Could I be hit with a big property tax bill???

Hi Shakeel, you are correct. I have attended many auctions where "average buyer"( and that means a person off the street that have never bought previously at auction) has pumped the air in excitement after successful bid, only to find out that the property they bid on is a money pit! When U used to do auctions I always looked at the property in terms of size, space (for bedrooms), solid walls, how long it's been empty, who the owners are (repossessions), legal pack for covenants etc. Then I looked at guide price and if I could make a cheeky offer BEFORE the auction. If they say NO, that means it has to be sold in the room (80% of the time). It's a game, but you have to have your ducks in order BEFORE you enter that room. I have only felt excited after I purchased maybe twice, I never fall in love with the property, it's not mine to live in. Must be the Capricorn in me lol!

AA spot on. You are my kind of a guy.

I have even suggest to friends that they visit one of two auctions as a dry run before going for the real thing.

One thing that people tend to overlook is that once you have bought at the auction & spent money developing & wait for six months to have access to lending.

In the in trim you have diminished your capital and in the present climate very few lenders will lend you at a economical rate to make the whole thing financially viable.

Where the even the lenders are willing to lend the paper chase is exhaustive & from my point of view sucks in my time that I should be focusing on developing, sourcing, finding tenants etc.

Reply to the comment left by "AA Properties Wales " at "14/04/2015 - 23:34":

Hi Kevin,

Thanks for the tips and encouragement of the auction process, I do appreciate that. What amazes me is that the number of people I speak to in my network and family who are small buy to let landlords in that they own say 1 or 2 properties fear auctions, they simply think that the bulk of properties there are simply ones with title issues or subsidence or some other major defect that will cost 10's of thousands. This cant be the case as auction business would not be growing in size, just look at how many there are these days all over the UK.

There will always be landlords.with the one or two properties that may have bought safe, but the whole reason of buyinhg inu uin auction properties is the prospect of picking up a bargain and refurbishing them renting then remortgaging then receiving your tax allowances from most of them
The costs. I started off in the Welsh Valleys buying at auctions this way
Believe it or not the north of England.and Welsh valleys there are still a lot of properties to be had at great prices at auctions, they will easily rent out. Plus by buying two and three bed houses they will always sell to young couples
Go to auctions to do a dry run, research the properties and their legal packs. Start off with a cheapie first, don't throw all your funds into one property.

Reply to the comment left by "AA Properties Wales " at "15/04/2015 - 22:15":

Thanks for the tips Kevin, I am trying to get 5 London properties under my belt and would then like to join you in the Welsh Valleys, sounds so cool! How cheap is a cheapie to pick up in the auction in the Welsh Valley location would you say? And could you rent it privately as well as to a LHA tenant? I always like to have the option of renting to both should the LHA market get hard to deal with. What kind of yield would one expect from the cheapie?

Thanks

Houses around 40-60-80k, flats around 35-45k
Lha or private rentals on average 300-600 per.month,
Email me aaproperrtieswales2@yahoo.com if you need any help. This site is invaluable in helping us so give our friend Mark a donation
I have just yesterday rented out a 3 bed house for 600 a month and was patient in the finding tenants with guarantor and instinct. The family is all working. I used the tips of this site from others so tomorrow I'm going to contribute to it.and it's tax deductible.

Reply to the comment left by "AA Properties Wales " at "16/04/2015 - 20:02":

Hey thanks Kevin, appreciate the info and contact details and the offer for help. Gosh the yields are good and the prices very workable to try it out and if not working out then easy to exit without taking too big a hit. When you brought up in London, the prospect of investing anywhere with a much smaller population is a bit of a mental challenge for me.

I suspect the accountant in question has little to no experience in this area, the only restriction on mortgage interest is you can not remortgage to beyond the original value of the property at the date it is first rented out!

Change accountant, those of us with knowledge in this area really are worth using.

Good luck with everything.

Jason

I think Joel is looking at a let to buy scenario, i looked at this a year ago and the lending criteria were very strict and a low ltv so i sold the flat. Certainly cash is king, esp at the auction but be careful as the auctioneer may (legally) bid it up to the reserve price and as has been pointed out that may be around the same as open market price, so a pointless exercise, ideally buy before or after, the room can be a bull pit.