What should I pay for this property?? 6 unit block

Hi guys,

I've been offered a property privately around Ipswich. The layout is similar to the below.

- It's over 2 lots - 850sqm and 750sqm, with 3 units on each lot
- 2 bdr each
- Average rent about $245/week = $76k pa return
- Separately metered for electricity but not water

Speaking to my broker it would be much better to buy them on 2 different contracts of 3 units each as I could get a 90% lend. The owner was willing to look into the possibility of this - I'm not sure if I could buy them on 2 separate transactions if they're over 2 lots?

I guess there are 2 angles:
1) Retain as cash-cow if I could buy for the right price. However cashflow isn't my issue at the moment, my goal is to create equity
2) Put separate water metres on them and strata subdivide to release equity, or sell-down to release cash
3) Combination of above. Strata subdivide, sell some and keep some. If I don't sell enough to make a profit, do I pay CG tax?

What are your thoughts on what price I should be buying for (based on above numbers)? Also who can help me cost up the strata subdivision process?

Cheers

 

Be aware that stamp duty may well be aggregated on this, so it will be on combined contract value not lower threshholds x 2

 

Gotcha. Thanks Dave. Are you aware if I can buy on 2 separate contracts if it's on 2 lots?

 

if there are 2 titles why not

 

To my knowledge this would be fine provided they're on two different titles.

Here's the information on aggregated stamp duty.

DA030.1.2—Transfer duty—aggregation of dutiable transactions (Queensland Treasury)

 

I don't think it's 2 titles, it's 2 lots. However I just found the below link, if it's 2 lots on 1 title they can apply to switch it to 2 lots on 2 titles for $875!
2 Lots on 1 Title to 2 Lots on 2 Titles - Certus Property Lawyers Queensland

 

Nice land content.

Have you got a quote for insurance? That would be my first consideration.
As for the price, it's got to be based on compareables and individual unit prices.
Really rough and just my opinion but as they are on one title they should sell at a small discount to an equivalent single unit.

Try calculating gross rent - insurance and rates ( which is close to a body corporate fee) - a small allowance for maintenance and multiply the figure by 20 give will you a price with a 5% yield. How does that stack up relative to any recent unit block sales which weren't strata titled?
Really rough but without looking at compariables it would be a start.

 

What is the purchase price and outgoings ?

 

I looked at similar unit block in The Switch. Valuation wise I worked backwards from selling individually factoring in all costs and profit. Ended up getting HTW to do an independent valuation which the seller rejected. (They ended up selling for the valuer price.)

 

Hi guys, anyone willing to take a punt on what it's worth?

I'm looking at it based on what the units are worth, less costs to strata them, less selling costs less a margin and it's not anywhere near the asking price of $1.15m.

I'm also thinking about buying them and then selling off 3 units on 1 title - what sort of return do you think someone would want for something like this?

Cheers

 

27 Salisbury Rd, Ipswich, QLD 4305 Sold Property Prices & Auction Results
Here's the one I didn't buy if it helps

 

You will have to tell the insurer there are two rooflines rather than one. This factor will make the insurance more expensive. Also not everyone will insure blocks of units. You will have to choose from those that do. Also I expect this will be commercial finance rather than resi. One of the brokers could comment on this. @Corey Batt ?

 

If it's on a single title this will be effectively commercial or pseudo commercial with low commercial-like LVR's. Ideally you'll definitely would be better off if on two titles to put this through as a resi lend with a lender which will take 3 on 1 title.