Selling Purple Title Block

Hi team,
Friends of mine are thinking about selling a Purple Title property block with 7 units in WA near ocean in Rockingham. Block size is 1760sqm and over two lots so good for developments and would be selling to developers.
Just the two owners now - husband and wife.
Will apparently take a year to change title to strata.

They are wondering whether to sell and let someone else do the work or would they be better doing the strata and then selling?

They want to clear some $250,000 debt which is why they are looking at their options.

Any thoughts?

 

What would the sale price difference be?

 

Probably a couple hundred thousand.
Good point.
Its going to cost them $47k to hold for a year in private financing.
But if it takes a year to do a srata title on it and maybe $40k.. they are still ahead $160k.

 

I suspect I know the complex you're talking about actually.

The problem is, what's the plan after the strata titling is done? Selling them all individually?

Because that is likely to take quite a bit of time longer, especially if you're trying to sell off every single unit in a given amount of time. Trying to sell the whole complex at once isn't any better either.

 

The plan was to convert to freehold and sell to developer. They are not units you would keep.

There are 2 lots and they were advised it would be strata title instead of freehold as that was cheapest option.

Would take a year to do and place needs to be surveyed.

 

Would a developer pay more if they were freehold? Prob not if they were to be knocked down.

 

I think I do too and it's been trying to be sold before.
It's likely to be a land value sale so I see no point strata ing to individual strata titles as a lot of work will need to be done to make them up to code.

 

They bought the property a little while ago...there were 11 owners.
While the title remains purple title, no bank will lend against it - even if there are only 2 owners now.
So the title must be changed to either freehold or strata title so they are able to onsell it at some stage.
They don't plan on developing it.

 

It seems like purple title may be known as company title in other states. If so the major banks will lend against this security. Generally up to 70% LVR.

 

Thanks Terry. I had looked at finance for them but the banks I looked at didn't lend to purple title (I assumed because they couldn't have the title). I will look at that again.

 

What is their aim here?

If they can borrow against it would they keep it?
Are they worried that no one will buy it because it's purple title?
Are they thinking of converting it to 7 on 1 title rather than individual titles

I believe converting to 7 on 1 title wouldn't take a year but I don't think it would increase the value at all - it would simply make it more attractive to potention buyers

I would talk to a Perth surveyor and or broker and look at options. This month they are also releasing Community Title in Perth which is very similar to Purple Title but more modern. There might be an option in that.

 

Thanks Westminster.
The aim is to cleara big debt elsewhere.
They have no loan on that property but havent been able to get one with purple title.

They can either onsell to release the cash or convert to titled lots and sell or take a loan once titled lots.

I shall look up the community title.

 

I think Westminster is saying that it might not be worth the effort if it costs more to do it than the increase in value.

Why not just sell it all off? There is some value in owning all the purple titles after all.

Or is it some sentimental thing that they want to keep some of the lots?

 

Good luck with that.

 

Great outcome.
I called Landgate and they said we could convert purple title to one single title. Cost of just under $200 and 1 month. Easy peasy.
Once done, easy to sell the block or put a loan on it.

Thank you for everyones input.

 

I didn't think it would take 12mths and that's why I asked if they would be happy to have the 7 on one title so that it could be green title

I'm surprised their surveyor didn't suggest this?

You're a good friend for doing the legwork on them for this

 

Thanks Westminster.
They don't need a surveyor and had never asked one previously.
They just relied on the information received from Landgate when they rang.
It was a matter of asking the right question when I rang back