Buying low and selling high is one of the keys to success in real estate investment and one of the best market segments is providing the type of buying opportunity is the auction market.

In the auction market, it is not uncommon to see some properties being auctioned at a reserve price of more than 50% lower than the current market price.

Take this service apartment in Tropicana Gardens, Kota Damansara being auctioned by Maybank for instance, its reserve price for the last round of auction was RM864,000, according to information from the bank as at July 25, 2020.

As a general practice, the next auction reserve price for this 1,398-sq-ft unit may be reduced by 10% to RM777,600 as it is unable to find a taker in the previous round of auction.

A service apartment unit in Tropicana Gardens is being auctioned at steep discount 

Source: Maybank

On the other hand, some sub-sale service apartments with the same built-up in Tropicana Gardens that are selling in the secondary market comes with a price tag of as high as RM1.68 million, based on the property listings on iproperty.com.my.

This translates into a 54% discount against the RM1.68 million asking price, if the auction property’s next reserve price is reduced to RM777,600. Even if the reserve price is maintained at RM864,000 for the next round of auction, it is also a decent discount of close to 50%.

Besides the huge potential in capital gains, auction property also offers great rental returns that could outperform the general market for yield hunters.

Currently, some 1,398-sq-ft service apartment units in Tropicana Gardens are asking for a monthly rental of about RM5,000, which provides an amazing rental yield of 7.72% if you acquire a unit at RM777,600.

With these merits, auction property is no doubt one of the best deals in the market that can bring lucrative returns.

Especially when there is an economic downturn, the number of auction property are usually higher and thus providing more buying opportunities for buyers.

But it is also often overlooked by many who are unfamiliar with the auction market and have no idea where to begin with.

Indeed, there are several things to note before one venture into the auction market, but it is not as complicated as one would imagine.

At PropNex, our team of professionals are well-versed in the auction property market and ready to offer tailored services in assisting you in finding the ideal property that you are looking for.