For investors looking for a property, auctions can be a good place to purchase. However, you need to be prepared, particularly as you will need to pay a 10% deposit on the day. Here are some top tips from our team:
Tip 1: Research the property beforehand
If you are purchasing a property for investment, make sure you research it before the auction. You should consider whether the area is suitable for your chosen tenant type, the potential rental income, and whether there are suitable local management companies if you would like to use one.
Tip 2: Do the legal groundwork
Before an auction, download the legal pack and give this to your solicitor for review. There may be additional searches you need to do on the property. Make sure you have made all the necessary enquiries to the local council regarding planning permissions and know what legal costs might be associated with them.
Tip 3: Consider a valuation
You may want to pay for a valuation to be carried out on the property prior to auction to ensure it is suitable for a mortgage and attend the auction with a formal mortgage offer.
Tip 4: Investigate the finance options
There are different finance options available depending on what you plan to do with the property. Look into whether a buy-to-let (BTL) loan, a regulated mortgage, refurbishment finance or development finance is the most appropriate for you.
Tip 5: If you are looking into short term loans to buy, make sure you know which one is right for you
There are three types of short term loans that landlords can obtain to purchase a property and do any necessary works. These are:
- Standard bridging loans – to assist with the purchase
- Refurbishment loans – to assist with the purchase and enable light or heavy works depending on the extent of the works
- Development loans – when starting with land