INVESTORS searching for bargain properties can find the best investments at auction.

04/11/2009

Kate Lay (formerly Hughes) of Merseyside Property Auctions, says those looking for a good investment should start their search at auction – where properties are still typically 20% cheaper.

Last week the Nationwide revealed that UK house prices were higher year-on-year in October - the first annual rise for 19 months.

This recent rise has been driven in part by the lack of properties on the market, despite more people looking to buy.  

However Kate, the Northwest Women in Business’ Young Entrepreneur of the Year, said genuine bargains are still to be had that are for sale well below market value.

She said: “There is no doubt that the best way to buy Below Market Value is to purchase a property at auction.

“Auctions are places where desperate sellers are driven to because of their need to sell quickly. 

“This often means that they are prepared to accept a much lower price than they could have achieved if they could wait for a sale through an estate agent.

“Similarly Auctions have many ‘tired’ properties where the owners do not have the funds or inclination to refurbish. These are great opportunities for investor developers who are prepared to do some work on the property.

“Properties with issues over ownership, structural problems, etc can also be good value as most investors can overcome these problems as long as they do their homework first.”

Many people have a fear of auctions and think it is a complicated process. However, Kate, a former senior valuer at Sutton Kersh, said buying at auction is quick and simple. Upon the fall of the gavel, the successful purchaser will be asked to attend the contract desk to exchange contracts and pay a 10% deposit. 

Usually they will also be required to pay a Buyers Administration Fee (fees vary depending on Auctioneers).  The remaining monies are required within 28 days from exchange.

Merseyside Property Auctions has achieved the highest sale rate of any auction house in the whole of the North West in 2009 at 85% and Kate said that there is real evidence that there is an increased interest in buying property.

Kate said: “Property for serious investors should be a long term investment and if you are prepared to commit should provide long term security and additional financial stability.

“One of the best ways of doing this is to buy a property with a tenant already in occupation as you don’t have to go through the process of finding a tenant or instructing a Management Company.

“A tenant might have been in occupation for a long time and you will be able to find out from the accounts whether they pay regularly and on time.”

She added: “Rental yields are also a critical measurement for investors. 

“A gross yield measures the amount of income generated from any given capital investment. 

“A property investor should only make their decision when they know the yield they are likely to obtain from their buy-to-let investment, just as a saver would make an investment decision based on the rate of interest.”

Latest results on residential investment yields in the September edition of RAPID (Residential Auction Property Investment Data) showed that gross yields are above 8% in all UK regions. 

Kate added: “In the current low interest environment look at gross yields of 8% which should leave you a net yield of approximately 6% after expenses.

“The location and type of property should determine the types of yields an investor looks for.”

Merseyside Property Auctions are holding their next auction at the Crown Plaza, Speke, on December 2 2009. For more information about this auction and the lots available please visit www.mpalimited.co.uk or call Merseyside Property Auctions on 01512609873.

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