I am contemplating expanding my property investing by potentially looking at blocks of units rather than individual houses or apartments.
I wanted to generate a cash flow calculator with key expenses and income associated with buying a block of units. Below is my understanding of all costs/expenses associated with purchasing INDIVIDUAL houses or apartments/units. Can someone help me add to my list below regarding what I need to add for block of units? As an example, I wasn’t sure if I need to pay water as separate expenses (per room in unit block), or collectively…
> Loan Repayments
> Property Management
> Council Rates
> Water Rates
> Strata/Body Corp
vyaw2003Participant@vyaw2003Join Date: 2006Post Count: 188
- This topic was modified 3 years, 6 months ago by propBuyer23.
If your unit block is new it might have individual water meters, if not you will be paying. If there are meters that might only save you $80 per unit per quarter.
BC – well this depends, a brand new set of units you buy off a builder may not have the BC stood up yet. You as the sole owner can run it without the BC in-place. But you will need clarifications on this one.
BC- usually covers Insurance and garden maintenance so you will need this regardless.
Thanks vywaw – but wondering what is ment by BC – do yuo mean body corp?annpParticipant@annpJoin Date: 2004Post Count: 13
Your Body Corp fees will cover insurance on the exterior of your property only, not internal fittings or contents. You will also need landlord’s insurance to cover any loss of rent or damage by tenants and their guests. Remember that tenants tend to stay longer in houses compared to units so you could have more vacancies. Banks don’t like lending to people who buy a whole block of units because they believe that if you become a distressed seller then the value of all the units will drop. The banks prefer not to lend for more than two or three units in a larger complex. Yes, BC is body corporate. As explained before, you will have to pay the fixed water charges and, if there is only one meter between several units, the individual water usage charges as well. If each unit has its own meter then you can charge the private usage only back to the tenants. Don’t forget a maintenance budget. There’s always a toilet to be fixed or a blocked gutter or bees in the roof cavity or a broken heater etc.
Good luck.ClaireParticipant@usernamealreadyexistsJoin Date: 2017Post Count: 1
Hi – we own a block of 4 x 2 bedders which we bought approx. 3 years ago.
We had no trouble getting finance, but we did have a line of credit already set-up and just needed to increase the limit, so maybe that made it easier.
We don’t bother with a body corp. as it is unnecessary hassle when you own the whole block.
Our property manager on-charges the water-usage component of the water bills to the tenants once per quarter (I just send them a copy of the bills).
The advantage of owning the whole thing is that you get to control what maintenance you want to do to the common areas and when (as long as nothing is actually inconveniencing one of your tenants). Plus you can upgrade one unit at a time whilst getting 3 other rental incomes (in our case) if you need to.
You need two insurance policies (as mentioned by the other poster) – Building/Strata insurance and Landlord’s insurance. You don’t have to have Landlords if you don’t want it, but I would recommend it.
I think all the other advantages/disadvantages would apply whether your properties are separate or in the same building (eg. tenant issues, maintenance inside units, etc.).
Hope this helps.CameronParticipant@baycam777Join Date: 2017Post Count: 2
one more cost that nobody has mentioned, and it could be a substantial cost is
LAND TAX, probably varies from state to state but it is something to considor.
Thanks all – really appreciate it.blackhotelParticipant@blackhotelJoin Date: 2010Post Count: 140
Land Tax = Rip-off tax.CameronParticipant@baycam777Join Date: 2017Post Count: 2
Yes, sometimes the burden of LandTax makes the difference between going fwd with a longer term investment
or just walking away !!BennyModerator@bennyJoin Date: 2002Post Count: 1,416
GST was meant to signal the end of Land Taxes and Stamp Duties, wasn’t it? Would’ve been good !!!
Oh, and do check on Land Tax in YOUR State if you are considering buying an IP in a Trust. Qld at least has a different algorithm for a Trust-owner – and it hurts big-time!!