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Auction Property

Proof You CAN Make Money Flipping Property At Auction

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!!

3 comments
  1. Amanda qi

    Sam, very interesting read. There is no guarantee in auction flipping and sometimes it does not make any sense at all. There was a piece of land in my village which was sold by Romans in 2010-2011ish for £65k. The new owner applied planning permission for a detached house but was refused. Due to it is on flood zone 3a and it’s position at a double T junction, some pipe work below it and public access, it will never gain planning permission unless the whole area to be removed from flood plan. It was put on auction again a couple of month ago and was sold for whopping £350,000! Initially I thought did the auctioneer make a mistake on the decimal point in the published price? No, it was £350k! And the vendor must have been laughing to the bank!!

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