Stay Away From Low Grade Property

I have always said that low grade properties are not a good investment. Readers of my column will have noted that I repeatedly advised that it was better to buy in “leafy suburbs” as values hold up better rather than the poorer areas.  The story below shows that even the best in the game still need reminding.   To buy and resell quickly  for a profit in poorer areas may be a different exercise but to buy and hold just because the rent is  smidgen better is, in my view, very short sighted.  Excessive repairs, and defaulting tenants can decimate notional returns.

It is also notable that prices achieved were up to 40% lower than the CV’s which goes to show how important it is to thoroughly learn how the market really works before jumping in .

NZ Herald 1.12.11

A portfolio of properties previously owned by self-proclaimed real estate mogul Don Ha has sold at mortgagee auction.

The portfolio of nine south Auckland houses, accumulated over several years by then investor and property mentor, sold today for a total of $1.97 million.

Mr Ha said he thought some of the selling prices were “a bit under value” but it was a good result.

“I think that’s what the market wants to pay. I think the outcome is good for both parties and I’m happy I don’t owe money now,” he said.

The portfolio included seven 2-4 bedroom houses and two 10-bedroom boarding houses.

Bayleys said the auction represented “one of the city’s biggest residential portfolios to be brought to the market in recent years”.

A 10-bedroom brick and tile house in Manurewa sold for the highest price at $382,000

Others sold at the auction included
MANUREWA, 16 Rehua Place   $368,000  (CV $430,000)

GOODWOOD HEIGHTS, 6A  Flamingo Court $235,000 (CV  $370,000)

PUKEKOHE, 14 Kennelly Place $165,000  (CV $235,000)

PUKEKOHE, 40 Birdwood Road $151,000 (CV $260,000)

PUKEKOHE, 22 Birdwood Road $137,000 (CV $240,000)

PAPAKURA, 23 Redcrest Avenue $151,000 (CV $250,000)

PAPAKURA, 2 Belgrave Place  $195,000 (CV $260,000)
Read the rest here:

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