Leaky investing
Investors can make good money from leaky houses, but one who did says the average buyer shouldn’t risk it.
Auckland property investor and developer David Whitburn used to look for leaky houses to buy and fix.
He would do the deal if he could get them for less than their land was worth. It was the only way to make it a safe purchase if the house turned out to need a complete rebuild.
Whitburn said he made good money out of it 10 years ago – but it wasn’t a good strategy for most buyers, especially now.
Analysis from Homes.co.nz shows Auckland houses built with fibrous cement in the 1990s and
2000s are valued at 24 per cent less than the city’s median.
The effect was most noticeable in Auckland central, where the median property value estimated by the site was $1.214 million overall. But cement-clad houses from the leaky building years only had a median of $836,526 – 31 per cent less.
The difference in value on the North Shore was just over 23 per cent, and in the south and east it was 26.3 per cent. In west Auckland the difference was smaller, at
26.34 per cent.
Analyst Tom Lintern said that was a sign of the stigma that persisted. ‘‘Homeowners are continuing to be cautious when purchasing homes from this era. Research into a property’s history is critical to avoid costly repair costs down the road.’’
But he said not all homes of this type would have construction problems. ‘‘Most would be well built or have had remedial work performed . . . There is an opportunity to take advantage of this perception and get a cheaper deal.’’
But Whitburn said people would need a good reserve of capital and some experience if they were to try.
Modern owners of leaky homes were willing to take less of a discount, expecting the work required was minor.
Even properties that did not appear to be leaky could still be problematic, he said.
It was not always possible to determine whether timber had been treated, and some places were held together with little more than their paint and some silicone sealant.
‘‘There are still ticking time bombs out there,’’ Whitburn said.
‘‘Getting in is one thing and you might be all right for 20 years but you might have a problem in two months.’’