Block of flats as an IP?

J

JCM

I have never looked at a block of single storey flats or units as an IP.
So Im alittle in the dark when it comes to hidden costs. I have seen some in the past that give reasonable yields of 7.5+, so it might be worth looking at in the future.
Can anyone here shed some light or anyone here that already owns a block of units be able to tell me what other costs apart from the usual costs of purchasing a house may there be with purchasing a block of units or other hidden costs to be cautious of?



Appreciate your input!

Regards

John
 
well, i can give you a little doosie.

don't pay for individual unit value unless they're strata titled.

most blocks of flats are built under a multiple dwelling code and are classed as a residential building, not a residential dwelling, under the BCA.

therefore, there's no need to provide individual titles to rent them out or onsell them. the only issue is, you have to buy the whole lot or sell the whole lot in this instance.

you get around this by getting a surveyor in to create 'part lots', ie Unit 1 and it's carbay are "Pt1" (part lot 1) on a title, Unit 2 and it's carbay are "Pt2" etc...

then you can sell a title individually and the units associated with those titles individually.

which is why when a block of flats comes up with no titles, they're snapped up. you might only pay $100k per unit when bought in conjunction with the rest of the development and untitled, you spend $20k getting them strata titled and re-list each one a few months later for $150k.

instant equity.
 
I bought a small block of 3 two bedroom units about a year ago. With a quick renovation, they return 7.1% gross yield (including reno cost). Now looking at strata titling for some more equity. They are also on a nice large block of suburban land less than 20 mins drive from the centre of Canberra.
 
Hi

depending on how many unit you may need to swallow a higher ongoing interest rate and as already mentioned, may need a bigger deposit .

80 % lvr on resi terms is possible for 6 or so units 2 beds on one title in a good locn

ta
rolf
 
Dirty tradie needs help, trying to be a developer

Aaron Sice said:
well, i can give you a little doosie.

don't pay for individual unit value unless they're strata titled.

most blocks of flats are built under a multiple dwelling code and are classed as a residential building, not a residential dwelling, under the BCA.

therefore, there's no need to provide individual titles to rent them out or onsell them. the only issue is, you have to buy the whole lot or sell the whole lot in this instance.

you get around this by getting a surveyor in to create 'part lots', ie Unit 1 and it's carbay are "Pt1" (part lot 1) on a title, Unit 2 and it's carbay are "Pt2" etc...

then you can sell a title individually and the units associated with those titles individually.

which is why when a block of flats comes up with no titles, they're snapped up. you might only pay $100k per unit when bought in conjunction with the rest of the development and untitled, you spend $20k getting them strata titled and re-list each one a few months later for $150k.

instant equity.
Click to expand...

You no your stuff Aaron, Thats what I've done a few times now, Just before the surveyour, the fire walls and the seperate water meters need to be done tho,With a BA from council And check town planning for parking requirements. I flick oncs strata titled and renoed because the water/land rates go throught the roof, not to mention body corp fees. all good tho


I no a bit about re-developing and next to nothing about proper developing, none of this 1 spec house **** anyone can do that. got a question as I need to make a decision on a purchase. Ok an existing block of strata titled units on 2000m. With just enough room out the back to build a duplex. My question is once I build the duplex on the common property of the 4plex will council make me bring the existing 4plex fire walls up to current BCA standards. or will they let it slide as they r already strata titled. Is there anything
else I could be missing. Can't spell for ****. Can build tho
Any info would be much appriciated. I have been working my *** off for the last 10years to finally start real projects. Thanks OXOX
 
Don't worry...I bought it,finally got it for 605k (toowoomba) look forward to throwing myself in the deep end. Biggest project so far, biggest out lay by the time I build etc.
All good........:D
 
Nice one Wilko,

Tell us a little more about the deal? I'm not sure if they want you to bring the fire wall all the way through. Depends on the council and who you work with. I've been told different things myself. I think you can get away without having to do it.
Let us know how you go.

