在澳大利亚 The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m
I'm interested in buying a block of units, eg, 4-8 units or whatever I can afford which I think will be 300k or less and will probably be in a regional area.
Apart from finding out what the yield is and council rates are, what other questions should I ask?
Since I only have 1 IP, I'm not very experienced.
I tend to look for the same thing as for houses in general but here is a couple of things I look for:
I prefer cavity brick or solid block rather that brick veneer.
Firewalls so that they can be strata titled in the future if not already
Can you improve value and rental return by(depends on the area):
-converting carports to lock up garages
-putting in a bbq, entertaining area
Don't forget that you'll need community title insurance as well as landlords. This covers the buildings and common areas as well as public liability etc.
IF they are strata titled you will pay rates on each unit, if they are flats you usually have to pay licence fees as well as extra sewerage fees for each pedestal.
I like blocks of units over singles:
-you own the land
-you have control(rather than being part of a body corporate)
-you depreciate all the common areas
Just a few thoughts
You said regional, Where are you thinking of buying?
I thought a good QS report included common area depreciation in the schedule for Strata units already?
uuummmm............check out what the tenants do for a living
Congratulationso on having the bravery to purcase a block on your second acquisition.
Things you will want to know are:
Are the units on one title or strata'ed?
What leases are the tenants on and how long has each been there? Are they up-to-date with their rent? Are the tenants seasonal or short term?
Are the rents market rents or above or below ( below market rents may mean you can easily add value by bringing them up to market)
What maintenance is outstanding?
What maintenance is likely over the next say five years?
Can you add value to the block given you will own the lot?
If it is strata'ed is the body corporate active and are the insurances paid in accordance to the law? (if not you may not be able to settle until this is rectified)
What general bills may you have to cover such as gardening, lighting of shared areas etc.
Have white goods been included in the leases?
What are the water rates, are they included under the council rates and who pays for excess water usage?
What discount will local agents give you to manage them?
Is this type of housing in demand in the local area (if not them you won't want 4-8 of them!)
I would not however suggest that you ask the agent to answer these questions for you. You need to keep in mind that the agent is representing the seller and so will want to present the property in the best posibble light. However they should be able to provide supporting doumentation such as leases and expenses over the past two to threee years. You would be better offf speaking to local property managers in the area to gain their view and local knowledge and a local citizen would also be invaluable in giving you a local's perspective.
Best of luck and let us know how you go!
Also check whether there are common or separate water/electricity/gas meters - my preference would be that they be all separate. If there are some common meters, then you may be able to negotiate a little harder.
If any unit is vacant - check for how long, because down in Vic. if a property has been vacant for more than a year and the power has been off for that period of time, the electiricity provider will require an electrical inspection prior to the power being turned on.
One thing I'd add to the above list , and it would provide many items mentioned above ,would be a copy of the Rental Statements for what every period you can get them for. I'd ask for two years , though whether you'd get it is debatable, Before you ask the agent for them , first ask them if they manage the property . If they do then there should be no reason why they can't provide them unless the vendor tells them not to. If they don't manage the property find out who does. Ring up that property manager and ask them first about similar properties before asking about the specific property . Part of my due diligance on an area is to first ring up PM's in the area and ask them what type of properties they don't have enough of / are easy to rent. ( this is before I talk to selling agents , though I will have a good look on the net to see what type of properties are in an area )
We looked at two houses which were split into five units , and while " the rent " was 22 k per year. Vacancies / letting fees quickly dropped the rent down , let alone insurance, maintainence etc. Get an actually quote for the insurance from a Broker , and check with them if the insurance co have any out clauses of the type that was worrying Ross recently.
Remember that with blocks you may only be able to finance up to 70 % so that limits your ability to finance other deals further down the line. With this in mind from my view point , if I was thinking of buying a small block of units ( which I am ) , the main reason to do it is to generate cash flow , so knowing what the actual income is , is a critical part of the due diligance.
Thanks for all your great replies.
I'm looking in regional Victoria at the moment.
How big a population do you think could sustain a block of 4 flats?
>Remember that with blocks you may only be able to finance up to 70 %
Why is it up to 70%?. It's because the Bank doesn't consider the deal as a residential any more?
Originally posted by agent007In my case, the bank considered a block of 8 as residential for loan purposes- but the LMI people regarded it as commercial, so would not touch it. The bank were OK on lending me up to 80%, but the LMI stopped them lending more.
Why is it up to 70%?. It's because the Bank doesn't consider the deal as a residential any more? Click to expand...
My creative personal banker arranged things so I could have the loan though- without the thousands extra for LMI.
We may be considering acquiring a block of units in the near future, maybe a block of 4 or 6, maybe around the 1.5mil mark.
Can anybody advise on what the finance would be like on these?
Is it something like 65 % lend and is it commercial rates, any indication of these?
For those who own a block of units, would you say they are better, equal or worse than single dwellings.
eg. Considering similar valuations and returns in the same location (demand for units and houses the same), how would a block of 6 strata units at 1.5 mil compare to 3 houses at 500k each?
Which would you prefer to buy?
Thanks for your thoughts.
to 80 % on near resi terms is poss but wont be easy, leat 6s to early 7s.
But that was last week and what next week holds at the edges might not be the same
3 houses in general 80 % is easy, with a likley 90 % a near possibly and some 95 an outside poss