates this, the rent will ome directly to you so no risk of not getting paid.

He does very well out of it - and does little or none of the work on the houses himself due to lack of practical ability although he does not buy complete wrecks, he fits what he has to do around a full time job. He has a couple of friendly tradesmen that work for him as and when he needs stuff doing.

He gave me a lot of advice as I was conisdering doing it when I relocated - and keeping my old house as a rental (1 bed back to back terrace, his bread and butter), in the end I decided against it as I knew how much work I would need to do in the mid-term on the house so just got rid of it.
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sully




Joined: 12 Jun 2006
Posts: 418
Location: Manchester (for 7+ years) ... far away from sunny Qatar

PostPosted: Tue Mar 21, 2017 12:01 am    Post subject: Reply with quote

Thanks folks, you've given a lot of experience/info, which was what I wanted and couldn't easily find on the internet and the info I did find I didn't want to fully rely on.
As with other questions I've asked on this off-topic forum, I do appreciate the unbiased opinions.
We do have several UK residential properties, which we rent via agencies. These were bought whilst we worked overseas & we wanted a hands off long term income.
We're now based in the UK for the next few years. I'm now looking to make the properties work as bit harder, release equity form 1 or more.
The property auction was an idea.
I will label myself as an absolute novice in this field, no property or project management experience and I have watched a few 'Homes under the hammer' etc. I realise my enthusiasm and basic DIY skills are, whilst admirable ... easily overshadowed by my inexperience. This may well remain a project that remains only in the planning stage.
Working only 3 says a week would give me time etc.
My other thought was to create a property company from the residential properties we already own, with the Mrs & myself as directors (& both of our kids, U16, as shareholders?) ... to create a corporate tax rather than personal tax situation on the rental income.
Using funds from a remortage, we would buy a property in the usual (non-auction) way, put 30% deposit down & use a buy-to-let mortgage.
Perhaps seems a clearer avenue to pursue?
Thanks again for these & future replies
Cheers
_________________
2010 July: IM CH 14:49 Chuffed as ...
2011, 2012, 2013, 2014 AbuDhabi Short Course
2014 Outlaw 13:43 Smile
2015 Abu Dhabi Maxi, Doha Pearl Oly, Tameside XL
2016 Tour of Tameside, Ripon Oly
2017 Windy Hill Fell, Zurich IM (to spectate Wink
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Foggy
Site Admin



Joined: 11 Aug 2004
Posts: 5309
Location: East Molesey

PostPosted: Tue Mar 21, 2017 2:46 pm    Post subject: Reply with quote

Overseeing property refurbishment part time is not something I would want to do. Having not long ago done a full back to brick refurb/extension of a property, the days when I was not on site were the most stressful. Nothing EVER went right. Thankfully, for most of it, I was there full time, and that was bad enough!
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