I have had a good look around the site and cannot seem to find much about buying a block of units/flats for investment.
Am I missing something?
All the posts seem to be about mainly houses .
I was interested in buying a block of 6 or so as I think the returns would be better and also you pay prices dependant on the rental returns and not as much on the general real estate hype the is happening at the moment.
My theory is that I might be able to get a block now for a much better price then if as I believe rents will go up a fair bit in the next 2-3 years so I will be buying at [hopfuly] a much cheaper rate.
Any thoughs and cooments would be much appreciated
Boo BooHi Booboo
I took the decision some time back to start investing in blocks of units.
The main reason was the land tax bill with my thinking being that a house has very little income to offset the land tax but a block of units will have many rents to offset the saem or nearly the same rated value.
Since then we have purchased 4 blocks, the blocks consisting of, 6 units,15 units, 7 units and 9 units.
We have found that they have different sorts of problems compared to houses, namely they have many more plumbing problems the tenants tend to be shorter term than in houses. The property can get run down very easily as fully tenanted (no owners on site)
The reduce our overall maintenance we renovate the units completely at a cost of 8-10k per. This has been very effective in keeping the maintenance work right down but also has helped in attracting a better class of tenant.
All up I have been very happy with the overall performance of these properties as they have been cashflow +ve the whole way and have increased in value from about 75 -80k to 200-250k, so not a bad bit of capital gain.
Cheers
Hi,
I’m all for blocks of units as it’s great to be in control of the body corporate. Surely the same logic applies that if it makes sense to own one – it makes sense to own the whole block.
There are problems too though… finance is a big one. Most lenders will tell you it’s a commercial deal and will proceed to either say ‘no’ or maybe limit your borrowing to 70%. This being the case, it can be capital intensive.
Also, with more dwellings, the maintenance is usually more of an issue too.
Finally, when it comes time to sell, you may find your market fewer in number as you really need to find another investor who’s willing to pay your price.
Still, I like the idea of owning blocks – provide the investing fundamentals are dealth with and the project makes the required return on my investment.
Good post and great question!
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Thanks for the replies.
If anyone out there is activly investing in blocks of units and would like to email me direct I would love to talk more as I am thinking that this is the way t go.
At the moment I have enough equity to borrow the full amout of $1000000 if I get 70% from the banks,would this be enough to buy a block on the Gold Coast?[not on th beach purly a residential block well away from anywhere expensive]
And what return should I expect?
My email is
[email protected]Booboo, if you’ve got $300k why don’t you look at buying commercial. Less headaches. the tenants pay the expenses, long leases, tenants have a vested interest in keeping the property looking its best, better nett yeilds etc etc. Once into commercial I don’t think you’ll ever look back!
Best of luck, JulianThanks for the post Julian.
I guess I am a bit afraid to get out of my comfort zone and have read to many books on residential property and all the problems that you migfht come accross in a commercial property.
Boo Boo
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