MG
 
mattyg_10 said:
Nice one Wilko,

Tell us a little more about the deal? I'm not sure if they want you to bring the fire wall all the way through. Depends on the council and who you work with. I've been told different things myself. I think you can get away without having to do it.
Let us know how you go.

MG
Click to expand...

Thanks Matty...yer it has been going on since I submitted highest tender575,500 on the 20dec, Playing hard ball for weeks, but finally got it for 605k(still very happy with that) Just wanted more cream at 575k. 4X2bed unit,internal access,80's, 90mm cove square set walls. Bargin, My wifes a property manager. its 2km from toowoomba uni. can fit a duplex down the back at least. And it is already strata titled,so save about 20k there,with plumbing/firewalls.surveyours,council ba and titles office,and body corperate set up. So I'm stoked, I'm a trady with a kitchen bussiness, and I do all my own reno's bar plumbing electrical, render/roof res. So I no I'm going to pull good coin out of this one.I done all my homework on it before I submited the tender off corse, I had a few questions for the council. all is good. And these floods gave me the push I needed, as I believe interest rates will be lower for longer now. Can't wait to start the DA.......where do I start...hahhaha. the reseach begins.:rolleyes:
 
Hi Rolf,

I have looked at a block of units before and was told by the mortgage broker that anything over 3 units attract commercial lending rates and LVR.

How do u get around with 6 units at resi rates and 80%? Which lender?

Thanx
 
Hi Evan

A broker with access to more products ( or sometomes just the experience) will be able to place it resi rates through to 80.

Im assuming this is metro or large regional full doc with at least 1to 2 beds ( over 50 sqm) and own laundry per unit

ta
rolf
 
evan1875 said:
thanx rolf,

i will be contacting a few more brokers and see what happens with financing unitblocks.
Click to expand...


Hey Evan

for us any block of units with 4 or more in the complex, is classed as commercial, and the IR goes to 9.3% if its under it Res and the rate is 7.3%. That was our last loan, signing up another next week,so hopefully it hasn't changed, I'll let u no.That is business banking with St George. There good, Where happy as with them, apart for there fees but...ahhhh small change. over it, still happy as:D.
 
9.3.....................nice coin over 7.3

once may be able to do a little better depending on locn and if full or lo doc

4 to 8 units at 65 to 80 % lvr with rates in the low to mid 7s is doable on full doc

ta
rolf
 
thanx wilko,

yeah that was exact what i was told but i will follow up on rolf's lead.

if 80% resi rate is doable for blocks of 4-6, it would indeed be very good news cos i have a soft spot for blocks of units.

so good luck with the one u r exchanging.

please do keep us informed on how ur DA goes with the council. if the density allows then hopefully won't be a major problem.
 
evan1875 said:
thanx rolf,

i will be contacting a few more brokers and see what happens with financing unitblocks.
Click to expand...

evan1875 said:
thanx wilko,

yeah that was exact what i was told but i will follow up on rolf's lead.

if 80% resi rate is doable for blocks of 4-6, it would indeed be very good news cos i have a soft spot for blocks of units.

so good luck with the one u r exchanging.

please do keep us informed on how ur DA goes with the council. if the density allows then hopefully won't be a major problem.
Click to expand...

Hey Evan

Been busy up north work.....
All good, well unit block settled

In the end it was an 80% lvr but full borrow of purchace price, using equity in other projects. Well I was told cut off from St George is now 3plex and above for commercial, so we got a line of credit 8.72 Varible, More than I would have liked but it will probly only be a 2 year project max, so I wasn't about to loose it over 10k as I beleive it is a great project, and time will tell. Can't wait to hook in,:D Also very curious about selling my own projects, cut com down etc. Anyone done this, that doesn't work for a real estate.......
Good luck with your future choices. :)
 
There's a set of units (6 or 8 I cant recall) which is coming up for auction in Bondi, Sydney, if anyone's interested. All 2br and apparently returning $500pw.
 
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