Tips for Purchasing Investment Property at Auction or Private Treaty

Purchasing investment property at the right price needs some knowledge and skill on your part. Depending upon how the property is listed you can either buy the property through an auction or by making a written offer through a real estate agent if it is being sold through a private treaty.

Let us first examine purchasing investment property by putting a written offer. This method has its advantages and disadvantages. The major advantage is that you will have time to think on what level of offer you wish to present. You will need to have patience and negotiating skills. If you like a property and push too hard you may land up in paying a higher price.

Your first step should be to condition the real estate agent because he is the one who communicates your views to the landlord. You should never reveal your final purchase price to the agent or he will push you towards that price sooner than later. You must present your facts and figures and high light all the negatives of the property to the real estate agent. You have to give a rational argument in support of your offer.

Timing is of essence. If you have competition then you will need to move fast. In case the property has been on the market for a few months and not received an offer then you should start low and take your time to test the vendors patience to get the best bargain price. Real estate agents will always tell you that there are other interested buyers and that they are expecting an offer in order to put you under pressure.

Always maintain your cool and stick to the price you have in mind. Another advantage of buying property through private treaty is that you can ask for a due diligence period to check out the property and get your finances in order before going unconditional on your purchase.

Purchasing investment property at an auction needs more skill and confidence. Firstly you have to do your home work up front. You have to organize your finances, check the title and quality of building construction before the auction. This can be a time consuming process. Most people refrain from spending money to carry out the necessary checks and building reports when they are not sure if their bid will be successful.

You purchase the property at drop of the hammer if you are the highest bidder. You can not remedy any mistakes later on. You might land up with a leaky building or structural problems that can cause all your financial calculations to go haywire.

You must either have the necessary knowledge to assess the property correctly or be willing to spend money to hire the right professionals to do the job for you. This can be an expensive exercise if you bid on lots of properties and buy nothing because your purchase price is too low.

Before you start buying at an auction it is vital that you have witnessed several other auctions take place. Purchasing investment property at an auction has all the ingredients of great entertainment....suspense, excitement, joy and sadness. You will find people losing their heads and paying far in access of the market value. You have to be a passive witness to this drama and learn from it before you participate in one to purchase a property.

When the market is slow auctions are a great way to buy a property as there is very little competition. You should avoid buying at an auction when the property cycle is on the upswing and buying at a frenzy.

One strategy at auction is to wait and let other players play out their hand. You enter at the very end and start bidding aggressively when others are fading out. If someone increases the bid by $1000 you should increase your bid by $5000. You should give an IMPRESSION that you will pay ANYTHING for the property but when the price goes over your budget you should simply walk away. 

Purchasing investment property is a numbers game. Do not allow your emotions to come into play. You may have done a lot of hard work in order to buy the property. If the price is beyond your budget have the strength to walk away. You will live to fight another day. There are other great properties that will meet your investing criteria.

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