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So there is a property that has gone into auction. The guide has been put very low. But the property has got a lot of work to do. The auction itself is based in Birmingham, and the said property located in Leicester.
I am hoping this property does not gain traction and would like to potentially buy it with cash, and do it up myself and learn the ropes of refurbishing. I think this could be a good first 'project' to get my hands dirty. Best thing, its walking distance from where I live
So question is this: The property is in a right mess. And very important to always get a survey done prior to buying. Given that nobody has access to this property and that its in auction, how do you ascertain there's nothing hidden under the rug (to say) apart from the obvious run down state.
Any advice would be helpful.
Hi Maz,First of all, what you are proposing is a high risk strategy imho. Auction rooms are generally the domain of experienced landlords and investors and many a newbie has been stung in them. The anagram of auction is "caution".The very fact that you cannot view the property makes it even higher risk. You will be speculating with such a property.We have a similar discussion recently - Don’t view before you buy ... trust me! It would be far better to get your hands dirty on a lower risk project - perhaps a terraced house in need of cosmetic refurbishment - decorating, new bathrooms, new kitchen, carpets etc.The market is very slow at the moment and there are deals to be had for sure. View lots of properties in your area and put in silly offers. It's a numbers game - someone will eventually say "yes" and you will have purchased at a deep discount. Hope that helps and good luck.
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Of you have spotted it due to price so have many other. Many start with low guides recent one 5 k guide sold for £47 k
Yet needed full refurb and no right of way into the property so I was told.
Very easy to get carried away in auction room I did it myself two months ago.
To elaborate further, I have actually been into this property to view it back in November when it was on sale with an Estate Agent. I have no idea what happened, as they claim it sold, but has ended up in Auction 4 months down. I did offer, but wasn't accepted. Had the offer been accepted, I'd have a survey carried out none the less. Given that its in auction now, that option obviously has gone. I guess, what Vanessa says, its just become too high risk!
Land Registry doesn't show a recent sell price, therefore assume it never sold.
For discussion sake, I have put the rightmove link to get a clearer picture. https://www.rightmove.co.uk/property-for...99321.html
The RIghtmove link says they are organising block viewings? Or is that the old link?With regards to the previous sale, it either fell through because the buyer found a "nasty" and their forfeited their 10% deposit, or the sale went through and then they realised it was too much for them, or they didn't have the funds required to put it right.It certainly looks like a major project from the pictures - a "back to brick" refurb.
I have bought many at auction and have never had a survey, Why? I go in and assess what I see , sometimes with a builder, and then when I decide on a value I take into account possible hidden problems. If I see cracks and believe it may be subsidence I allow £10000 for the possible work. To date that's never been the case .Worst I've had is having to replace all the whole ground floor flooring, but this cost came out if my contingency that there could be issues unseen. You are better advised to be accompanied by a builder as they can spot the issues as easily as a surveyor and won't charge a fortune.
I have just done what you are considering. A property came up for auction that I believed was sold last year. I had just received the proceeds from the sale of an inherited property so was in a position to buy with cash. This would be my first investment.
I studied the legal pack, spoke to the tenants, the neighbours and local agents. I didn't employ a surveyor or solicitor and was aware of the risk, but I researched thoroughly. It was my money, my risk and as it turns out my reward, which initial estimates put at around 50% gain.
I viewed another auction property more recently as there's enough left in the contingency for another cheaper project. This was potentially a great bargain with greater gains, but there were a lot of unknowns. Even after thorough research and involving my solicitor from the first purchase I wasn't comfortable with the risk and let this one go.
There are 2 sayings that I continuously checked myself against:
You have no lender to satisfy which gives you the freedom of your own choices. By all means take a little calculated risk, make yourself uncomfortable but don't be foolhardy.
A good teacher must know the rules; a good pupil, the exceptions.
Martin H. Fischer
As Vanessa said, this is a back to brick project . It looks like it's had an electrical fire and will need a full rewire, new GCH, floors repaired or replaced, new kitchen bathroom, plaster etc. It's a massive job for a first project and if you don't already have a reliable, competent builder I would steer clear. Also, it's likely to take 2-3 months to complete which you need to factor in.
Why not speak to the previous selling agent. If he thinks you may give him the resale after your refurb, he may be more forth coming with information. Just don’t ask for it in writing.
Dont let the low guide price fool you, if you decide to bid, after proper DD then set your maximum price in your head and don’t go above it.
work on the highest price, the highest refurb costs and the lowest resale value, if it still stacks up, it may be worth trying for