Auctions – Friend or Foe?
So what’s the skinny on auctions? It depends who you ask, but there tend to be a few truths. We have recently seen a lot of customers pay over the odds on properties in auction. This is especially true where they are online auctions and bidders get ‘click happy’.
Let’s check.
1. Yield. After all, the reason for investing in a buy to let is the return you will receive and how profitable the opportunity is for you. Yield measures the cash flow an investor receives on the amount invested. Generally, yield is calculated by dividing the dividends or interest received on a set period of time by the amount originally invested. In a nutshell, the higher the yield, the greater the return.
2. Location. Your yield will be dependent on a number of factors with the main one being the property location. Is the location sought after? Is it up and coming? Is it near local transport links and/or local schools? Generally, most think the higher the yield the better the opportunity. A desirable location always results in a higher yield and a better capital appreciation.
3.Exit Strategy. You may be a long-term investor but knowing you have a way out if you’re circumstances change is important. There are many different types of exit strategies:
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Sell at short notice.
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Re-finance to give you the equity needed at any particular time.
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Restructure a portfolio. Sometimes the best option is likely to be a mix of residential and commercial properties, depending on your risk tolerance and income requirements. If you’re relying on income from your portfolio in retirement, there’s a strong argument for restructuring in some way.
The saying “buy and hold forever” makes sense if you are a long-term investor.
It is important to remember that as an investor, you should not be emotionally attached to any property and should only treat it as a source of income.
We can help
recently we have helped customers make the right investment choice and avoid:
– buying in slow growth areas
– buying properties where planning will be difficult
– buying properties that will not get finance
– buying properties in flood areas
….and more
We are always happy to help you become wealthier.
