If you have been waiting a long time to venture into property investment how often do you curse that you didn’t start years ago? Is there still all round,at the office, at the party, the dinner table or the golf club the talk of how much next door’s house sold for or is it now that all the chatter is about how prices are dropping and property is remaining unsold? And yet are you still tempted by those adverts of free seminars where possibly unscrupulous dealers try to convince you that there are millions to be made out borrowing to the hilt and purchasing buy-to-let bargains which they can procure for you?
Investing in property is a business and all businesses need working at. I’m sure that you don’t believe that you can go out, recklessly borrow the earth and make a fortune without going out to learn all about your new trade.
The front line of the property battle is the auction. Think about it. There is a seller keen to sell, the competition is all out in the open, you certainly “put your money where your mouth is” when you put up your hand to bid, you sign a binding contract there and then, pay your non returnable deposit and pay up the balance within a month later. If this is to be your business then you have to get into that battle!
But is now the right time? Who knows - but anyway you have to remember this is a long term operation. At the moment auction houses are wilting under the weight of vendors looking to sell. The number of properties being offered at the moment is four to five times those that were being offered three years ago. Press articles are still saying that in the South East property prices are falling but there are indications that the number of tenants taking up occupation of empty investments is increasing. In the North West selling prices are still showing gains of 200% over what purchasers were paying three years ago. Canny purchasers, whilst bemoaning the figures, are realising that many of those taking their profits are skilfully trimming their reserve prices and that new purchases should still show benefits in income and capital appreciation – for the longer term.
Auctions will always be the right place to buy. You might have doubts about stepping in right now but remember we are thinking of the long term. The U-turn by the Chancellor in the last budget on SIPS rather shook the house market and the removal of residential investments from self-invested portfolios has not really penetrated the consciousness of those who were looking to benefit from the scheme. There may be a backlash that takes account both of this and the fact that, realistically, domestic investment yields are now unjustifiably low. So too are the yields on commercial properties and the market may be looking for a correction shortly. The last catalogues of Alsops, the leading auctioneers in the country, have been very large recently and pundits in the business press are beginning to suggest that sales and leasebacks may increase in the next twelve months.
If you are now ready to put your foot in the water, then it's perhaps you should wait for six months or so before you buy. Sit back and learn your trade. Read up on the subject, visit plenty of auctions, learn how they work, research your chosen districts and market and decide which specialities to pursue. Then organise your finance and go out and buy. Good luck.!
Howard Gooddie is the author of 'Buying Bargains at Property Auctions' published by Lawpack Publishing. He is also a freelance auctioneer, having recently retired from being head of auctions at Longden & Cook Commercial in Manchester in Manchester, one of the city's oldest firms of Chartered Surveyors.
Further Information
The Buy-to-Let Bible
Top Ten Tips to Profitable Property
Unusual Property Hotspots