33% Yield on a Conditional Auction - Payback Period is Just 3 Years
Wednesday 18th September 2024
Anyone who has read or listened to my book, Property Auctions: Repossessions, Bankruptcies and Bargain Properties will note that I have never bought through a conditional auction, also called the 'modern method.' I focus entirely on unconditional auctions, which viewers of Homes Under the Hammer will be familiar with. Many of these are now online.
However, this has now changed.
I was watching TV last Saturday when I browsed the EIG website and saw a property in a conditional auction that was guiding at a ridiculously low price. It suggested to me that there was something seriously wrong with the property (which there wasn't), the tenancy (which there wasn't), the legals (which there wasn't), the location (which there wasn't) or that the seller was desperate to sell.
It was the latter.
So, I registered with the conditional auction site and placed a bid. I also worked out my maximum bid, including fees (which were high), and programmed the auto bid feature. I wouldn't recommend anyone do this without years of experience in auctions and understanding that with the potential upside, there are also potential downsides.
I went to bed and thought nothing else about it.
I was in a meeting with the fantastic team from Town and Country Property Auctions in Chester on Monday when the auction was due finish. As I had the auto bid feature on, I didn't have to do a thing. As it turns out, my bid was the highest but below reserve, but the seller accepted it.
The property yields about 33% at market rent. It's legally tenanted and in great condition. The payback period is a mere three years.
As I keep saying to my clients and mentees, now is the time to accumulate. Be patient; pick your moment. The opportunities are abundant. You need to be able to sort the wheat from the chaff.
