I own a small strip mall (13,500 Retail sq ft + 13,500 warehouse space underneath and accessible from the back as the property is built upon a hill). How much value will strataing the property unlock? The top rents for $12 a sq ft. and the bottom basement warehouse space rents at $3 sq.ft. With one warehouse unit currently vacant. Is strataing a good idea? Why is this model rare for retail properties(but extremely prevalent for all others).
Strata adds value as it allows the sale of smaller portions of the property which means there is a larger market. Larger markets mean more demand. More demand means bigger prices.
Robert Bou-Hamdan
Mortgage Adviser0414 347 771
[email protected]
http://www.mortgagepackaging.com.auFREE Finance-Related Newsletter – Click Here
Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty Ltdanion, i’ll presume the property is in BC Canada?
in Australia what your talking about is quite common, multiple ownership of industrial and retail/commerial complexes is common place.
it is also common for existing ‘non strata’ blocks to be converted to strata title and on sold to investors and primary users. hopefuly at a price which compensates the developing party appropriately.
hope this helps.
cheers
brahms
Mortgage Broker
[email protected]I was tipping the USA myself brahms because of the ‘feet’ measurements.
Robert Bou-Hamdan
Mortgage Adviser0414 347 771
[email protected]
http://www.mortgagepackaging.com.auFREE Finance-Related Newsletter – Click Here
Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdSpeak to a few local agents. They will give you the prices per square foot as you quoted for both strata’d and as you currently have them.
If the price warrants it then complete the strata. I would only do this if you are trying to unlock some equity for another purchase. Doing it for the sake of it, will only increases the rates and charges you pay to the government.
Byronent
Adelaide SAAny idea how much value strataing could unlock? Could I make a case to the tenants ownership (with the very low mortgage rates) is cheaper than renting? Many of them have been there for a long time)
Determining the future value of units in a building that is going to be changed to strata is a simple process. Look at similar units in the immediate area that are already strata titled and PRESTO!
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.auFREE Finance-Related Newsletter – Click Here
Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdWhy would you want to sell them to the tenants?
I mean they are giving you great returns, paying all outgoings, commercial is nothing like residential.
Selling back to them would be almost a false economy unless you are cashing out and if so, why you buying them?
Sounds complicated. Is there any land with this to spare?
Byronent
Adelaide SAOriginally posted by byronent:Why would you want to sell them to the tenants?
Byronent
Adelaide SAI can make the case to them that owning is cheaper than renting (beacause of the low interest rates). In essesnce I will sell the property for 5.0% cap.
Yes true but if you kept them wouldn’t you be returning cash flow positive enabling you to purchase another property instantly?
Byronent
Adelaide SAIf I sell this property at a 5.0% cap rate, I can increase my capital base and acquire a much larger property.
Don’t forget taxes and stamp duties (if you have them) will have to be taken into account, not to mention sales agents and lawyers costs.
Julian2
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