I'm after some advice/feedback regarding a block of 5 Torrens Titled units (x4 2br and x1 1br). Currently all 2br units are tenanted but 1br is vacant. Rents are $150pw for 2br and $100pw for 1br (gross $700pw assume $35k pa) and asking price is $490k. The block is older 1960s but looks ok. Land component is about 1000m2 and future development of a much higher standard building is happening nearby in the area which should lift value (hopefully).
As each unit is Torrens Titled, rates water etc are payable on each unit (rates $700ea, water/sewer $350ea). My calcs say outgoings approx $10k for rates, water, insurance and letting fees). No allowance made for maintenance costs as yet but older property so potential costs could be significant.
My questions are
1) does having x5 torrens titled properties put you into land tax issues straight away
2) is the lack of depretiation likely to be offset by small chance of having zero income due to spread of tenants
2) what am I forgetting to include??? it looks I'd only be out of pocket by the same as a newer propertyWe have sufficient equity and income to fund the purchase but given the multiple title issue, I'd be interested to hear what upsides there may be to investing via trust structure in this instance vs investing in my or my wifes name.
Thanks in advance to all who contribute.
You've lost me – 'all the units are torrens titled'. Torrens refers to the real property act 190? which basically means the Crown guarantees the title to the land. Do you mean that each unit has been Strata titled ie each has its own individual title?
With regard to land tax, if the total value of the land owned exceeds the land tax threshold, then you will be liable to land tax (ie need to add up all of your landholdings then deduct your ppor and the threshold).
Depreciation is totally separate from having tenants – it does not relate to the tenant but to the age & use of the building.
You will need to check whether there are any outstanding fire orders or compliance requirements from council – this may mean that you have to install fire hose reels, exit lighting, hydrants, fire doors, fire compartmentation etc which can run into big $$$$.
STL
I am a great lover of multi unit dwelling blocks and own a couple of larger ones in my portfolio.
One thing to bear in mind is when there are more than 4 units in the block it will be classified as a Commercial loan rather than a residential loan and will mean that you will need a slightly larger deposit and potential there will be some higher set up costs and possibly a higher interest rate.
Structured correctly a MUB gives you greater control and less cost when it comes to Body Corporates etc.
As i say i am personally an advocate of this type of asset.
Richard Taylor | Australia's leading private lender
STL
I am a great lover of multi unit dwelling blocks and own a couple of larger ones in my portfolio.
One thing to bear in mind is when there are more than 4 units in the block it will be classified as a Commercial loan rather than a residential loan and will mean that you will need a slightly larger deposit and potential there will be some higher set up costs and possibly a higher interest rate.
Structured correctly a MUB gives you greater control and less cost when it comes to Body Corporates etc.
As i say i am personally an advocate of this type of asset.
Richard Taylor | Australia's leading private lender
I know this is a really old post but did you go ahead with this purchase? Also did you really have to pay 5x taxes etc? Im looking at a similar purchase with 4 villas or units on an 850m2 torrens title lot.
Does anyone know of any banks who will lend on this with 90 to 95% lvr? Also is it correct that in this case you would have to pay 5x rates, water etc?
Hi Chirp,
Are the four villas each on their own title, or all four are on a single title? If they’re on individual titles almost every lender will consider them at 90-95%, however if on a single title theres only a handful. Thankfully some of the ones which will consider it are decent lenders, not lenders of last resort!
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Thanks Corey, To be honest Im not sure. I assumed they would be on the one title but am waiting for the agent to get back to me. I had never really looked at this kind of investment an so have a fair bit if research to do.
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