Buying at auction: “I got all my money back out of the deal!”

Auction deal

An auction purchase case study from property investor Clint Hamblett

by Julie Whitmore, YPN writer and property investor.

Getting started and investing in property without any formal training or knowledge is not uncommon. In an article in the July 2021 issue, property investor Clint Hamblett shares how he purchased his first investment at the age of 21, whilst having a full-time career in the army.

Clint Hamblett

After an accident left him recovering at home, he used the time effectively to educate himself by watching property videos on YouTube to enhance his understanding and learn about property topics that he previously had no formal knowledge of. In particular, he wanted to find out how he could refinance refurbished properties after six months, by purchasing with cash or a bridging loan.

The principle of recycling cash

Recycling cash and minimising the amount of money in a deal is key to most investors so that they can move onto the next deal. Clint’s story also emphasises how having the right knowledge and education in property can help you to leverage and expedite your business as, “no-one knows what they don’t know!”

Check the details when buying at auction

The article covers a case study where, having seen a sign for a property available by auction, Clint explains how he contacted his solicitor to ask for help in reviewing the legal pack, something he advises everyone to do who is considering an auction purchase.

House before

Buying a property at auction is something that can be fearful and daunting to some investors, particularly the dread of getting carried away on the day and overpaying for something! Auction purchases also need to be typically completed within 28 days or sometimes less, so you need to be 100% clear how it is going to be financed. Once the hammer falls, you are committed!

Particularly important is to understand the fees associated with an auction purchase as they can vary (as he explains in the article), up to 4% in some instances, with additional fees on top of that. Clint’s advice is to ensure that you understand this through your solicitor, in addition to any other areas in the legal pack that may cause challenges post purchase.

Prepare a budget

Subsidence on a property is a topic that can scare most people and be costly to rectify.  The property that Clint showcases in the feature had a serious subsidence issue with extremely large visible cracks. He shares how he engaged his builder pre-auction to review the property, the importance of estimating how much the work would cost to rectify and how he built this into his budget.

Having a budget for refurbishments and understanding the cost of works is vital to understanding overall if an investment is viable, particularly when buying at auction, as you need to understand all the costs to identify your maximum purchase price, then stick to this on the day!

Clint was able to achieve the utopia that most investors dream of: no money left in the deal. He inspires us by revealing how, after the renovation was completed and refinanced, he was able to recover all his costs in addition to taking out a sum of cash! If you are thinking of buying at auction, this article is a MUST read.

Clint’s takeaway tips for buying at auction

  • Ask a solicitor to review the legal pack.
  • Have your finance lined up, as you will most likely be completing within 28 days after the hammer falls.
  • Remember there will be auction fees.
  • Find out how much it will cost to repair defects in the property, and to undertake all works.
  • Prepare a budget.
  • Set your maximum bid and stick to it!

To read the full article, subscribe to YPN Magazine.

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