Property grading system A/B/C - how does it work?

I only know heard from a friend. Only reason they had to sell their upper value PPOR was because their business was bleeding cash during the GFC to repay some bad debt.

I am sure if your clinic business was in trouble, you would off load your property investment.

 

Exactly! What I learned, possibly more because I didn't have the income to buy so called 'A Grade' properties is that sometimes it's best to not buy them. Sometimes it's just their - "Gurus"-rating system so they can prove how 'superior' they are, to act as buyers agents, oversee developments, sell books and get bums on seats. Tell me, are they doing well because of their investments or their work promoting investments to others?

If you buy properties where people want to live, have decent insurance, good PM's, keep them well maintained, charge market rents and buy/sell with general timing in mind, you are going to do well. You don't have to buy at the bottom and sell at the top, although that will improve your results hands down, but I presume you don't have a crystal ball.

I've bought in some places that would be more like D, E, or F grade properties in the past. Couldn't afford better at the time, and you know what? Every single one of them has made money when they've sold. Most of them have gone now. Now they've not been in the city, so the percentage of CG has been less than city properties, but the yields kept us going as they would be cash flow positive from day one at 100% finance plus costs. BUT I've always held them until at least the next boom, cashed out and put the funds into some in a better location.

As for 2770, that's where we've made the most, simply because we lived either in the area or close by. It's meant that we've been able to sweep in and grab sell offs straight from the Housing Department, fix & rent out. Hubby is a tradie, so the costs haven't been too high.

We've sold many of them, and with hind sight would have made a lot more by keeping them, BUT then there are others in our portfolio that we couldn't have bought without selling something first.

The fact is that you can make money from property ANYWHERE, so long as you know what you're doing and you're prepared to actually DO it. There was a lady on SS who bought really crappy rundown stuff in more rural than regional areas, fixed them & rented them out. Self managed because there's no Agents there & she did well too. That's too much hard work for me, so I wouldn't do it, but she's proof that even that can work. If you wanted to put a grading system on her stuff I'd grade it as "X Grade".

 

Haha, they all tell you that. Especially the snake oil salesmen for off the plan.

 

Don't quote me, but I'm sure @See Change has enough buffers in place that this would not be necessary.

 

Yep!

Domain has a bit of a vested interest in selling homes. Many investors go to buyers agents these days who spruik about how they can find these "A grade" for you.

As @See Change said, it's a marketing ploy, and it works really well with new investors. But think about this for a moment......

If you buy "A Grade" properties does that mean that you know more than someone who buys "B or C" Grade properties? Does that mean you will be wealthier? I ask because over the years I've known many investors retire early on their "B, C or worse" Grade properties. Don't know many who have been able to do it on "A Grade" properties.

 

We went to a parents gathering ( Knox ) the week after GFC hit . Several high profile execs were unemployed and we found out that Mac bank would have gone under if the government hadn't brought in the guarantee ..... Lots of pain for people in high level nice areas living in nice properties in nice suburbs

Sold my business many years ago .

Employee with gradually decreasing hours of work and no hassle of running a business

We have lots of buffers . NDIS income is giving us a nice cash flow positive balance to our IP's ( more than enough to retire on to be honest ).

Positive cash flow within super which we could access , but happy to let it build up .

Weekender worth a motza and if we wanted a cash flow increase we could rent it for probably 1 K a night on weekends and more in school holidays , but we like the freedom of going when we want to . We did go through the process of getting it set up for renting , but decided not to when covid hit . We do wonder whether we might do it when we retire if we see a tangible benefit of more income ..

Cliff