Ltd. company formation for an auction purchase - timing

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Ltd. company formation for an auction purchase - timing

    I am thinking of bidding on a property at auction next week.

    If buying any more property my intention is to do so as a Ltd. company. However, there is no Ltd. at the moment, since there is no need for one unless I am buying a property.

    I am conscious that at an auction, contracts are exchanged when the hammer falls and a deposit is payable immediately. Therefore if buying as a Ltd., does it have to be the Ltd. which registers to bid and pays the deposit? Or is it possible to do so as an individual, then form a company, and for that company to complete the purchase?
    There is a fine line between irony and stupidity. If I say something absurd please assume that I am being facetious.

    #2
    I've changed buyer name in the past post auction but not recently so I think due to money laundering etc it wouldn't be allowed. For the sake of £35 maybe form company pre auction and pass the registration formalities

    Comment


      #3
      Thanks - that's that what I suspected.

      Not unwilling to form company if needs be, but it's all admin.
      There is a fine line between irony and stupidity. If I say something absurd please assume that I am being facetious.

      Comment


        #4
        I would suggest that you create the Limited Company , make sure that if it is going to be an SPV vehicle that you have the right SIC code. If you haven’t any activity during the financial year you can register a dormant account statement with Companies House. At least you would have everything in place when acquiring your first BtL in the company’s name.

        Comment


          #5
          How do you decide on the maximum price for bidding at the auction?

          Is the price set at 10 x the estimated annual rent ?

          Comment


            #6
            Whenever I have bought any property I have started by running the numbers. Could be on a leveraged or unleveraged basis depending on the circumstances. Monthly rent x 12 minus allowance for voids, minus all estimated costs (which may include mortgage if leveraged) and divide by purchase cost plus capital expenditure if applicable. This gives either net yield, with no mortgage, or ROCE with mortgage. Or preferably both to see how it would stack up either way.

            I use that method to work out what the property is worth to me (or perhaps more accurately what I am willing to pay for it, which is not strictly the same thing) and decide whether to make an offer, or bid, based on that.

            Although I hadn't appreciated just how similar the process is until recently, I now realise that the method is almost exactly the same as a value investor uses to assess companies and decide what share price they are willing to pay. Unless trading or speculating (where the issues are different) the property can be considered a business and the investor should be trying to calculate its intrinsic value and buy with a margin of safety.


            btw, as an update on the original question I spoke to both the auctioneers and my solicitor about this today. Auctioneer thought it would be possible to bid as an individual and do some kind of legal transfer to a Ltd during the conveyancing process. My solicitor pretty much echoed this in vague terms but said it was not something they did and I would have to consult a commercial solicitor. Lacking definitive info, I gave it a miss this time.
            There is a fine line between irony and stupidity. If I say something absurd please assume that I am being facetious.

            Comment

            Latest Activity

            Collapse

            • Reply to BTL loan with bad credit issue - please help
              by leasee123
              A bad credit record just for being overdrawn by £100 and paying it back soon after? What a joke. Which bank is this so I and others can avoid them with a bargepole?

              OP - if you missed out on this property I wouldn't be so disappointed with such low yield. Capital appreciation, even...
              17-10-2021, 11:31 AM
            • BTL loan with bad credit issue - please help
              by trippyvibes
              Hello, I am new to the forum and would appreciate your help.

              Back in November 2018 we had a loss in the family and it affected me. I lost interest in most things and neglected my responsibilities. I have a minor bank account which I use mainly as backup for Paypal payments on eBay and...
              01-01-2021, 18:05 PM
            • All change... Plan number 2...
              by Bonehead33
              So the previous flat sold before I could get my hands on it.

              So another quick plan for your collective scrutiny please. Don't know how feasible it is.

              We're moving to new build in march with new mortgage and savings. New build purchase not dependant on current residential sale....
              16-10-2021, 16:15 PM
            • Reply to All change... Plan number 2...
              by landlord-man
              Wow, a £300k mortgage is going to take a sizeable monthly rental to service - and then the tenants decides not to pay - ouch.

              I would sell and use the £100k to buy 1 or 2 BTLs at £100k-£120k each with mortgages, spreading the risk.

              It may mean buying away from where you...
              17-10-2021, 09:20 AM
            • Reply to All change... Plan number 2...
              by Gordon999
              If you can sell your former home for £400K with £300K mortgage to pay off , you would receive £100K and no capital gains tax to pay.

              Before you decide to rent out the property, you should check the rental demand for houses in your area and the current rents.
              17-10-2021, 09:07 AM
            • Reply to All change... Plan number 2...
              by jpkeates
              If the mortgage is joint, the ownership will have to be joint.

              Moving the property to a limited company is going to be difficult because of the timing - your limited company would require personal guarantees for a mortgage and you would need to be a property owner to be able to use the...
              17-10-2021, 08:16 AM
            • Reply to All change... Plan number 2...
              by doobrey
              Yes, you would....
              16-10-2021, 21:23 PM
            • Tenant used to own property
              by dizzymill
              Hi all. We have owned a property for 16 years which we bought off the person who is and has been the tenant all this time. It has been mortgaged with TMW but now when we come to remortgage back to them as mortgage term has expired they are saying it doesn't meet their criteria as it's a sale and rent...
              15-10-2021, 09:20 AM
            • Reply to Tenant used to own property
              by theartfullodger
              & Beware you may already now be on the National "Hunter" system that records persons with loans/credit deals that were... err.. based on might appear to be "iffy" info.

              Designed to flag warning red flags to any lender when later approached.

              See......
              16-10-2021, 14:52 PM
            • Reply to Tenant used to own property
              by loanarranger
              JpKeates is correct on his understanding of granting Vacant Possession but not adhering to the requirement. Don’t kick up a fuss with TMW as you might not like it if you were asked to repay the mortgage, unlikely but never take such things for granted.
              16-10-2021, 14:25 PM
            Working...
            X