I want to buy a block of units as part of my portfolio. I am having huge amounts of trouble finding anything close to what I am looking for, as generally each unit is owned individually, but I want to own the whole block, and avoid body corp etc.
My question is, has anyone built a block of units before? I have no idea how much a 6 x 2 brick block (think 1980s 6 pack), and I was wondering if anyone was able to give me some idea of where to start my budget.
Any help greatly appreciated.
Thanks,
Victoria
Reason can answer questions,but imagination has to ask them. — Ralph Gerard
Before looking at building a six pack, check with your finance specialist. Not too many banks want to do anything above four units as a residential deal. Six pack may be a commercial deal (however AXA Home Loans may look at a six pack on occasion).
Four pack, probably can get done at 90% LVR, six pack, commercial deal, may be 65 or 70% LVR.
Gary Young
Home Loan Connexion
Mobile 0407 64 66 32
Fax +61 7 4636 4841
It really comes down to how many titles the units are on. For instance, I researched a deal for an 8 pack of units. No bank would touch it, as it was on one title. However, if it had been built on two blocks (titles), they would have been happy to do the deal as residential finance at 90% LVR (max of 4 units per title).
AXA Home Loans has told me repeatedly they will do six units on one title at 80% LVR, but haven’t had the chance to prove it yet.
Is this helping you?
Just so you know, I’m currently paying down my O/O home loan to gain sufficient equity to do a Lo-Doc deal to construct a duplex in Toowoomba or Dalby or Warwick. May even consider a triplex, but depends on the block of land at the time.
Gary Young
Home Loan Connexion
Mobile 0407 64 66 32
Fax +61 7 4636 4841
If you would like to construct the units you could get 100% finance based on the value of the end product only. No credit checks, tax returns etc needed. (Depending on the location). size doesn’t matter!
From what I have seen ,unit construction works out to be about $130,000 per unit.
There is a catch-The interest rates are high. This is meant to be short term finance only, so once the project is completed you could refinance with a lower rate. It will also depend on the location, anywhere on the east coast may be OK, but not country areas.
It works by getting 70% of the end value which is often enough to get 100% finance. based soley on valuation with no, credit checks, no financials etc (not even an application form).
There a number of different ways to find something like this. I suggest that the major effort is required in identifying the project. If the numbers stack up then most reputable brokers will be able to finance something like this.
I think you need to focus on finding the deal – this will be your bottleneck!
Another thing that concerns me is finding a reputable builder. I am very green, and don’t want to get ripped off. How do I judge what is a reasonable price and what is ‘she looks blonde, I’ll add on 25% dumb tax’.
Other than location, what factors do I need to take into account when choosing land?
Thanks again,
Victoria
Reason can answer questions,but imagination has to ask them. — Ralph Gerard