Does anyone hold unit blocks here? What kind of loan do you get for these type of dwellings? I have been advised it depends on the number of units in there. Is that right? They look pretty good on cash flow numbers especially in smaller and regional cities. Too good to be true?
We own a block of four units and have financed it twice, original purchase (in 2008) and refinanced this year. Both times a normal resi loan, both times a split loan (part variable with offset, part fixed). Had no problems due to the block of units. The property is owned by a hybrid trust - that caused us some minor issues/delays.
We have a small block in Brisbane - not strata. Purchase price was much cheaper than buying the units individually but the rent is the same. So - you do get a much better yield with also having control over the land. Loan for us is also standard resi. Definitely a good way to go.
Sydney seems to be a different market. Many times there is a premium on the whole block as against the individuals. Seems to be plenty of investors in the 2-5 million bracket who want the security of resi property.
You might wish to post in the loans section so the brokers can comment. For Residential lending rates, some lenders only like 2 on one title, some 3 and a few 4. Over that and you are likely to have issues securing Resi finance and may have to go the business/commercial finance with lower lvrs, higher rates and fees.
Up to 6 units on one title is possible under resi with one lender - dependent on location and LVR%. Most lenders tap out at 4 and beyond that you're into commercial
As @Morgs and the others above said resi finance ok for smaller blocks, then commercial for larger. Yes the yeilds are great especially in 2nd tier locations but just be aware the maintenance costs and rates on some of the older blocks do eat into the returns so the net is usually not quite as amazing as the gross. Still a great strategy to obtain +cf and control the land, especially if there is longer-term redevelopment potential or the ability to strata title and sell separately one day if desired. Few things to watch out for but a valid strategy for sure.
Yes, I noticed that in the boom, also, because developers could buy and knock down 4 aging units and put a high rise in many spots.