Timing is crucial in property.
You have to know when to buy and when to sell.
The oft quoted maxim is: You make money when you buy, not when you sell. Sounds weird, but the thinking is: buy smart, buy well and you will always make money.
And so to illustrate the importance of timing in the property market I’m going to take you through a real life auction property trajectory that has happened in the last year.
This flipped property may surprise you – it’s an ex-council flat, in a not particularly salubrious part of town – and in the beginning nobody wanted it!
So here’s the property:
128 Joyce Avenue, Edmonton, London, N18 2DR
On 6 March 2013 this property failed to sell at auction. Despite being tenanted at £9k per year, the last bid was £86k which didn’t hit the sellers reserve.
On 1 May 2013 the property goes to auction again, it’s still tenanted at £9k per year and it now sells for the princely sum of £87k. That produces a gross rental yield of 10.34%. In London.
On 4 December 2013 the property has been newly tenanted to produce an increased rental of £19,239 per year. The property is entered to auction, but sells prior at £120k.
Fast forward to 26 February 2014, the property remains tenanted at an income of £19,239 per year, but this time sells for an astonishing £158k!
In less than a year, this property has been flipped twice, seen the sales price rocket by almost double (£71k from the start point) AND seen the rent more than double.
Is it still a good buy?
Astonishingly, despite the massive increases on the price paid last year – the whopping rent increase means that even at a purchase price of £158k this flat will still produce an annual gross rental yield of 12.18%! In London
The moral of the tale: Buy smart, maximise what you’ve got…then get out!
And if you need more proof how flipping at auction can work in your favour check out the garden in Chelsea which I wrote about originally for the Evening Standard. Just a few months on and the buyer has flipped for a whopping £31k gross profit on their initial £53k purchase!!