Why buying land at auction is a good investment?

When people think of profitable investments, they usually associate it with buying property, however buying land in the UK may be an even better investment opportunity in a lot of ways.

There are multiple plots of UK land to buy through Auction House London and each one is worthy of consideration for several reasons. Land investments can be lucrative, they are much cheaper in the long term thanks to the lack of utility bills, maintenance costs and necessary insurance. It is the type of investment that enables investors to diversify their portfolios, while requiring little to no effort to maintain, also land will generally continue to rise in value. With land becoming ever scarcer within the UK, that value increase could be worth more than any property flip or redevelopment.

Of course, owning land also gives you an opportunity to develop it yourself should you desire. At the very least, it is absolutely worth perusing the available land lots at Auction House London to see if any opportunities to invest in land attract your attention.

Our team at Auction House London has been examining why investing in land can be an excellent option and here we share our findings to help you see the potential rewards of investing in land.

Our step-by-step guide will walk you through the entire process, ensuring that you’re well-prepared and equipped with the knowledge to bid with confidence. So, if you’re ready to dive into the world of buying land at auction, this guide will empower you with the tools and strategies you need to navigate the auction process like a pro.

It is easier to buy land in the UK

Buying property comes with inherent risks, buying land is much more straightforward. When you buy land in the UK through Auction House London, you don’t have to deal with banks and mortgage brokers as you don’t necessarily need to borrow money from financial institutions. Land does not usually require as big a financial outlay as property, so it is much easier for deals to be expedited quickly.

Buying land at auction offers several advantages over traditional real estate transactions. Firstly, auctions often provide an opportunity to purchase land at a lower than market value. This is because auction sales are typically sold “as-is” and may require some level of repair or improvement. This can deter some buyers. Additionally, auctions allow for a quick and efficient purchase process. Once the auctioneer’s hammer falls, the sale is typically final, eliminating the need for lengthy negotiations or contingencies. This can be especially advantageous for buyers who are looking to secure the land quickly or investors who are looking to flip the land for a profit. Land can often come with planning permission such as the Lot 106 in Waltham Abbey, Essex featured in our May Livestream Auction.

Land is potentially less stressful to own than property

Owning land can be a much less stressful investment than owning property for several reasons. Firstly is the fact that it will require limited upkeep with no need to develop the land to retain or increase its value. You don’t have any tenants to tend to, nor do you have any of the inevitable property problems to solve such as plumbing, broken boilers or leaky roofs.

Without tenants and property to maintain, landowners are less restricted by legislation and the costs associated with this.

Land is a stable investment

When you buy land such as the lots available through Auction House London, it may not depreciate or become derelict over time. There is no wear and tear to worry about, nor can parts of it be stolen or destroyed. It is a much less risky investment and will not fluctuate wildly in value according to trends in the housing market.

The value of a land investment will only increase in time since land itself is in limited supply. There is also the potential to make a huge profit should you buy land that is over time required for a large development project.

Land provides passive income opportunities

Owning a plot of land such as this 8,121 square metre freehold in Ipswich  does allow you to generate some passive income. Even small plots of land can be rented out to individuals or as community allotments for the purposes of growing vegetables, fruits and crops, or even to raise cattle. You may also be able to rent the land as a space for renewable energy technology such as solar power or a wind farm.

Rental space for campers and caravans is another potentially lucrative option.

Advantages of buying land at auction

Another advantage of buying land at auction is the wide variety available. Auctions often feature a diverse range of land types, including residential, commercial, agricultural and recreational. This means that regardless of your specific needs or investment goals, you’re likely to find a lot that aligns with your requirements. Furthermore, auctions provide a transparent and open bidding process. Unlike private transactions, where negotiations can be opaque, auctions allow for a fair and competitive environment where buyers can view the level of interest and make informed decisions based on the current market conditions.

Researching and evaluating potential land lots

Before diving into the auction process, it’s crucial to thoroughly research and evaluate potential properties. Start by identifying your specific needs and goals for the land purchase. Are you looking for a residential lot? Or perhaps a large parcel for commercial development? Understanding your requirements will help you narrow down your search and focus on areas that meet your criteria.

Once you have a clear vision of what you’re looking for, it’s time to research the market. Utilise online resources, local estate agents and professional networks to gather information about the current market conditions, recent sales in the area and any upcoming auctions. This will give you a better understanding of the market value of similar types of land and help you set a realistic budget for your purchase.

