Join Australia's most dynamic and respected property investment community

Block of units/apartments

Discussion in 'General Property Chat' started by Fitzy1903, 17th Sep, 2015.

Tags:
  1. Fitzy1903

    Fitzy1903 Well-Known Member

    Joined:
    27th Jun, 2015
    Posts:
    82
    Location:
    Perth
    Hey guys!

    If you were to make a purchase on a unit/apartment for a long term hold, what would be the maximum amount of units in a building that you would buy into? (*edited)

    Through my small amount of research and knowledge, I've picked up that a purchase into a block of 100 apartments would not be the best investment, but how about within a block of 4, 8, 15 etc.

    I'm keen on Melbourne and within 10km of the City, but with a budget of $400-$450k, the only ones available are within a block of 4, 8, 15 or 1,000,000.

    Cheers,
    Fitz
     
    Last edited: 17th Sep, 2015
  2. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,598
    Location:
    Adelaide, SA
    Really depends on what funding was available, funding any more than 5 could be difficult or expensive I believe.

    I've inspected a couple of 4 packs of late and wouldn't mind one myself.
     
  3. Leo2413

    Leo2413 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    5,842
    Location:
    Sydney
    *post edited*


    For me it would have to be a boutique building and it will depend on the area. Some areas boutique blocks might be 8 or 12 etc, Generally as a rule, I wouldn't buy into a place larger than 30-40 units max.

    Also big no nos for me are:

    1. High strata
    2. Amenities like pool, gym, lift, games room, concierge etc
    3. 100% definitely no high rise. No way, no how.
    4. No block of units next to a million others and/or massive new unit developments nearby.
    5. I wouldn't buy new either ( Personal choice)
     
    Fitzy1903 likes this.
  4. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,598
    Location:
    Adelaide, SA
    I knew what he meant, and I was suggesting that my buying is limited only by finance. I'd be happy with an 10,000 unit building if someone would fund it. Unfortunately, this means I'd be happy with a 4 ;)
     
    Fitzy1903 and Leo2413 like this.
  5. Fitzy1903

    Fitzy1903 Well-Known Member

    Joined:
    27th Jun, 2015
    Posts:
    82
    Location:
    Perth
    haha sorry fellas, my choice of wording was poor. I'll edit it now.
     
    Leo2413 likes this.
  6. Leo2413

    Leo2413 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    5,842
    Location:
    Sydney
    Its too late. You've caused a rift between @D.T. and myself. Just received @D.Ts. nasty email :p
     
    Fitzy1903 likes this.
  7. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,598
    Location:
    Adelaide, SA
    Oh, with that wording I'll revise my answer to 0. Not interested in buying units at all unless I can have the whole block.

    Sif I've ever sent a nasty email to anyone :p
     
    Leo2413 and Fitzy1903 like this.
  8. Leo2413

    Leo2413 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    5,842
    Location:
    Sydney
    Fitzy1903 likes this.
  9. Fitzy1903

    Fitzy1903 Well-Known Member

    Joined:
    27th Jun, 2015
    Posts:
    82
    Location:
    Perth
    So Leo2413 how about after 20-30 years when the boutique building becomes rundown from the outside? Will it lose much value? Is it a good long term hold or would you sell it within 5-10 years?
     
  10. Fitzy1903

    Fitzy1903 Well-Known Member

    Joined:
    27th Jun, 2015
    Posts:
    82
    Location:
    Perth
    is that because you'd lose control over the land?
     
  11. Leo2413

    Leo2413 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    5,842
    Location:
    Sydney
    It depends on someone's goal. For me this is how I see it.

    1. Buying into a boutique means you already have an asset that is a little more unique than other massive units.
    2. Often boutique buildings are older, allowing you to avoid paying a premium.
    3. They also allow for room to add value quite often.
    4. Boutique buildings have lower strata, lower maintenance (no pool, gym lift).

    I would hold the asset long term and not sell just because I was worried about the overall condition of the place being worse, therefore my resale value less.

    You need to remember you didn't pay a premium, you have a boutique building (which is often sought after), lower strata, AND you most likely have room to add value.

    I think all that will trump any slippage in value for an older looking building. Just my opinion. That's important imo.

    1 more thing, make sure your buying the right type of dwelling for the demographic/area your buying into.
     
    Fitzy1903 likes this.
  12. House

    House Well-Known Member Premium Member

    Joined:
    13th Sep, 2015
    Posts:
    774
    Location:
    Sydney
    I'd be happy with a block of 8 and no more. Was looking at one around Kensington (NSW) about 5 years ago in need of an aesthetic reno and strata titling... Wasn't in a position to buy right then but really missed out with the growth that happened there.
     
    Fitzy1903 likes this.
  13. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,598
    Location:
    Adelaide, SA
    Yes, I'm not a fan of units at all because:
    1) Poor land content (this is the bit that appreciates)
    2) Competition to sell / lease with other units
    3) Strata fees hamper rental return
    4) If an unsavoury buyer or tenant gets into one of the other units, it may negatively affect return
     
    Fitzy1903 likes this.
  14. skater

    skater Capitalist Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,421
    Location:
    Sydney
    I used to think that way, but have changed my mind. I bought two units a couple of years ago for no other reason that they were cheap. Really, really cheap! Both around $50k under similar units at the time. We paid $150k for one and $155k for the other. They were bought solely to flip as soon as the market moved.

    We've sold one of them, & good riddance too as the Strata was ridiculous, but we made decent coin out of it, so it served it's purpose. We've still got the other one, and not sure if we'll get rid of it or not. It attracts decent tenants, is walking distance to everything you could want, and the Strata is very reasonable. It's also cf+, and has been from day one.
     
    Fitzy1903 likes this.
  15. nswvic

    nswvic Member

    Joined:
    19th Jul, 2015
    Posts:
    8
    Location:
    Sydney
    If you don't want paying land tax on IP, buying high rise apartment is an option.
     
  16. The Social Investor

    The Social Investor Active Member

    Joined:
    15th Sep, 2015
    Posts:
    28
    Location:
    Williamstown Victoria
    A serious consideration is the exit strategy. What happens if I need to sell in a hurry. Boutiques probably cost more on a sqm basis but the competition is lesser. If you were looking to purchase an apartment at similar price point would you buy the 30 apartment block or 8?
     
  17. Leo2413

    Leo2413 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    5,842
    Location:
    Sydney
    Ok you avoid land tax.

    Now the minuses. Massive strata. Low capital growth. Low demand. Huge supply.

    What's worse?
     
  18. skater

    skater Capitalist Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,421
    Location:
    Sydney
    You do realise there are other options to avoid Land Tax, don't you?
     
  19. The Social Investor

    The Social Investor Active Member

    Joined:
    15th Sep, 2015
    Posts:
    28
    Location:
    Williamstown Victoria
    Everyone seems scared by land tax but this should not affect our selection criteria. It's an included cost so include it and crunch the numbers
     
  20. Leo2413

    Leo2413 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    5,842
    Location:
    Sydney
    I know people who wont buy a property (ppor or ip) because they don't agree with paying stamp duty. lol:eek::eek: