Top tips for BTL investors in the auction room:1. Research before you bidIf you’ve never been to a property auction it pays dividends to attend a couple before you make any bids. P...

Top tips for BTL investors in the auction room:

1. Research before you bid

If you've never been to a property auction it pays dividends to attend a couple before you make any bids. Property auctions are very different to their antiques and art counterparts; a visit will give you a valuable insight into the way the auction works and the tactics other bidders use. To make sure there are no costly hidden surprises following a sale, study the auction catalogue and the properties you are interested in before you bid. Visit properties to see what condition they're in and to get an idea of what budget you will need to allocate for repairs and refurbishments.

2. Check your rental returns

It's easy to get caught up in the excitement of bidding at an auction so make sure you've put pen to paper beforehand and know exactly what returns you can expect. Rental yield is an easy calculation expressing the rental income as a percentage of the purchase price and allows you to check whether your investment gives a viable rental yield. Also make sure you have a contingency fund for when the property is not being rented and loan or mortgage repayments still need to be met.

3. Auction house jargon

Don't get caught out by not understanding the terminology used in the auction house. One good example here is the variation between the guide price and the reserve price. The guide price of a property is an indication of where the reserve will be set and what the property could be sold for. However, the reserve price could be above or below the guide price. The reserve price is the lowest price the vendor will accept and will be agreed between the vendor and the auctioneer before the auction. The final sale price will depend on the bidding in the room and the vendor's final instruction, not the guide price of the property's market value.

4. Arrange finance beforehand

It's imperative that finance is considered before a purchase. Auction buyers will usually only have 28 days to complete, sometimes it can be as little as 14 days, and you will need to put down a 10 per cent deposit on the day. This can be a problem if you have yet to secure a mortgage with a traditional lender. Short term finance can be arranged prior to an auction for a particular lot, up to an agreed bid price, so you can be sure you have the funding in place before you bid.

To avoid a last minute panic, think about having an agreement ‘in-principle' on any loans you will need before you bid on your lot, although these can be secured through short term lenders before, during and after an auction.

5. Proxy bidding

You don't have to physically be in the auction house to bid, proxy bidding is where you authorise the auctioneer to bid on your behalf up to a maximum amount set by you. To do this you'll need to give the auctioneer your instructions in writing and the deposit prior to auction using a form normally found in the catalogue. It is advisable to contact individual auction houses for specific information on proxy bidding at their auction. Many auction houses also now accept telephone bids and online bids - an option which is only likely to grow in popularity in coming months.

6. Auction room checklist

It's the day of the auction and you're ready to make your bid. To avoid all being lost at the last hurdle, ensure you have the following documentation with you

-Your cheque book and bank details as 10 per cent deposit on the day will be required. -Your solicitor's details - the auctioneer will require details of which solicitor you are planning to use. -ID - you will need to have your original passport or driving licence and proof of residency to comply with Anti Money Laundering rules. Take at least two forms of ID along with you.