Doom & gloom in the sale room....

I was at a property auction on Tuesday looking to pick up a 1 bed room apartment near me.

Buying at auction

It was actually a two bed top floor victorian conversion. Somehow they had managed to squeeze two beds into a space of some 468 sq ft. As you can imagine it was tight. My idea was to turn it into a spacious 1 bed and add in a couple of large dormers to open it up and lighten up the space.

I've notice recently that rentals on spacious 1 beds have been creeping up touching the same rents as those for smaller 2 beds. Is it a case that because of the slump tenants are trading down and forgoing the extra bed?

The access to the property was via an external fire escape so that would rule out tenants that were scared of heights. It was never prime and I'd set myself a realistic target that had factored in refurbishment and purchase costs of £14,000.

The property needless to say went for it's guide price of £60,000 , £5,000 more than my upper limit and £10,000 more than real bargain territory. Oh well - there are plenty more properties out there and I'm only going to buy if I can find a real bargain or a significant development angle.

'Lack of enthusiasm to bid'

What struck me in the sale room which was full of prospective purchasers was the general lack of enthusiasm amongst the attendees. Despite the auctioneers attempts with bout of wit and cajoling to whip prospective investors into action, most seemed only prepared to bid if they were going to get a real bargain. A few let properties with high yields attracted some attention but their was no real enthusiasm to bid. A massive contrast to a few years ago.

'Property ain't a one way bet'

To me this is good- it's slowly dawning on property investors and speculators that property investment aint a one way ticket to instant riches and that the 'crash' was not a temporary blip to be followed by an instant recovery. I suspect that prices will drift for a good part of this decade whilst governments and banks rebuild their balance sheets.

It means that now we have got over the concept that all property investment isn't gold. I can get on with finding some real property investment nuggets without idiot speculators pushing prices up to unsustainable levels.


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