When evaluating potential land lots, pay close attention to its location, size, zoning restrictions and any potential development opportunities. Consider factors such as proximity to amenities, schools, transportation and future growth projections. Assess the condition of the land and any existing structures or improvements. It’s also essential to conduct a title search to ensure there are no legal issues associated with the land. This due diligence will help you make an informed decision and avoid any unpleasant surprises after the purchase.

Preparing for an auction: tips and checklist

Preparing for an auction is essential for a successful land purchase. Start by familiarising yourself with the auction process. Each auction may have specific requirements and procedures, such as pre-registration, deposit amounts and bidding increments. Make sure to read and understand the auction terms and conditions before participating.

One crucial step in preparing for an auction is setting a budget. Determine the maximum amount you’re willing to spend on the lot and stick to it. It’s easy to get caught up in the excitement of the auction and exceed your budget, so having a predetermined limit is crucial for maintaining discipline and avoiding potential financial strain.

Bidding strategies and tactics

Bidding at an auction can be a thrilling experience, but it’s important to approach it with a clear strategy.

When it comes to bidding, start with a conservative bid that reflects the property’s market value. This will help you gauge the level of competition and determine the seriousness of other bidders. If the bidding is slow or lacks competition, gradually increase your bids. However, if the bidding becomes aggressive, consider whether it’s still within your budget and be prepared to walk away if the price exceeds your comfort level.

Understanding the auction process

To navigate the auction process effectively, it helps to watch some Livestream auctions taking place which are the same format as Auction House London’s auctions.

During a livestream auction, the auctioneer will start the bidding at a predetermined price and incrementally increase it until a winning bid is reached. The highest bid at the end of the auction will secure the lot if the reserve price has been met.

Common pitfalls to avoid when buying land at auction

While buying land at auction can be a lucrative investment strategy, it’s important to be aware of common pitfalls and avoid them. One common mistake is not conducting thorough due diligence before the auction. Failing to research the lot, assess its condition, or review the legal documents can lead to unforeseen issues and financial setbacks down the line. It’s essential to dedicate sufficient time and resources to gather all the necessary information and seek professional advice when needed.

Another pitfall to avoid is getting caught up in the excitement of bidding and spending over budget. It’s easy to get carried away in the heat of the moment, especially when competing against other enthusiastic bidders. Stick to your predetermined budget and don’t let emotions cloud your judgment. Remember, there will always be other opportunities to find the right lot at the right price.

Financing options for purchasing land at auction

Financing a land purchase at auction can be different from traditional estate agency transactions. In many cases, auctions require buyers to have financing in place before participating. This means you’ll need to secure pre-approval from a lender or have the necessary funds available to make the purchase.

If you plan to finance the purchase, explore your options early on. Contact lenders who specialise in land loans and discuss your specific needs and circumstances. They can guide you through the application process, provide information on interest rates and repayment terms and help you determine the maximum loan amount you qualify for. Having financing in place before the auction will give you a competitive advantage and demonstrate your seriousness as a buyer.

Post-auction considerations: legal and due diligence

After successfully securing a land lot at auction, there are several post-auction considerations to keep in mind. First and foremost, ensure that all necessary legal paperwork is completed promptly. This includes transferring the title, updating ownership records and addressing any outstanding legal issues or encumbrances. It’s advisable to consult with a solicitor to ensure all legal requirements are met.

Additionally, it’s important to conduct a thorough due diligence process after the auction. This may involve obtaining a land survey, assessing any potential environmental concerns and verifying the property’s boundaries and easements. Engaging professionals such as surveyors, environmental consultants and solicitors can provide valuable insights and ensure there are no hidden issues that could impact your investment.

Conclusion

Buying land at auction can be a rewarding and profitable endeavour if approached with careful planning and knowledge. By researching potential properties, setting a budget and understanding the auction process, you can navigate the world of buying land at auction with confidence. Remember to conduct thorough due diligence, avoid common pitfalls and explore financing options early on. With the right strategies and information, you’ll be well-equipped to secure your dream property at a land auction and make a sound investment for the future.

And finally having a diverse portfolio……

Enhances your financial stability and helps drive growth potential. Buying land is one of the best ways to diversify a property portfolio as it is an investment that normally increases in value over time. It can continue to perform even when your other investments are not.

And should the housing market take a dive, an investment in land will remain steady to provide you with a safety net for your overall property portfolio. Land is a resilient asset class and investing in it is a wise strategy that reduces risks and protects your investments.

Auction House London prides itself on having local knowledge about diverse opportunities for land investment. If you have questions about buying land in the UK, please contact our team of property and land auction professionals. If you’re looking to buy land at auction, browse through the lots listed in our forthcoming auction. Or, if you have land you want to sell, why not see how much it could be worth in an auction with a free valuation by Auction House London.