What should we do with $1M

[wylie]

Thanks Shuggy.

I'm assuming "one one title" means they are not strata titled. I have read several times that this can be one way to improve the value of a block, by applying to have them strata titled.

I started this little idea of buying something with a block of units that were not strata titled and will be auctioned, in Brisbane. I never heard back from my enquiry to the agent, but there were enough things I didn't like about the block that I didn't take it any further.

Just what is involved with applying to have a block strata titled and is the major benefit in doing so simply that they can be sold individually?

What are the other benefits?

I was speaking to a friend of a friend who applied to build three units on her 27 perch block (house was taken away). It was approved as three separate titles, but final wash-up is that they are all on the one title. She said nobody will fix the problem and they don't have the funds to take anybody to court to force them to fix it.

This means (my understanding) that when they come to sell, all three must be sold together. Their initial plan was to build two in the back yard, keep the original house to live in and sell off one or two of the new builds. The cost of keeping the old house was too much and they built three new builds.

That plan is now stymied and they will sell all three and build again. However, I imagine three townhouses on one title is not worth the same as three townhouses on individual titles?

 

[cu@thetop]

Resi units at Labrador? Sounds like a dog to me!

 

[INVSTOR]

Resi units at Labrador? Sounds like a dog to me!

My first thought was, nice growth in about 10 years. Second thought was, dealing with multiple unemployed beach bums would not be fun.

 

[willair]

On email - ask them to send thru to you the IM. Don't ask for the Information Memorandum....that's one of the signs the agent looks for to tell whether they are dealing with a commercial bunny or not. It will contain all of the pertinent information regarding the property and the Lease. Have a good squizz
.

Thanks for that little 'GEM" now i know why on my few talks with comm agents over the past few months,they seem to talk their way around any questions,..

 

[willair]

Thanks Dazz. That sort of deal is food for thought. I like the weekly rent for the outlay. I like the idea of not having to worry about it. I like the idea of not having to paint it

Do you (or anybody else) know what the CBA bank in Holland Park sold for several months back? I remember it was discussed on SS and wasn't considered (by some) to be a good buy, but I cannot remember why.

On the CBA listing I notice the outgoings are -

Outgoings per annum
Rates: $1 450.00
Water: $ 950.00
Insurance: $2 500.00

... so I assume this is one of the commercial properties mentioned in another thread where the costs are paid by the owner and not the lessee.

Is this usual or, if we dip our toes into commercial, should we be looking for something where we don't pay rates and water. Or are we not likely to find that in the $1M price bracket?

I'm interested enough to at least consider this type of investment. It is a big leap for us because we are clueless about commercial and that is really a big hurdle to get over, that "what if we get it wrong" thought.

Being rather simplistic, I think that if CBA don't renew the lease then someone else could rent it, but perhaps at a much lower rent if we needed it filled by somebody, ANYBODY. That scares me.

But this type of commercial property interests me more than a roller door and office type set-up in a local commercial or industrial area where there could be several vacancies at the same time.

I searched commercial properties, and there is such a huge array of choices, houses in areas that could be used as commercial properties, development sites, centrelink office for under $10M, commercial building with fantastic sounding tenants returning $2M per year (no mention of cost to buy but certainly out of our league ).

I will do some more checking, but buying a house seems so much easier. A house is a house is a house.

But thank you Dazz for the link. It does tweak my interest.

You may be a bit late,the ink is dry on that contract from what's i'm told
it was sold last night for 740k,and if anyone did a quick search on the title the driveway??? was and parking??? may well pose a problem as one person seems to control a lot of property in that small section..imho..

 

[wylie]

You may be a bit late,the ink is dry on that contract from what's i'm told
it was sold last night for 740k,and if anyone did a quick search on the title the driveway??? was and parking??? may well pose a problem as one person seems to control a lot of property in that small section..imho..

You might have missed it, but post 45 is a section of the email I received from the agent saying it was under contract. It went on to say contract was signed at considerably short of the asking, but no price mentioned, so thanks for the update on the price.

