I’ve just been to an auction for a unit in my home town, and I couldn’t believe the way the auction went. It was quite funny.
I started the bidding strong, but with a very low initial bid. The next thing I know, three other people are throwing hands in the air, shouting out bids. I stopped straight away, especially when the unit went outside my calculated limit of Cashflow
.The thing that got me was that the bidding went on until one person (obviously) won. I went and congratulated him on the purchase (and tried to find out some details), and it seems that he is an investor who just couldn’t say no to not having the property.
He actually bought it at $23K above market value (in comparison to other unit sales in the same block). But considering that it was only a total of $83K, I mean, that is a huge percentage.
The unit will not return any +ve cashflow for the next 10-20 years at least.
I just couldn’t believe that a supposed investor could simply pay so much for a simple unit.
Obviously some people buy with emotion, or else they just have totally different plans for life…..
I had a very similar experience at an auction, but did not bid (not having a spare million!).
It was a mortgagee auction of a block of 4 units. The owners ran out of money, and the units were only half fitted out (no floors, no baths, no switches, etc). Where things were done they were done poorly (eg you could stub your toe on very uneven floorboards, etc!). Also there were no courtyards or gardens and the view was bad (they were trying to cram as many units onto a narrow houseblock).
The building was unfinished for 2-3 years. Would you believe the four units sold for $1.2m, after starting at $1 million?! Even though this was 12km from the Melbourne CBD, surely this is a bad bad investment, especially with the costs of making it habitable.
Maybe someone was seeking big depreciation allowances, but I doubt they’d make much money on it.
.
The topic ‘People who buy on E.M.O.T.I.O.N’ is closed to new replies.
