Units - small vs large block

Hi all,

I am a novice property investor (one IP to my name, purchased January '09) looking to purchase my second IP. Area is Sydney - lower North Shore. My criteria for purchasing my first property were: small block (high land content), 2 bed, parking, internal laundry, well located for transport, in need of cosmetic reno - I ended up purchasing a 2 bed unit in an art deco block of 4. Where I am struggling at the moment is in finding an appropriate property in a small block (all other criteria still apply) - if I was to widen my search to include strata/high rise buildings then I would have a greater choice.

So what are people's thoughts on purchasing an IP in a larger block (up to 40 units) if the unit ticks all of the other boxes? I understand the concept of high land value and how this is beneficial for CG, but is this always the case, or do some strata units do as well CG wise as those in smaller blocks? I would always avoid areas with a high number of similar units (e.g. St Leonards), and also only look at older buildings (i.e. no new developments) - so should I cast my net wider to include larger blocks of units? Your thoughts and advice on this would be very much appreciated! For example, something like this:

http://www.realestate.com.au/cgi-bi...r=&cc=&c=92615209&s=nsw&snf=ras&tm=1260438028

Or do I stick to my guns and keep looking for a unit in a small block?
 
Thanks Propertunity. Also my preference, but don't want to blindly ignore larger blocks if some of them may present a good opportunity as well. Do you prefer smaller blocks because they tend to show greater CG, or is there some other reason? What is the max size block you would reasonably consider?
 
I prefer smaller blocks because for some reason I feel safer in them.

You still have people around you but not too many and it's unlikely to see strangers walking in and out as you do in large buildings.

On the negative side, I guess council rates and strata fees will be higher and any major repairs could be costly as the repair cost will be shared by only a few owners.
 
Do you prefer smaller blocks because they tend to show greater CG,
AFAIK there are no published CG stats of units in big blocks like Meritons c/w smaller ones. They only differentiate between houses & units.

or is there some other reason?
It is probably the land component thing again. More of it with lower numbers of units in the block

What is the max size block you would reasonably consider?
20 is about my upper limit. I'm happier with 4 or 8 to maybe 12.

Usually this means no lifts - so lower BC fees too.
The more in the block the less uniqueness and therefore less desirable IMO.
 
Hi Stark, my upper limit personally would be 8. Although so far the only units I own are both in complexes of 5.

or is there some other reason?

Yes; in a smaller block, it would be a more reasonable goal to one day own 100% of them and renovate/redevelop the entire site. i.e. It'll be easier for me to gradually buy 4 more units in each complex than say 39 more units.

These remaining 8 units in my complexes are properties that I continually have my eye on for future purchases.

-Ian
 
I prefer the smaller groups for units and villas.
They offer better scope to reduce operating costs by self managaing the body corporate.
They tend to command a better rental and selling price (based on my experience).
I also like the idea of buying multiple properties in a group with the long term view of either owning the entire group or enough properties to have control at body corporate meetings.
 
eg. What are the pros of being in a block of 40?

pros: generally lower strata, lower land component so if you have other properties possibly little or no land tax. If there are any structrural issues they'll be shared by a bigger pool of people

cons: too many people and possibly there will be a need for an elevator and cleaners so strata will increase.
Some people won't buy or rent in big blocks.

I'm one of those, I don't like high rise apartment blocks but I don't mind large complexes with vilas or townhouses
 
Apart from what BV says, why limit yourself to analysing one specific style of property. Sure have preferences, but if you see an IP that's a good deal (whatever that is), why pass on an opportunity because it's got one too many units.
 
Apart from what BV says, why limit yourself to analysing one specific style of property. Sure have preferences, but if you see an IP that's a good deal (whatever that is), why pass on an opportunity because it's got one too many units.

Oh for sure, every property has a certain price point that makes it a good deal.
 
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