How do you know what price it went for? Is it because it has gone unconditional? Do you have spies somewhere

I fished about a little, and she admitted she had a little flurry of emails in the past few days .

Dazz, you should ask her for a spotting fee .

My problem with any of these deals, is not knowing what I don't know. I could well do what I believe is my DD and find I have missed the elephant in the room.

Am I scared of doing a commercial deal... you betcha!!!

 

[sanj]

You might have missed it, but post 45 is a section of the email I received from the agent saying it was under contract. It went on to say contract was signed at considerably short of the asking, but no price mentioned, so thanks for the update on the price.

How do you know what price it went for? Is it because it has gone unconditional? Do you have spies somewhere

I fished about a little, and she admitted she had a little flurry of emails in the past few days .

Dazz, you should ask her for a spotting fee .

My problem with any of these deals, is not knowing what I don't know. I could well do what I believe is my DD and find I have missed the elephant in the room.

Am I scared of doing a commercial deal... you betcha!!!

arent these all comments/worries you said your son had before he bought his unit but you helped him through? might be time to use some of your own advice?

 

[wylie]

arent these all comments/worries you said your son had before he bought his unit but you helped him through? might be time to use some of your own advice?

Of course .

The big difference I see is that he could ask us as many questions as he liked, and we were happy to provide them.

I have SS to ask questions on, but I do run the risk of being seen as someone who wants things handed to me on a plate if I don't do my own DD.

I understand that, but I don't know what doing my DD involves with commercial and could well miss something obvious staring me in the face, but I just didn't know to ask THAT question, the one that means we lose money.

I will keep looking and learning though. I think you CAN teach an old dog new tricks

I honestly think paying a property finder could be worthwhile, but it seems from other posts that finding commercial properties isn't something they are asked to look for.

 

[willair]

How do you know what price it went for? Is it because it has gone unconditional? Do you have spies somewhere
!

No spies,just know someone within that company,but i think there is a problem with the easement and car parking that may pop up in the future..imho..

 

[INVSTOR]

Last time I did any serious research was 18 months ago....I haven't looked recently so I'm not in a position to say Invstor.

OK, Thanks

 

[shuggy]

Thanks Shuggy.

I'm assuming "one one title" means they are not strata titled. I have read several times that this can be one way to improve the value of a block, by applying to have them strata titled.

I started this little idea of buying something with a block of units that were not strata titled and will be auctioned, in Brisbane. I never heard back from my enquiry to the agent, but there were enough things I didn't like about the block that I didn't take it any further.

Just what is involved with applying to have a block strata titled and is the major benefit in doing so simply that they can be sold individually?

What are the other benefits?

I was speaking to a friend of a friend who applied to build three units on her 27 perch block (house was taken away). It was approved as three separate titles, but final wash-up is that they are all on the one title. She said nobody will fix the problem and they don't have the funds to take anybody to court to force them to fix it.

This means (my understanding) that when they come to sell, all three must be sold together. Their initial plan was to build two in the back yard, keep the original house to live in and sell off one or two of the new builds. The cost of keeping the old house was too much and they built three new builds.

That plan is now stymied and they will sell all three and build again. However, I imagine three townhouses on one title is not worth the same as three townhouses on individual titles?

Hi Wylie, yes the property is on one title (not strata titled). There's advantages and disadvantages to both, the main ones being outgoing costs and using it as security for future lends. A strata titled block of units has higher outgoings.. council rates are much more expensive if they're strata titled compared to being on one title. Main disadvantage is banks may consider it a commercial lend (~70% LVR) unless you have a savvy mortgage broker who can get you a resi lend with higher LVR. It's possible to strata title a block by installing firewalls and complying with other Council reg's and then sell them off individually.. this is a strategy successfully used by some investors on somersoft and there's a few threads on here about it including Geoff's one which can be found if you search "flock of bats". Some comments others have made could be said about any property in any suburb, especially in the states of Queensland and WA.. horses for courses and all those other idioms apply. Caveat emptor and good luck with the decision making.

