Block of 3 2BR units - thoughts?

Hi Everyone,

I am looking at a block of 3 2BR units tomorrow after lunch, with a view to perhaps buying the whole block. It is not currently subdivided. At current rental yields, it would initially be cashflow neutral.

Anything particular to watch out for with small blocks of units? The units are quite old but in OK condition, and I understand (and am checking) that the block is zoned for multi-dwelling development so maybe do a redevelopment down the track.

Thoughts? Pitfalls? Criticisms?

Thanks heaps in advance.
 
Hey VYBV8,

Firstly have a look here:

http://www.somersoft.com/forums/showthread.php?t=55592


http://www.somersoft.com/forums/showthread.php?t=49618&highlight=Block+flats

http://www.somersoft.com/forums/showthread.php?t=49078&highlight=Block+flats


Those threads aren't too long and some posts may provide some ideas to add to your DD list.

Sounds like you have upside in the land zoning, however make sure you can (if you desire to go down that road) put more on than what is currently there.

Be careful of fire rating and the ease/logistics of attending to this is you wish to strata to onsell or re-value and suck out some equity.

Aside from this, the usual building/pest, and other investigations on title, legal etc., etc., that you would normally entertain even if buying one single unit or a house.

If it's only three you may even sneak in with a resi LVR.......MB's may be able to add further with current credit criteria.

Good luck :)
 
Thanks heaps guys, hugely appreciated. The unit block is actually over the border in NSW. As far as LVR goes, I'll be running at 80% across most of my portfolio including this unit block, as I have some headroom in other properties at the moment. At present, I'm concerned the vendor is asking too much, so I'll try and get the price down to a level I think is reasonable (6-8%) below asking. If it goes above that, I'll let this one slide and keep looking.

Thanks again.
 
Cheers Rolf. Bank said the same thing, but also said they could get a bit nervous about having to sell a whole block. I pointed out to them that they hold mortgages over 5 other properties of mine, and that surely we could work something out if it really came to that, and they backed off.

Haven't heard back from the agent yet, but I figured I'll stay quiet until they contact me.
 
They called last night and offered to drop their price by $11k. I made a counter offer of $10k above my first offer, meaning that we are now $9k apart rather than $30k apart. I also offered to let their son stay in the unit he is currently in (at approx market rent anyway).

I called for vacant possession of the other units, as we're going to do a light reno (bathroom tidy up, carpets, paint) before renting them. One unit has tenants moving out anyway. I also offered flexible settlement date.

Fingers crossed, ball is in their court. My only concern is that apparently another party is looking through this afternoon, and perhaps the agent will attempt to play us off against each other. I guess we'll cross that bridge once we come to it.
 
Go to Subway Belconnen, buy lunch and talk to a certain person about his "flock of bats"......:D

Cheers,

The Y-man
Especially if it's in Queanbeyan, as it may appear ;)

I'm not at Subway all days now. I'm at home today. But happy to talk if you want. PM first.

Or search the forum for "flock of bats".
 
Cheers Geoff!

Agent just called back with another counter-offer, lower again. I responded with another counter-offer, slightly higher. We're within $2.5k of agreement now.

Fingers crossed.
 
The selling agent was LJ Hooker in Tuggeranong, and I didn't use a buyers agent.

It must be said that the agent was incredibly straightforward and honest about things. Certainly one of the better I have dealt with. None of the games or mucking around you often get during negotiations.

Thanks for the congrats, guys - today has been a good day!:)
 
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