When it comes to buying a pub at auction, success is ultimately linked to doing your homework properly.
Carefully consider why a pub is being sold, including what may not have worked so well for it under previous ownership and why. Take time to research the demographic in the area in which you are looking to buy to identify gaps in the market and think about how much others may be willing to pay, which all helps you to prepare your own pricing limit before the auction.
Also ponder alternative uses before bidding as pubs with good development potential are likely to attract investors and developers, often inflating the price. Overbidding can be a common mistake and, although it’s less of an issue if you’re a cash buyer seeking to own a ‘live in’ business for a long time, it is always worth having at least a ball park idea of resale value, should you need to sell in the near future if circumstances change.
Be sure to do in-depth due diligence, both in terms of legal documentation and your own checks of the building, area and potential legal and operational issues, such as asset of community value listings, late night levies and business rates. This helps to ensure you are not caught by surprise at a later date.
In the increasingly competitive pub and wider food and beverage market, new concepts and products can be the key to standing out, so it is a good idea to be on the look out for properties which could support such opportunities. While mass sales of pubs from large estates may be less common today than in the past, this does not mean that the right pub at the right price is not out there.
With auction purchases, timing is often key. Taking a risk can pay off for some buyers who successfully secure a property off market after it fails to sell at auction. Conversely, if you’re not willing to chance a pub going to another buyer on the day, there is often an option to purchase prior to auction saving any potential for bids to spiral.