Auction sale for let property

bigadaj

I'm just after any experiences people have of going to auction and particularly using the larger London auctions.

My father has a shop and converted two flats behind and above, a garage and outside space with two parking spaces. He is slowly running down the shop as he is 80, and has been looking to sell for about two years.

Location is a large village/ small town in west wales, and he currently gets around £800 a month rent for the two flats. He has tenants in both, young couple with kid on one and retired bloke in the other, think both get some housing benefit or support.

He's had little interest with a local agent so giving some thought to putting to auction probably in London where there is more money and the yield might look good to investors.

He has had the whole property on for £150k, getting more flexible as time goes on and recently dropped to £130k.

Any comments or thoughts appreciated, he's had an offer from a couple to effectively take over the property, they pay him around half the rent and then buy it in three to five years at current price. He thought this was quite good but it would be impossible to force their purchase in future, they've suggested this option because they have no money for a deposit, and would look to get a mortgage at that point in the future.

anselld

By running down the shop he is devaluing the property as a whole and making it harder to sell. Not many will want to buy a mixed use property with an empty or near empty Commercial unit.

He would be better to sell the shop with a longish lease (e.g. 5y) as a going concern. Then he can sell the whole lot at auction with a steady rental income of the two flats plus shop.

bigadaj

anselld wrote: »

By running down the shop he is devaluing the property as a whole and making it harder to sell. Not many will want to buy a mixed use property with an empty or near empty Commercial unit.

He would be better to sell the shop with a longish lease (e.g. 5y) as a going concern. Then he can sell the whole lot at auction with a steady rental income of the two flats plus shop.

Thanks for the response, The shop probably has little value anyway, a small shoe shop as it currently is in a small town is worth little, the whole of the value is in the flats in my opinion.

It might be worth exploring the option as you say, the garage was converted into a small wool shop that an old lady ran for a few years, but is currently just storage space. I'd seen the shop as currently having no value but it could be interpreted as a negative, I'll suggest he speak to the agents about exploring your option.

The area is primarily residential, the shop itself is only around five hundred square feet and one flat is directly above it.

anselld

Or apply planning to convert the shop/garage to a third flat perhaps?

Fosterdog

Depending on exactly which village/town I would agree with the above about the business. West Wales is has a lot of similar sounding places with a lot of empty commercial spaces. I pass through Cross Hands a couple if times a year and it seems to be a very quaint little town/village but has quite a number of empty shops and each time I pass through some of them have new quaint little boutiques opened up, baby clothes, shabby chic furniture, bike shops etc. But by the next time I go through in roughly six months they have already closed down showing that it is not the best area to get a thriving business off the ground.

The other surrounding towns and villages are the same when I pass through them and while it is sad to see from an investment point of view it's just not desirable. If the business is successful getting someone to take it over would be the best move or if possible turn the shop space into a third flat, those areas are popular with commuters who want the idyllic village life but not yet ready to buy.

bigadaj

It's actually further west than cross hands, nicer place to live but less work or a far longer commute.

Shop is probably too small to turn into a flat and garage is separate so not really convertible but it would be a good idea if feasible.

Probably worth trying to see if someone would take it on at a low monthly rent, it's often rent and rates that retail businesses struggle with.

He's been there well over 50 years and is an indication of the ch ages in the economy, a thriving business in the seventies isn't now really economic, poses a wider question for the economy which isn't been addressed but that's a whole different story and something politicians aren't addressing.