Thanks Y-Man,
perhaps i'll pose the question differently.
the reason for me asking for clarification was in regards to thinks like body corprorate fees, and strata/stratum/whatever titleing.
heres my new question(s)
do villas have body corp fees? is it true that if you own a villa, you own that little slab of land that its on?
if a unit is in a block(ie a flat) is this treated the same as apartments in terms of body corp issues - and percentage of land owned?
i guess what im asking is which is the better investment, if all else is equal (ie size, location, facilities, blah blah) , a villa or a flat/unit/apt in a block? in terms of land content, body corp fees
if my queries are too newb, then feel free to point me elsewhere, i've done quite a few searches and havent found it covered here before.
Thanks!
Hi Gigantor
I appreciate I am coming late into this thread, but your questions are expanding from the specific - what type of funding for what type of property - to the general - which is the better investment?
That's a bit like asking which is better - tea or coffee? Each investor has different criteria. There is no right or wrong with property investing, and over time, very little 'better'.
You mentioned wanting to live in the apartment, and lenders view an owner occupied scenario quite differently to a purchase specifically for investment purposes. You can get to quite a good LVR in a Docklands tower with a full doc owner occupied loan, and certainly achieve 100%LVR for areas such as Elwood. There are only a few restricted postcodes now, and the lenders quotas in some of the main buildings have eased up.
For example, if you were interested in Tower 5 at Docklands, you may find that Lender A which insures with Insurer A would not take the deal, but Lender B which insures with Insurer A and C would take the deal.
You mentioned insurers 'lending' money, do keep it mind that lenders lend money, insurers insure against borrowers defaulting on the loan. Two completely different situations and in the early days of Docklands and the redevelopment of St Kilda Road, there was concern that defaults would be high. This has not necessarily happened and insurer's policies have subsequently softened considerably.
A lender is not concerned as to your choice in property, but the property is mortgaged to provide security for the loan of money, and if the borrower defaults and the lender has to foreclose on the loan, it is important that they can expect a reasonable chance of selling the property to recover their money within a reasonable period of time eg three months.
As the Docklands has stabilised and occupation of the towers reaches certain proportions, the time to sell shortens. Once sales data indicates that selling time is within market parameters, lenders and insurers act more confidently in advancing funds against these securities.
Any new suburb - and Docklands is a whole new suburb - can go through these early stages of risk assessment.
It's all very scientific from a lender's point of view. They are only concerned with risk management, whereas the buyer is more emotionally involved and focuses more on the view or the proximity to cafes or schools or their Mum or whatever.
However, if you are wanting 100% or 105% lending against the one security, this is more readily achievable in St Kilda or Elwood or South Melbourne or Brunswick or Footscray than it is in the CBD, Docklands or St Kilda Road. If this is your first home and you will be using the FHOG and not much else to get in the door, make sure the flat / unit / apartment is at least 50 square metres in internal space. Measure it, the valuer will! The property should have at least one separate bedroom, but things like 'European laundries' don't matter at all. Equally, it doesn't matter whether the property is a townhouse with it's own footprint, or a strata flat in a block. Provided that the property is classified as a 'dwelling' and meets all other criteria you should be able to achieve a good quality high level lend from a major lender without much fuss.
With regards body corporate fees and ownership of land, if there is any common property - the foundations, exterior walls, roof, driveways etc there should be an operating body corporate and the body corporate should have appropriate insurances, which is mainly what the fees go towards.
All owners own the land 'jointly and severally', meaning if there are 10 flats built in one building on a parcel of land, the owners of the flats will own an undivided share in the land. No, you will not own the bit where the letterboxes are and your next door neighbour own a bit of the driveway, you will all own all of it together. As the value of the site increases over time so, too, will your unit increase it's capital value even though the building will eventually depreciate to 'nothing'.
If you buy into a 'walk up' block of less than four storeys with no lifts, gymnasiums or swimming pools, the body corporate contributions will obviously be less than if you buy into a 30 storey tower with high speed lifts, concierge services and high tech fire services.
It's as much a lifestyle choice as a financial choice. You may decide that paying $4,000 per annum in body corporate fees and living in a tower where you can walk to walk, means you don't have to spend $4,000 per annum on petrol, fares and parking, is good value for you because that's your choice of lifestyle.
Someone else may be on a tighter budget, want to live on the ground floor, have a bit of a garden and watch the world go by - for them, a flat in an older building in South Yarra close to the Jam Factory may be their idea of Heaven. It's all relative values.
Good luck with your search. The hunt is half the fun. There are some great buys around - both older flats and newer apartments, take your pick!
Cheers
Kristine
