Forums / Property Investing / Creative Investing / Strata Titling a Block of Units…

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  • David Thiu
    Participant
    @david-thiu
    Join Date: 2017
    Post Count: 75

    Hi guys,

    I’ve found a block of 10 units for sale at $850,000, which could potentially be individually sold for +$120,000 each or rented out for +$220 per week.

    Just wondering if anyone has had much experience with this strategy.

    – What are the steps involved in Strata Titling?
    – How long does the process normally take from start to finish?
    – What would be the estimated cost to strata title 10 units?
    – Are there any special consideration to take into account with this strategy?

    Cheers,

    David

    Profile photo of crjcrj
    Participant
    @crj
    Join Date: 2004
    Post Count: 618

    Complying with fire regs. You will need fire separation between the flats including in the roof space. Suggest you get a competent building certifier to inspect and say what the regs require.

    David Thiu
    Participant
    @david-thiu
    Join Date: 2017
    Post Count: 75

    Thanks for your advice crj…

    It could be very costly should fire separation need to be installed between each unit…

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,366

    Hi David,
    Just looking at the numbers, to me this looks like the ideal “buy and hold”. As such, there would be little to gain in strata titling. I haven’t done it myself, but had previously read it can take ~$20k to strata one unit.

    Is that number correct? I don’t know – but, if it is, the values on your units don’t seem to justify such a large spend.

    With the returns sounding like 13%, is there any other downside to just keeping them? Even if half full, it sounds like you would still be cash positive !! Other downsides though could cruel the positives – e.g. if this is a regional area with just one eemployer (and they are looking to close down…) What is the vacancy rate currently?

    Returns sound great – but is there another “elephant in the room” that looks particularly dark? :)

    Benny

    David Thiu
    Participant
    @david-thiu
    Join Date: 2017
    Post Count: 75

    Hi Benny,

    I guess there’s not that much downside to just buying and holding the properties, especially since the area have 0.8% Vacancy rate, and only 30 minutes from the CBD.

    The only problem is I don’t have the deposit, nor the borrowing capacity, and was hoping to gain control over the property with an option, strata title for maybe $50k, and then onsell them individually onto the market for a quick profit.

    Considering that this block will require fire separation, and may cost $20k to strata per unit, might mean this deal might not be worth pursuing using this particular strategy.

    Kind Regards,

    David

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,366

    Hi David,
    Well, you never know – someone reading this might be willing to pay to know where this cashflow gem is, and you may be able to gain a spotter’s fee !! :)

    Benny

    Profile photo of C.R.E.A.MC.R.E.A.M
    Participant
    @solotak
    Join Date: 2017
    Post Count: 1

    Why is that not more common in Australia? It seems wholesaling is very common in North America but rarely done here? Is there a wholesalers network or group in Australia?

    • This reply was modified 1 year, 9 months ago by Profile photo of C.R.E.A.M C.R.E.A.M.
    • This reply was modified 1 year, 9 months ago by Profile photo of C.R.E.A.M C.R.E.A.M.
    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,010

    Because you need to be Licensed to take a few for service.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

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