VIC Low rise older brick apartments

Discussion in 'Property Analysis' started by bacon, 11th Oct, 2020.

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  1. bacon

    bacon Member

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    I am looking to purchase my first property for PPOR, always prefer older established units compared to the newer builds. Ideally within 10km from CBD and on the east/south east side, so looking at St Kilda, Balaclava, Ripponlea, Elwood, Elsternwick, Malvern, Glen Iris, etc. Most of the apartments in the area are on the older side, built between 1960s and 1970s.

    I know older buildings require more maintenance and come with risks, I am living in one and love it. But what are the pros and cons for buying into a smaller building (<8 units) vs larger building (<20 units). There's this unit in a low rise building that caught my attention but there's only six units, around 1.5k p.a OC, still waiting for the contract/S32 to review the details. It sounds like there's no sinking fund due to the low fees, which is not uncommon. Most units have been renovated and they are really nice inside, 3 rentals, 3 owner occupied and held them for quite a while.

    If there are massive works to be done, obviously the levies are higher because it's only divided between 6 of us. But in the event that the building *touch wood* has massive structural issues in the future and no one wanted to put anymore money into it, and everyone agrees to sell the land its on (probably worth around $2M today).. I guess we split the sale between owners? o_O

    What other red flags I should be looking out for?
     
  2. willair

    willair Well-Known Member Premium Member

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    I know nothing about the area,but look at it this way the small 6 packs brick with a high percent land content and owner occupied who mostly are house proud are the ones too target ,they just don't build property like they did during that period anymore..
    The red flags would be if the plumbing is old --HWS-- Pipework--Roof-- but as it only ever comes back to 3 items..Price--Size--Location..good luck..
     
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  3. bacon

    bacon Member

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    Thanks willair :). Yes, it's a very close knit community between the residents there, which is a great intro. Also trying to look into CG if I were to convert it to an IP in the future. The unit is on a smaller size unfortunately (65sqm) but the rental yield seems to be 3% during covid as one just got rented one couple months ago no problem.

    Was told HWS and pipes were recently upgraded/changed but waiting for the paperwork to come through to review.
     
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  4. hammer

    hammer Well-Known Member

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    It sounds like as close to a "no brainer" as you can find @bacon .

    You sound like you're on the right track.
     
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  5. bacon

    bacon Member

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    Thanks @hammer , still very new to this and my biggest purchase in life :). Plenty of friends told me to buy new but I prefer old, so just need to do proper DD and make sure it's not a lemon. Pretty scary to be doing this alone, but have a great broker and solicitor on my side.
     
  6. hammer

    hammer Well-Known Member

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    Keep reading this forums @bacon . The general consensus is that "old is gold" in terms of use olde brick walk-ups....

    You'll also be able read about some of the horror stories from people who bought new .....
     
  7. bacon

    bacon Member

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    What do you think about these cracks, 60 year old low rise apartment building? Building is only 2 levels (3 units on ground, 3 on top), 2 sets of stairs between each unit. According to OC, "major causes of cracking included unstable soil, old drainage and the presence of trees", but I am waiting for the report that the engineers have done last year as it wasn't provided as part of S32.

    No cracks (from what i can see) on the inside, unit is on the middle top floor.

    Deal breaker? Run?

    Front of building
    Front-1
    Front-2
    Front-3

    Under the stairs (2nd stairs closer to the back)
    Under-stairs
    Under-stairs (entrance to stairs)

    Back of building
    Back-1
    Back-2
     
  8. The Y-man

    The Y-man Moderator Staff Member

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    Cracking doesn't look anywhere near as bad as we've had on some blocks. Remember these are usually double brick.

    Would be more worried about the water damage - eg back 1 (concrete balcony), front 1 (window frame), front 3 (under balcony). These can lead to concrete cancer. On a real positive, no sign of rising damp in the pics.

    The Y-man
     
  9. Shogun

    Shogun Well-Known Member

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    I would be worried the Strata Body doesn't have a preventative maintance plan/program in place. Does the block have a sinking fund with a good account balance
     
  10. bacon

    bacon Member

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    Unfortunately no sinking fund. I've inspected quite a lot of older walk ups in Vic and majority of them do not have sinking fund and raise special levies for repairs.

    They've raised special levies last year to fix/replace the damaged pipes due to tree roots and the subsequent removal of tree, but haven't held their AGM this year so not sure what has changed since. There's only 6 units so pretty small OC.
     
  11. willair

    willair Well-Known Member Premium Member

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    Bacon,would it be possible to give a rough idea on the age of the building and land area..The only one that would concern me is the balconies as they may need attention with the way they look but if this complex is in the 1980 range then it would be normal but I'm not an engineer or anything..imho..
     
  12. Shogun

    Shogun Well-Known Member

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    I own a property in a Strata without a fund as well. After 10 years an owner has sold and a new owner moved in. The common driveway will soon need repairs. The new owner will have to contribute to repairs. The owner that sold has gotten away with 10 years use and didn't have to contribute to repairs. I would think long and hard about the purchase price without a sinking fund but ymmv
     
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  13. bacon

    bacon Member

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    1960 building and suburb is Elwood. Apparently the area used to be a swamp (good old google)! It's not close to the beach, about 1.5km out.

    Yeap, in my previous 1950s apartment of only 4 units, 2 new owners moved in and within 6 months, they were slapped with a $60k repair bill ($15k per lot) due to plumbing issues affecting my unit.
     
  14. willair

    willair Well-Known Member Premium Member

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    For a 1960s building and the few slight movements in the brickworks and balconies it still looks solid..
    When one looks at some of the modern otp apartments and the problems the title holders face now after less then a year from the completed stage makes the old unit complexes look like new..good luck..
     
  15. bacon

    bacon Member

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    That's good to know :) . The cracks only appear past few years by comparing old photos available online. Will see how it goes pending structural report from OC, and consider future repair costs vs offer price if I do proceed!
     
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  16. The Y-man

    The Y-man Moderator Staff Member

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    Don't worry - in a few years with global warming, you should be beachfront! :D:D

    The Y-man
     
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  17. bacon

    bacon Member

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    If covid doesn't get me first lol