Buying unit blocks in regional areas

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

Join Australia's most dynamic and respected property investment community
Tags:
  1. strongy1986

    strongy1986 Well-Known Member

    Joined:
    24th Jun, 2015
    Posts:
    1,236
    Location:
    VIC
    As far as i know it makes no difference. Im not a broker though
    This stuff changes all the time
     
  2. Tony Fleming

    Tony Fleming Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    717
    Location:
    Sydney
    Still don't have any unfortunately but as others have stated you need higher deposits from memory 70lvr if four or more units. @Corey Batt might be able to shed some light.

    521-527 Cowper Street Albury NSW 2640 - Unitblock for Sale #122195010 - realestate.com.au
    Saw this the other day. With alburys higher vacancy rates I couldn't imagine dropping 16 one bedroom units on the rental market would be too successful but if someone has the wealth and expertise to maybe convert some of them to two bedrooms would be a different story. The location and the conditions of the property are a plus.
     
  3. JacM

    JacM VIC Buyer's Agent - Melbourne, Geelong, Ballarat Business Member

    Joined:
    12th Jul, 2015
    Posts:
    2,194
    Location:
    Melbourne, Australia
    Maybe it could be used as a motel ...
     
    carfield and Tony Fleming like this.
  4. Free_dom

    Free_dom Member

    Joined:
    14th Jul, 2015
    Posts:
    12
    Location:
    Sydney
    Seems the consensus is that it's not worth the hassel. No one with any positive stories?
     
  5. strongy1986

    strongy1986 Well-Known Member

    Joined:
    24th Jun, 2015
    Posts:
    1,236
    Location:
    VIC
    It could be good but you need to be aware that most will not be

    Compare it to seperate units for sale

    You want a good discount
     
  6. HUGH72

    HUGH72 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    3,022
    Location:
    QLD
    I don't own a unit block but manage a duplex which would be similar in most aspects. I don't mind smaller unit blocks, triplexes and duplexes.

    Positives:

    -High Yields
    -Likely to be cashflow positive
    -Can be purchased at a per unit cost considerably less than individual units. For example a triplex might cost 490k but equivalent individual units in the same regional centre might cost 190k each.
    -Greater contol
    -Often are on large blocks of land which might allow further development
    -Buying land not just a unit which will depreciate.
    -No body corporate on one title

    Negatives:

    -Pricewise are a little more volitile as their market is limited to investors.
    -When vacancy rates rise in an area regional units in my experience are more likely to suffer vacancies.
    -Tenants are often students or low soco economic tenants, turnover seems higher than for houses in the same area.
    -Gardening and lawns for common areas are your responsibility.
    -At least in Qld they are often not individually metered so you can't charge the tenants for their own water use. There may be a way around this but it's annoying paying for water if there has been a leak.
    -Rates are slightly higher but this depends on the state and the number of units.
    -Insurance options and costs can vary, once again I'm looking at this from a Qld perspective.
    - I'm not a broker but from memory > 4 is no longer resi and LVRs will need to be lower.

    Lots of people have these in SMSFs.

    Prices vary greatly depending if they are on one title or strata titled. You could always sell one if strata titled.
    One other obvious negative I forgot to mention is concentration risk. That's what has held me back more than anything.
     
    Last edited: 24th May, 2016
    apk and Sackie like this.
  7. JacM

    JacM VIC Buyer's Agent - Melbourne, Geelong, Ballarat Business Member

    Joined:
    12th Jul, 2015
    Posts:
    2,194
    Location:
    Melbourne, Australia
    Tread carefully with acquiring any dwelling that fetches less than say $180 per week in rent. You still have to msintain the oven, hot water service, toilet etc. When something needs replacing it'd take out a huge chunk of your rent that year. Units in uber regionals often fall into that category.