 

[Ed Barton]

I have SS to ask questions on, but I do run the risk of being seen as someone who wants things handed to me on a plate if I don't do my own DD.

I understand that, but I don't know what doing my DD involves with commercial and could well miss something obvious staring me in the face, but I just didn't know to ask THAT question, the one that means we lose money.

i think you only run that risk if you ask 'is this property a good buy' rather than 'i've been to the branch it looks like it was refurbished a few years ago, the easement is not an issue. I've checked out the IM and everything seems good, but I'm not quite sure about x. any other ideas on what i should be doing for my DD. have I missed anything? yield is s, which is good for this type of cip. etc etc '

the likely response would be ' don't worry about x because of y, pm me the IM and I'll take a look at it. have you considered z?'

look at how forum resident cynic Dazz has given you so much information because you have asked what questions should I ask rather than hand it to me on a plate.

 

[Deltaberry]

Clearly you don't own any brothels

Hilarious. One of my colleagues owns the largest brothels in Jakarta. Big commercial property investor over there. Spent 3 days with him at a conference. His wife is divorcing him because he is the brothel's number 1 patron.

 

[Melbournian]

Hilarious. One of my colleagues owns the largest brothels in Jakarta. Big commercial property investor over there. Spent 3 days with him at a conference. His wife is divorcing him because he is the brothel's number 1 patron.

Damn...that must be alexis. i think it is half brothel/half relaxation place. outside is just squatters and once you enter it - it's like you're back in rome. the karaoke lounge is as big as a basketball court.

PS : i've never been there.

 

[willair]

Hilarious. One of my colleagues owns the largest brothels in Jakarta. Big commercial property investor over there. Spent 3 days with him at a conference. His wife is divorcing him because he is the brothel's number 1 patron.

Maybe he was only good for half a minute that's why she is divorcing him
anyone who owns brothels ends up understanding,each has karma as their own..

 

[investor2009]

I don't quite understand why $75,000p/a is such a great return on $900,000 + stamp duties and fees? Add to that $5000p/a fees.
Can't you just stick it in a term deposit yielding 7%> I could understand that you're still open to capital growth, but if you wanted to retire, less risk would equal more peace of mind.

 

[Sheryn]

ICan't you just stick it in a term deposit yielding 7%>

Term deposit rates are decreasing as more people are saving their money. Lucky if you can get 6.5% nowadays.


Sheryn

 

[Aaron_C]

Term deposit rates are decreasing as more people are saving their money. Lucky if you can get 6.5% nowadays.


Sheryn

Even at 6.5% term deposit rates the banks would be losing money since they lend out money at 6.8% these days

 

[shuggy]

I don't quite understand why $75,000p/a is such a great return on $900,000 + stamp duties and fees? Add to that $5000p/a fees.
Can't you just stick it in a term deposit yielding 7%> I could understand that you're still open to capital growth, but if you wanted to retire, less risk would equal more peace of mind.

Any interest on income earnt is fully taxable. Any rental income is also taxable but can be offset by claiming deducations against it such as loan interest and outgoings (PM fees, maintenance, depreciation etc). Disclaimer: I have an interest in the block of flats pictured on page 4 of this thread.

 

[INVSTOR]

When buying banks etc I have noticed that the ones they seem eager to sell are the branches that are not in growth areas.

I would be investigating the current rental per m2 for that shopping centre, if you pay a premium for an A grade tenant and that tenant vacates then the value of the property could fall.

I am aware of quite a few in my local area that have had a bad experience buying banks.

I have noticed some banks have new leases in place for 5 years and others have signed for a 1 year lease with 4x1 year options. I guess they are the ones you need to think really hard about if they don't stay on. Found another one today. Bigger numbers though!
http://www.realcommercial.com.au/property-offices-qld-sandgate-5810324