Don't believe you can't buy at a discount

[Dean@Massiveaction]

Just to encourage those of you in Auckland who believe cheap properties don't exist.......
Bought 2 properties today in Papatoetoe.
RV 230K PP 185K 19.6% below valuation
RV 270K PP 215K 20.4% below valuation

You just have to keep putting in offers. The deals are there!!

[donna]

What are you going to do with those properties Dean?

Trade? Hold?

I understand the deals are out there to buy under valuation - however do all the numbers stack up? Are these properties going to produce healthy yields too?

Or is the focus these days to trade property not buy and hold?

Keen for your feedback.

Cheers,

Donna

[donna]

Our neighbour's property was on the market for $100K less than valuation. CV (rateable value) was $450K and BEO was $350K.

The house in question has leaky building syndrone where two houses were joined to make one larger home. My neighbour said initially they were told the cost to repair would be around $25K - however on further investigation that figure rose to over $100K and that's why they put it on the market.

The property sold for $380K. Would this be considered a good deal? It did sell for $80K under the valuation.

Cheers,

Donna

[Dean@Massiveaction]

Hi Donna, haven't decided finally yet. Probably trade one and hold one. One of them is over 8%, the other I can onsell to an end buyer and put the profit into the other one.
I'll end up with a 2 year old brick and tile property paying me 10%

[donna]

umm that definitely sounds attractive!

Well done.

Cheers,

Donna

[Cliffy]

Yes, it's turning into a buyers market (in Auckland at least).

I bought one last week -
RV $290K PP $240K 17% below valuation

and put a back-up offer on one in Remuera today -
RV (Feb 2004) $590K PP $490K 17% below old valuation

And there's plenty more out there.

I am planning to trade or lease option these.

Cheers,

Grant

[Dean@Massiveaction]

Yeah that was my other thought, lease option them both.

[SwissKiwi]

Hi What exactly do u mean by lease option ?
Are u able to please explain that one ?

Cheers,
Matt.

[tamara]

Hi Poomba

I was wondering if when you buy, whether you look at a suburb and then become selective about the locations within the suburb?

Tamara

[Dean@Massiveaction]

Hi Swiss Kiwi,
Lease optioning is effectively a rent to buy tenant. They have the option to purchase the property when they are able. Very complicated to explain in detail here, but it attracts great tenants and gives you top rent!!

Hi Tamara,
As you've probably read from me elsewhere here I believe that researching an area is everything when it comes to buying well. In the case of these 2 properties I knew you couldn't buy a free standing 2 brm house in Papatoetoe for under 200K. I think there is 1 on Realenz. And you definitely can't buy a 2 year old brick and tile property in Papatoetoe for under 250K.
I checked the rent stats and both tenants are paying median rents so I knew they were a good deal. BEcause Papatoetoe is out of my normal patch, (it's too expensive), the only thing I didn't know was whether the street was bad, but I decided the numbers were so good I'd take a punt on that. Have since found out the street is good!!

[donna]

Matt,

Click on 'seach' - tab found on the horizontal menu bar within blue boundary of the forum. Type in 'lease option' and you will find oodles of threads on lease options as it has been a popular topic for some time.

Cheers,

Donna

[Careynz]

Hi Pooomba, to get such good deals you must be a whiz at negotiations - can you spare a mo' to let us know what your techniques were in these two cases? I myself am always looking at BEO way over the RV and find it difficult to get negotiations going below that figure let alone the GV. What’s your secret?

[Karter]

Hi poombaa,

was just wandering, if you plan on trading the properties do you get tenants in, or do you just keep it empty and put it back on the market straight away.

Cheers

[tamara]

HI Poomba

Thanks for that I was just confirming my thoughts and trying to decide if I was being too picky when it comes to location. I know am able to confirm that I am not.

Tamara

[Dean@Massiveaction]

Hi Pooomba, to get such good deals you must be a whiz at negotiations - can you spare a mo' to let us know what your techniques were in these two cases?

My main "secret weapon" if there is any such thing is I listen to the agents and ask lots of questions to try and discover vendors motivation. In this case the vendor had owned the property a long time and so his gain was enormous. I also found out he was building a mansion for a stroppy wife, had run out of money and needed a quick sale. On that basis I made a low offer with quick settlement and no conditions!!

was just wandering, if you plan on trading the properties do you get tenants in, or do you just keep it empty and put it back on the market straight away.

Always try and keep it tenanted if possible. I usually try and trade to another investor and leave enough in the property for them as well, so they will want a tenant usually

Thanks for that I was just confirming my thoughts and trying to decide if I was being too picky when it comes to location. I know am able to confirm that I am not.

Good Tamara, stick to your rules!!