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Buying unit blocks in regional areas

Discussion in 'Where to Buy' started by Free_dom, 22nd May, 2016.

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  1. Free_dom

    Free_dom Member

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    I am contemplating purchasing a 4x2 unit block in a regional area. I don't have a specific location in mind at the moment. The main reason I was looking at a unit block was for the cash flow and attractive yield. One of the issues I can see is you wouldn't experience much capital growth which you would next for your next purchase.

    Can anyone share good or bad experiences with owning a unit block in a regional area. Any financial numbers would be greatly appreciated.
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    Attractive yield, yes.

    Capital growth prospects?
    Vacancy prospects?
    Maintenance costs? (usually less choice of tradey in regional areas)

    Have a think about how it helps you move forward once you've bought it. Where does deposit for the next place come from after that?
     
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  3. standtall

    standtall Well-Known Member

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    I have a mate at the cricket who owns couple of units in regional QLD ... he's been telling us the horror stories of dealing with regional agents and constant vacancy issues.. I wouldn't not do it based on his accounts of how things can be in regional towns
     
  4. HUGH72

    HUGH72 Well-Known Member

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    Units or unit blocks? And do you know where they are?
     
  5. standtall

    standtall Well-Known Member

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    Units - i think one is in Harvey bay, other I don't remember.

    He bought them after selling a unit in Coogee to his brother during 90s when Sydney had slumped.

    Needless to say he's been very grumpy last 2-3 years after seeing his former unit getting valued at around $2 mil plus.
     
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  6. JacM

    JacM VIC Buyer's Agent Business Member

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    You will need a hefty deposit. The size of deposit depends on how many units are in the block and how regional it is. It may also have to be a commercial loan rather than resi. Thus higher interest rate.
     
  7. Luke T

    Luke T Well-Known Member

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    Usually less capitol growth from those and more maintenance unless rented to gov housing eg compass or the like.
    If undervalued and able to add value maybe worth it .
    house and land -older style with large block closer to cbd usually better for growth ,unless u can get 8-12% cashflow from the unit block
     
  8. apk

    apk Well-Known Member

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    @Free_dom what type of regional you are talking about, if you don't mind ?

    Ex:- Population less than 50k or less than 10k regions
     
  9. Free_dom

    Free_dom Member

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    I was looking around places like Wagga Wagga and Albury. From basic sums I gather you would get around 6K net per year. Nothing really special.
     
  10. Chrispy

    Chrispy Well-Known Member Premium Member

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    It depends on when and where you buy. I have done well buying blocks of units in Cairns but I knew the market when I bought the first block at $250k for block of 4. They were never empty but some of the tenants were a bit iffy..I held on to them for about 3 and a half years, until the Aussie dollar started to rise, then knew it was time to sell, sold them for $585k. There are some in Cairns that have been for sale for close to a year. Now is not the time to buy them....yet.
     
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  11. larrylarry

    larrylarry Well-Known Member

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    @The Dark Knight might shed some light on buying blocks of units in regional centres.
     
  12. hash_investor

    hash_investor Well-Known Member

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    so what has the dollar to do with those blocks?
     
  13. hash_investor

    hash_investor Well-Known Member

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  14. HUGH72

    HUGH72 Well-Known Member

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    Tourism
     
  15. hash_investor

    hash_investor Well-Known Member

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    Time to buy then??
     
  16. strongy1986

    strongy1986 Well-Known Member

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    The highest yielding unit blocks are in regional QLD but dont be fooled!
    Often the council rates on a block of 3 or 4 units could be around 6-10k.....
    You also have to factor in vacancies - your rental product will likely be not that desirable. Especially if it is multi story - at least if its single story you can fill it full of oldies...

    Once you factor in all the costs your net yield on asking price will be poor. If they were really that good cashflow would they be up for sale?

    Might be easier just to buy houses with a yield of 8%. I bet you the cashflow is better than a unitblock with 10% yield

    Obviously there are good deals to be had but 99% of unit blocks for sale are pretty poor cashflow on asking price
    So bargain hard i guess

    Also im pretty sure you are better off looking for a ubitblock of 3 as the required deposit goes up to about 30% when you go to 4
     
  17. hash_investor

    hash_investor Well-Known Member

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    Reason?
     
  18. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    those that lend the money

    Few lenders will do 80% lvr for 4 OOT, most wont touch it all

    Limited lenders will do 90/95 for 3 OOT

    ta
    rolf
     
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  19. strongy1986

    strongy1986 Well-Known Member

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    Youll have to ask the banks that - becomes commercial property in their eyes

    The bigger the risk the higher the deposit required
     
  20. hash_investor

    hash_investor Well-Known Member

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    it it true for metro areas as well? I see a few unit blocks advertised around brisbane metro areas. Would they require that level of deposit as well?