Snoway Id buy an apartment

Posted on Friday, August 19 2011

“Snoway I’d buy an apartment?”

This has been the Mantra of many an investor I have come across – ‘I like to have a piece of dirt’. Why? Do you go around to your rental property to harvest the Taro on a weekly basis? What happened to location, location, location? Being in the centre of one of the world most liveable cities isn’t good enough? Maybe you thought the chances of you buying an apartment were as good as a snowstorm in Queen Street? Could be time to consider it – ‘snow time like the present (sorry – we Aucklanders get a bit excited after 70 years without snow) . Rents are rocketing and prices at the lower end have already gone up by 15% this year. But you probably won’t read it in the papers until they go up another 15% and it will be too late. Maybe they won’t keep going up and you’re stuck with a property returning 10% net. Could think of worse things.

All types of property have their pros and cons – the key is to do your homework properly and minimise your risk. Homes perceived as leaky can offer opportunities but not without risk, a risk which may not be easy to mitigate. A friend is getting an 8.5% gross return on a townhouse in Grammer Zone which was perceived to be leaky but only needs up to $15,000 spent on it. Today I valued a roughcast property for a buyer making a backup offer. The people who had the first offer employed a building inspector who told then after 5 minutes to forget about the property as it was clad with Harditex and there were cracks – -except it was actually solid plaster which is not nearly as problematic. Conversely a colleague valued a proposed home – the existing home recently purchased with a favourable building report leaks and needs to be demolished. It may be that thermal imaging should be considered as a minimum requirement in obtaining a pre inspection report for this type of home.

The Auckland market remains fairly tight in that there is generally little selection for buyers and strong competition for desirable properties. While the more central areas have been performing well most of this year, there appears to now be some flow on effect in the lower cost areas with returns becoming too enticing. Happy investing and don’t forget come rain, hail, snow, graupel or shine, the team at Property Indepth will value your property (yes I did measure up a property while being snowed on last Monday! The client was recalling playing in the snow at Bombay primary in 1939!)

Rene McLean.

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