New Zealand Property Investors' Federation, (NZPIF) is the umbrella body for 20 local Property Investors' Associations throughout New Zealand.

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Email: www@nzpif.org.nz

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21-11-2011

Potential - and pitfalls - in mortgagee sales

Landlords.co.nz

 

Almost three times more mortgagee properties came to market this year than before the global financial crisis in 2007.
 
Figures from realestate.co.nz reveal that so far this year 1,535 properties have been brought to market as mortgagee listings, compared to just 571 in 2007.
 
At the height of the GFC in 2009 the number of mortgagee properties being marketed peaked at 400 and in that year 2,231 mortgagee properties were placed on the market.
 
NZ Property Investors Federation president Andrew King said that while mortgagee properties can present bargains for the investor, it's a route lined with numerous pitfalls.
 
"There are risks involved in buying at mortgagee auction in that there's usually no guarantee for getting possession. If the person who's being forced out of their home doesn't want to go, it's up to you to get them out."
 
King also warned of the dangers of buying without being able to view the property.
 
"Chattel's may be taken, so you can arrive there and all the doors may be gone, the carpets are gone, the kitchens are gone - they could be stripped basically," he said.
 
"There are certainly risks there."
 
Despite the potential risks, King said he knew of lots of investors who have been successful in acquiring property through mortgagee sales - largely thanks to doing some extra homework before hand.
 
"You've got to know what you're buying and not get carried away [at auction]," he said.
 
"Know how much it's worth, know how much it's going to rent for, have an appreciation it might not be the property you think it's going to be at the end of it because of those risks, and determine what that will cost you. For example, if there's no kitchen and it's been stripped out completely, what will it cost you to put it together and take that into consideration."
 
"Don't just rock up there and think 'I've got it for this price', there may be fishhooks there, it may all go swimmingly well but you just don't know."

Tags: andrew king - mortgagee sales - gfc - realestate.co.nz

Source: Landlords.co.nz

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