Yahoo Finanza ‘I bought a derelict drug den at auction, and now have a burgeoning buy-to-let business’
When Christina Dejonge, 42, first started looking at property auction sites in 2020 it was just a way to pass the time in lockdown – but it soon became the route to building her property portfolio.
Back then she had no property experience, but recognised an opportunity in the market and worked to capitalise on it.
What struck her was the number of derelict properties available to purchase below market value that no one else was interested in. She doesn’t mince her words about the state of the first property she bought that year, describing it as “a crack den”.
Located near the Etihad Stadium in Manchester, the house needed significant cosmetic work to get it to a liveable state.
Four years later, Christina now has 11 rental properties, ranging in size from two to five bedrooms, all bought at auction.
Currently 1.55 million properties are sitting abandoned and derelict in England and Wales, according to local authority data analysed by lender Together, presenting an opportunity for regeneration and a boost to housing availability.
The financial opportunity was not lost on Christina. While she says being a mother was always her priority, Ms Dejonge wanted to create some financial independence for herself and her five children.
“The first thing that interested me in auctions back in 2020 was the notion that we could get properties below market value and then add the value to release the equity,” she says.
“This is still the case four years later. With the current economic conditions the margins are tighter, but it’s still viable buying in auctions.”
However, as a full-time mother she needed to find the financing to fund the purchases, so Christina worked with a mortgage broker and has used financing from Together to buy the properties.
While buyers can use mortgages to purchase properties at auction, the short time from winning a sale to completion means it is often not possible to finalise a traditional home loan quickly enough.
As a result, a popular option for auction buyers is to use a bridging loan to cover the period while a mortgage is processed, and then repay it once the full home loan is approved.
“A broker explained our options to us and buy-to-let seemed like the one that would work for us,” Christina says.
“I use short-term bridging loans to buy and refurbish a new property to increase its value. I then pay back the bridging loan with a longer-term buy-to-let mortgage once the property is renovated and we have tenants in.”
Christina now works full time with her husband running their buy-to-let business, E4 Property LTD. Through the company she takes a salary of £12,500 then receives the rest in dividends. Rental income from the properties cover landlord expenses such as repairs and mortgages.
The houses they have bought have been in various states of dilapidation, she says, with some needing more work than others – although they have managed to avoid buying any that require serious structural repairs.
“We now have the turnaround time for renovations down to about four weeks,” she adds.
Most of the properties they’ve bought are in the Greater Manchester area. The couple favour the area of Middleton in the north-west of the city, which they think offers good potential for value growth. Being from Moss Side herself, to the south, Christina wanted to buy property around the city she grew up in and use her local knowledge to inform her buying strategy.
‘Not for the faint-hearted’
Despite the work required and the risk of being out-bid – which Christina says is the main downside to using auctions – the certainty of the auction process compared to buying on the open market is a big part of the appeal.
When buying a house through an estate agent the process is often longer and, before you exchange contracts, carries the risk of being gazumped – when the seller accepts a higher offer from a third party. Similarly, sellers cannot push you up on price once the gavel falls, and both sides are legally bound to the terms of the agreed sale.
However, she warns that the process isn’t for everyone.
“Property auctions aren’t for the faint-hearted, so they attract a certain person who has the ability and confidence to see the deal through.”
Christina’s advice for those thinking about buying at auction is to take the time to assess your finances fully, know what you can take on and don’t overstretch.
“You need to decide how much you’re willing to spend and not go a penny over, even if you love the property.
“That’s how you make money, by sticking to your budget, knowing what you can afford and not letting the heart rule the head when it comes to financing.”
She is also clear that you need to find out as much as you can about the property before bidding, and “[do] everything by the book” – including getting to grips with the legal pack. Much of this information will be available online through the auction listing or the auction team.
However, like buying a property through an estate agent, you need to also go and see it in person and ideally get a survey done so there aren’t any nasty surprises.
“Do everything possible to be sure that the property you’re buying isn’t going to surprise you with rising damp or subsidence.”
But, there is also something to be said for trusting instincts, she adds.
Looking ahead, Christina and her husband plan to grow their business with a strategy to buy two new properties a year to add to their portfolio within the Middleton area. They are actively looking for investment opportunities.
“From the minute I bought my first property I caught the bug and haven’t been able to stop,” she says.
“There’s something incredibly rewarding about transforming empty and rundown properties into a home where people can start their families and lay their roots. It gives me a great sense of pride knowing I’m helping people to do that.”