As I am going through the search function i come across this post from @stephanie garner with some commentary from @Heinz57 @Wanttoretire @bigmax @Shahin_Afarin Buying a existing multi unit IP as i am looking at 4-6 packs in and around brisbane. (under 10kms CBD) They seem from the outside (My calculator and laptop) a good deal. Lets say something like this 20 Horatio Street Annerley Qld 4103 - Unitblock for Sale #128787026 - realestate.com.au It yields at 4.6% (65k and $1.4 - room to move here - Further DD required) If this this could go through on a standard res loan- (It seems it may not be able too and that could lead to a whole different plan) the cash price at 20% LVR is somewhere in the $320k-$350k area These numbers are - positively geared - potentially double the yield of a sydney property - future development - future strata and sell off What do you see as the potential pit falls to this property? - lending at 80%LVR would be first that comes to mind but what else? (edit) Thanks Ryanb
Hello RyanB. That’s a great block in a good area I know well. Just watch your yields aren’t impacted by over and above expenses. For example your landlord insurance and pest control etc will all be x 5. You will also be up for water charges.
Thanks Heinz57. Im window shopping at the moment, but intend on pulling the trigger before the end of the year. There would be so many bases to cover during DD and seperate metering - installed or not is definitely one of them, and obviously would have to be addressed if future subdivision is on the cards. Thanks for your reply. hope your block is doing well
LVR with more than 3 units OOT will be limited . 4 u can still get away with a few lenders at 80, but beyond that it gets gets very skinny, and most lenders will only consider commercial 65 to 70 % lvr, with a couple doing them under resi terms. In part, its this limitation with the finances that gives them apparent great return, because they can really only be be bought by flush investors ta rolf
It'll be positively geared at 20% LVR, but I think you might actually mean 80% LVR and there's no way it will be positively geared at that level.
Thanks Rolf. At 70% i think the Cash in price is going to bed up around the $430-480k mark. Its a lot the burn on one medium-long term investment. I suppose another question to ask is, if you were forced to sell in one line down the track, is the financing going to make this property out of reach for most investors, could be a tough sale.
up to 4, u can get 80 % if your servciing is ok up to 3 up to 90 with a couple of lenders. But as you say, the limited buyer base could make it hard to move - hence the lower lvrs. ta rolf
@spludgey How so? 1.4m Buy Cash down 280k (20%) 70K (buying costs) Repayments I/O @ 4.5% on $1.1m - $49,400 Returning 72K gross Id put rates in insurance at around 10-12k in there plus utilities (again not sure of metering is seperate) (edit) Rough numbers but it looks close to me? FYI- I have not intent to purchase this particular property, i am however researching the idea of something similar to this.
LVR: "Loan Value Ratio" or loan divided by value. You're doing a DVR, a deposit value ratio. There are also a lot of costs other than just interest!
Several lenders like CBA, RAMS, Westpac (lower LVRs), St George (lower LVRs), Auswide (lower LVRs) etc will do 4 units on a single title. BoQ and Virgin will do 4-6 units at 65% but must be metro locations. TMB will do up to 6 at 50% LVR. Adelaide Bank will do up to 10 units but at lower LVRs. Your biggest issue is going to the valuation and potentially lack of comparable sales.
Bought 4 in a line in Albury. CBA. Not commercial. Positively geared from Day 1. If buying to strata, check fire separation. It’s probably the most expensive. Mine are in original 60s condition. Solid as. With fire separated walls. Water rates, even though water is not separate, is charged times 4. Even so, yield is great. We will strata at some point in future and sell one by one. In no hurry. Some small CG. Also bought 3 in a row at Windang. Inexperienced, and would cost heaps to strata. So that is not the plan. But we did a good Reno on each one. Will not sell. Great yield, even considering the Reno costs. May be my imagination, but these blocks seem to have less tenant turnover. I think they are more neighbourly to each other.
Great reply @Wanttoretire I posted in the Development section this morning about What is "actually required" to strata. I come from a building background and would like to know what to look for when looking at small blocks. aside from fire protection (internal brick walls and party walls in ceiling space) what makes the cost too high to strata the windang block? Is there anywhere you know i can find out what the requirements are for strata titling? cheers
The Windang block cannot be fire rated between the units. The ceiling and floor have joists wrong way. I’m not a builder but that is as close as I can tell it. Also...power was a concern. It was separate...but well...not really. We had to redo. But, we were able to really increase value by adding back doors, and partitioning outside areas to each unit. Small cost for large improvement...each unit now has own space. We did one at a time...for finance reasons. We learnt a lot. Was interesting. But real value was also in the area. Being gentrified with large new homes. Choose area well. Not that many units there, and they are in demand. Albury. Solid. Firewalls are already there. Old..and we will renovate each....but not to a high standard. We will add extra outside space to Unit in front by adding boundary front fence and knocking down an old brick fence. This will be easy way to increase rent. We will need to separate water. There is maybe a problem in albury with higher vacancy rates, but ours is near hospital, and in east albury. But..there are a lot of such units. Tenants. Prefer the older tenants. First step...go to council. Ask for their help. We haven’t gone down strata road yet. But also did not know with First one. Inexperienced.
Units in Bris are problematic .... lots of them. So the opportunity would be if they are very cheap and if you didn't mind them staying low in price for the foreseeable. But we need affordable housing so great that someone wants them.
Not what I’m seeing in areas 4-8km from CBD, small walk up complexes, 70s/80s brick. Add val potential, not going to break any records by any means but are selling very quick & for asking. People will do well from these, easy to hold too as rents are ok. @sash has a few I believe and may be able to confirm?
Yep...I have a few in Annerley and surrounds. Annerley is now becoming foodie central and down the road from the hospital. 2 br Units are selling from 290-350k. The price of a house is now pushing over 700k....at some point some bright spark is going to figure out the land value of the 6 packs is huge......so people who are only reading the newpapers have no clue what is happening on the ground.
