Tips for Purchasing an Investment Property at an Auction
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Published by TOP4 Team
There are two types of people in the property market: owner-occupiers and investors. While there’s certainly some overlap between the two, there are distinctly different ways on how an investor should behave at an auction, compared to a future owner-occupier.
For you to find that next diamond in the rough for your property portfolio as an investor, consider these few tips on getting the best auction results.
Wait for the lull.
Many people make the mistake of thinking that an auction is only about defeating the other buyers. This might be true if you’re buying a home that you want to live in for the decades to come, but it’s quite a different story if you’re buying for profit. You want to get a bargain, so it’s really all about entering the scene where the vendor is more desperate to sell – when clearance rates are low.
As an example, if you look at CoreLogic RP Data, they have recorded lower weekly clearance rates at the start of every year since 2011 in Australia. This only means more properties are failing to reach their reserve and passing in, meaning the vendor might be more willing to negotiate. This will give you the chance to get a bargain outside the competitive arena of the auction. The vendor might be more willing to negotiate.
Consider your tenants.
Don’t fall in love with an investment home – don’t pay more than you planned just to ‘win’, and don’t consider your own needs as a priority. You want to appeal to as many audiences as possible. You’ll want to find a property that has good parking, cable internet and a strong mobile signal to get the best rental yield.
When buying an investment property, you want to be looking at value growth. Cast your net wide and find properties in strong neighbourhoods – you can even go interstate. An investor living in Brisbane doesn’t only have to buy Brisbane properties – they can easily switch their gaze over to a better-performing suburb in another state and invest there instead.
Buying for investment is a game of objectivity and willpower. Always remember that you’re there to get a bargain and that entails a completely different strategy.
Seek the help of the top real estate agents in Australia today.