Buying an investment property at an auction

All property investors, whether it’s their first property or if they are a seasoned expert, want to snag a great deal. Heading to your local auction can be a great place to find a bargain.

Here are 3 tips to being successful at an auction.

Do Your Homework 

Always research the market, both online and off, then talk to Real Estate Agents so you go into the auction fully informed.

Go to other auctions to see how they work.  You may think you know how they work because you saw one once on tv, but in real life, they are quite different.

Once you have done your research and are up to speed with how things operate, always get expert advice on legal, finance and building matters.

Do you know the rules

Auctions have very strict rules so read through them as soon as you get there. In Victoria, the auction rules must be displayed at least 30 mins before the start.

The auctioneer must tell bidders that the auction will be conducted according to the auction rules and regulations.

It is illegal to make a false bid, hinder another bidder, or in any way intentionally disrupt an auction.  You can be fined if you are caught doing any of these things.

Stick to your budget

When at an auction it can be easy to get caught up in the moment and the excitement of bidding.

Before you start, have a really clear idea of what your limit is and don’t go over that.

The auctioneer is trained to try to get the best price possible so they might encourage you to compete.

Check out Consumer Affairs Victoria for more information.

Have you ever bought a property at an auction? Did you score yourself a bargain or get caught up in the moment and pay too much just so you could win?

How to finish a project on time

One way to make money on a property is renovating it. Buying a property at a good price and then renovating allows for a good rental yield and also adding capital value to the property.

However, one of the ways to start cutting into profits is by that renovation dragging out, meaning you cannot rent out the property by the date you had hoped and we want to help you avoid that. It’s important to not go over budget, but it’s also important to not go over time.

Work backward

It’s not fool-proof, but it helps. It’s a tool that pretty much every planner uses, from mums trying to get their kids to school on time, to party planners and renovators. You want that property to be tenanted by July 1st, so what do you have to do to make that deadline. Break down those months into weeks and days. What needs to get done by when to make it happen? What padding have you added each week just in case?

If that is going to be a realistic date then you need to understand the full scope of the project before you pull out a sledgehammer. You need to get your team crawling all over that property and figuring out if you will need permits and approvals, and what work you need to do before you can really agree to an end date.

If you do need permits, the approval process can be frustrating if you haven’t done it before, but if you have a qualified and smart team they will walk you through it and have it smoothed out in no time. A small renovation on a rental probably means that you’re not adding a second floor to a heritage building or getting too close to the property line.

Renovations can still be impressive, however, knocking down walls to make an open plan layout, or adding an en suite can make a rental look completely different. These changes are likely to get through the planning and approval process faster than if you were thinking of a fancy 3-bedroom addition.

Hire the right team

Getting a fully qualified team in place who have done this kind of renovation before is the best decision you can make. You may be a DIYer and want to do it yourself – and that’s fine. But make sure you work with your contractors to set up jobs that you can help with – jobs that you can do after hours that will help the contractors during the day time.

Develop a great relationship with your Project Manager, or head contractor to get the work done. Find out what they are thinking in terms of time, find out what you can do to help – after hours most likely – and then look at the calendar. After going through everything with a fine-tooth comb, after getting all supplies on site (if possible) and allowing for issues such as finding more dry rot than anticipated, does that July 1st deadline look like it will happen?

What tricks do you have when trying to get a project finished on time?