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Strata dividing a unit block?

Discussion in 'General Property Chat' started by hudbry, 22nd Dec, 2015.

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  1. hudbry

    hudbry Active Member

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    23rd Aug, 2015
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    Location:
    nsw
    Hi there,

    Last year, to diversify, I bought a property in regional NSW with a focus on good rental return and cash flow.

    - It's one block with 4 units. 2 one bedders and 2 two bedders.
    - It is not currently strata divided.
    - according to council the block is able to be strata divided.

    I'm thinking about strata dividing the block to add value to it with the aim of getting more leverage for future borrowing, but I don't know the cost, the process or the time involved in doing so.

    - who do I need to get involved? Surveyor? Architect?
    - what are the specific building requirements needed to strata divided (fire walls etc etc...)?
    - what are the estimated costs involved?

    I look forward to your thoughts and suggestions.

    Many thanks in advance.
     
  2. dabbler

    dabbler Well-Known Member

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    Surveyor.

    Look closely at it, if you strata it you will introduce new costs & may not appeal to other investors if you want to sell again, personally, I would not touch a strata unit away from a proven performing city area. You also will have to run it as per strata laws.

    So if it wont provide a significant advantage to borrowing.........I would check this thoroughly first.
     
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  3. hudbry

    hudbry Active Member

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    nsw
    Thank you for that information dabbler. Much appreciated.
    Do you know have a rough idea of the costs involved with a surveyor?
    I'll certainly look into those laws you mentioned.
    Although I don't intend to sell, I was also seeing it as a security option/buffer in the future: should I need to access money, I'd be able to sell one unit instead of the whole block.
     
  4. dabbler

    dabbler Well-Known Member

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    No, not really at today's costs, call around, I would expect it would end up being 2-5k

    If you cannot get extra money out without selling, maybe get a rough idea of costs, but only do it if your sure you will sell one or more off I would say. Ask some local agents on likely sales if you went ahead, you could probably sell while it was being done, just like OTP.
     
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  5. geoffw

    geoffw Moderator Staff Member

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    Requirements will vary from one council to another. Fire rated walls from foundation through to roofline would typically be a requirement. Your local council will be the first place to visit.

    I looked into doing this once. The fire rated walls were an expensive requirement-- and to do the work vacant units would have been required, potentially adding a lot more to costs involved, as some units may have had to be vacant for months while waiting for other leases to expire. Additionally council rates (at that time) would have gone up a lot.

    I've done a strata title for two separate residences, which did add a lot of value but decided not to do so for the block of flats.
     
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  6. Chilliblue

    Chilliblue Well-Known Member

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    We purchased one with everything completed and only the Strata Plan to be registered. Once we looked at compliance and associated costs, decided it was better leaving them on one title.
     
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  7. hudbry

    hudbry Active Member

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    Posts:
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    Location:
    nsw
    Brilliant.
    Thanks everyone. You each have given me lots to think about and a good place to start. I'm very grateful.
    I'll keep you posted.
    All the best.