Forums / Property Investing / Help Needed! / Buying a Block of Units (advice)

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  • Profile photo of propBuyer23propBuyer23
    Participant
    @propbuyer23
    Join Date: 2018
    Post Count: 2

    Hi all,

    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

    Cheers

    • This topic was modified 1 week, 3 days ago by Profile photo of propBuyer23 propBuyer23.
    Profile photo of vyaw2003vyaw2003
    Participant
    @vyaw2003
    Join Date: 2006
    Post Count: 180

    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.

    Profile photo of propBuyer23propBuyer23
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    @propbuyer23
    Join Date: 2018
    Post Count: 2

    Thanks vywaw – but wondering what is ment by BC – do yuo mean body corp?

    Profile photo of annpannp
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    @annp
    Join Date: 2004
    Post Count: 12

    Hi,
    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.

    Profile photo of ClaireClaire
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    @usernamealreadyexists
    Join Date: 2017
    Post Count: 0

    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.

    Profile photo of CameronCameron
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    @baycam777
    Join Date: 2017
    Post Count: 0

    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.

    Profile photo of propBuyer23propBuyer23
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    @propbuyer23
    Join Date: 2018
    Post Count: 2

    Thanks all – really appreciate it.

    Profile photo of blackhotelblackhotel
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    @blackhotel
    Join Date: 2010
    Post Count: 137

    Land Tax = Rip-off tax.

    Profile photo of CameronCameron
    Participant
    @baycam777
    Join Date: 2017
    Post Count: 0

    Yes, sometimes the burden of LandTax makes the difference between going fwd with a longer term investment
    or just walking away !!

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,304

    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!!

    Benny

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