Proof You CAN Make Money Flipping Property At Auction

1 Aug

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

joyce avenue

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!!

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