Are auctions the best way to buy cash flow positive properties?

It used to be a common belief that if you bought an investment property through auction, you were almost guaranteed to get a bargain. But the truth is that from the moment you find out the property is going up for auction, you are often drawn into the stories of the agents explaining how the sellers have fallen on hard times and are now desperate to sell on the first offer. decent.

Of course, you could try to make the sellers an offer before the auction date in an attempt to see how ‘desperate’ their situation is, but most likely they will just thank you for your interest and put your offer aside until after the auction. the auction takes place.

The problem is, it’s not until auction day that you find out what that ‘decent price’ is. And that means that if you’re serious about buying property, you may have already incurred expenses for pest and building inspections, spent countless hours reviewing valuation estimates, and haggled with your bank manager about the financing.

But you certainly need to do that research beforehand. You want to know why properties in the surrounding area have sold recently. If you are looking to rent the property, it is also wise to ensure that there is demand in the area for rental properties. There is no point in spending many thousands of dollars just to have the house sit empty for weeks or even months.

On the other hand, if you’re looking to sell the property to a Wrappee, you’ll also want to know that you can in fact insure the property at or below appraised cost to get a decent cash flow positive from the start of a Wrappee deal. And for that reason, you also want to look for properties in areas where people would be proud to buy a home to live in.

You could engage the services of a purchasing agent, which could prove invaluable, especially if you’re buying outside of your local market and haven’t been able to gather enough information to make a decision either way.

If the auction is moving at a slow pace and bids are still within the bargaining range and then stall, be sure to present yourself as the last bidder. In fact, it is best to register as a bidder at the last possible moment; the fewer bidders the seller expects in advance, the less he expects to get a bidding war and his hopes do not rise.

With any luck, you’ll still be able to score a great investment property for less than appraisal price.