Forums / Property Investing / Help Needed! / Community Title or Strata for a small 2 units

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  • Profile photo of gurjjeetgurjjeet
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    @gurjjeet
    Join Date: 2010
    Post Count: 18

    Hi

    We bought a house which is built on a block which is not very deep but has long front. The existing house is stacked on one side and 2/3 of block was empty. So we renovated the existing & got a DA approved for strata title second Townhouse. the townhouse is being built now.

    Both houses only share a Fire wall between the Garage, a 3 meter fence & a driveway. Everything else is separate. Its like two separate houses with common driveway.

    One of my friends has mentioned that I should go for Community title instead od Strata which is what we have put in the DA.

    My question is should I go for community title or strata title?
    As I am going to rent the existing home & live in the new one, he mentioned that I should not go for Strata title process as that will result in doubled Council rates. Is that true?
    If I take his advice, does that put me on risk of council changing rules & not allowing me the strata title later on(say after 5 or 10 years).

    Any help is highly appreciated.

    • This topic was modified 4 years, 8 months ago by Profile photo of gurjjeet gurjjeet.
    • This topic was modified 4 years, 8 months ago by Profile photo of Benny Benny. Reason: Fixing title
    Profile photo of RichardRichard
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    @richardppiadvice-com-au
    Join Date: 2014
    Post Count: 20

    From my understanding; strata title is where dwellings on a community title, can be sold separately.

    If the title was subdivided, then there is no community title, only individual ones ‘freehold’, with own rates.

    A multi-unit title is where more than one dwelling shares the one title, for which there is still a community title, managed by the body corp.. I’m pretty sure that’s right. Any Town Planners out there?

    So if you are keeping what you produce and renting, as per your friend’s advice, its logical to keep the holding costs down by having more than one dwelling on the one title to minimise rates.

    The downside depends on whether you want the completed valuation of the property to reflect the two separate (strata titled) townhouses. Or whether the value of the two dwellings on a multi-unit title are going to value up to support the equity required to retain the debt.

    Remembering that two dwellings on one title are worth less than two strata titled dwellings, which can be sold separately.

    Is this making sense?

    Richard | PPI Investment Advice
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    Licensed Property Financial Advisors providing tailored property advice and solutions!

    Profile photo of David HallDavid Hall
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    @wiggles2
    Join Date: 2014
    Post Count: 64

    I would also have an informal discussion with you bank. Traditionally they do not like to fund community titles.

    David Hall | Momentum Wealth
    http://www.momentumwealth.com.au/
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    Buyers Agent

    Profile photo of Corey BattCorey Batt
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    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    I wouldn’t say financing community title is that difficult at all. Some lenders have a small few other requirements (solicitor inspecting the community deed at cost) but it’s not exactly onerous.

    • This reply was modified 4 years, 7 months ago by Profile photo of Corey Batt Corey Batt.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
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    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of gurjjeetgurjjeet
    Participant
    @gurjjeet
    Join Date: 2010
    Post Count: 18

    Thanks everyone

    Sorry I am bit late to respond. I was hoping to get an email when someone responds but didn’t get any.

    Thanks for all the information. I forgot to mention that construction is underway & finance is sorted out. Yes you guys are right the bank valued it atleast 20% less because of it being one title. Their logic is that they cannot value it as 2 titles until it is 2 titles.

    I do not have a lot of time on my hand for paperwork, is there any business who do this sort of thing for small time investors like me. I mean someone who can advise me & also help in paperwork.

    Thanks & Regards

    Gary Singh

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