I have had a couple of Private messages asking about some help with Strata Title of an existing building.
I purchased a block of 10 un-strata units and settled the sale Jan 2005 for 820k gross.
After completing a building inspection and employing a Consulting engineer to undertake a Fire Service inspection required by Clause C3.2 of the BCA with the recommendation by this Consultant we were able to supply to Council a Certificate of compliance.
With the Fire service conditions, we only had to provide smoke detectors and illuminated lighting in the stairwells. At the time of lodging the D/A I also lodged the Strata Linen Plan,
I decided to undertake a quick low cost renovation, I striped out all of the kitchens, shower screens, carpet, light fittings and power points, we then rendered the front elevation and the side elevation next to the driveway, sand blasted all balcony rails and repainted all.
The total cost of the renovation worked out to be only 12.5k per unit, the time taken was 3 months.
I sold 6 x 2 bedroom units with a contract price of 179k each, I allowed for a remote control for the garage doors and a clothes dryer in each unit for a quick exchange of contract, on 3 of these units I also gave a 1 years rental guarantee of 170K per week this is now about to cancel and it has only cost me $500 over this period.
I also sold 1 x 3 bedroom unit for 195k with same inclusions but no rental guarantee.
I kept 1 x 3 bed and 2 x 2 bed with valuations of 553K borrowing of 210k interest cost 15k per year and a rental return of 27k per year.
Cost of project
Purchase 820k
Renovation 125k
Interest 22k .
Sales costs 36k
Total 1,003k
Total sales plus value kept. 1,812k
Any questions?Chris
[email protected]Hi Chris,
Deal looks great…. did you complete any of the renovations yourself personally or did you outsource all of that work???
Also did you have a financier support you for the improvements based on end value or did you provide equity/cash to “owner build” the improvements????
It seems as though the whole apartment block was vacant at settlement???? What is your experience in relation to these types of deals??? are the properties generally vacant ?? how would you complete renos if properties were tenanted???
Any feedback would be helpful to add to the information bank as I plan to move into these types of properties once we get through the unit sites we are constructing over the next 6 mths..
Cheers
Brian [suave]
Thanks for your note Brian, my sons and I stripped out all of the units, then used contractors to complete the works, we kept the site clean and undertook minor works. I funded the purchase from my own equity status with my bank; the renovation was done with my LC.
At the time that I entered into a conditional contract all units had week to week leases, over the period of acquiring the D/A and C/C most tenants moved out.
I had one tenant being a pain but we started the Reno around him and he moved out after about two weeks, we had arranged to relocate him to another property off site, cost me one month’s rental for him.
In general I have managed to get vacant position but I would always look at any deal on its own merits.Chris
[email protected]See this link for pic,s of elevations http://www.somersoft.com/forums/showthread.php?t=24176
Chris
[email protected]wow, this is exactly the sort of thing we are working towards.
at present we’re doing a subdivision and building and will then follow that with a renovation on a currently tenanted property while we are in the process of another subdivision.
because we don’t have the equity position yet (ages 24 and 25 with mortgage still to pay on PPOR) we want to do these projects until we’ve build up 500-750 in free equity for deposits on some bigger deals.
we’re thinking of a 2-3 unit development or buying 2-3 villa block for reno next to add some value.
all takes time though. I’m amazed at the timelines you can complete these in. It’s great.
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