Hi everyone,
I am looking at buying some studio apartments on community title. I know very little about community title. From looking on the net it seems virtually identical to strata title. Was hoping you guys would help…
Are there any specific advantages to community title?
Are there any specific disadvantages to community title?
Anything I should watch out for?
I’ve seen more than one unit on a single lot in community title; is this bad? Could they be severed into two titles?
Is there anything else of note about community title?
Thanks!
Originalsinner.
Not dead yet.
Hi Originalsinner
Are there any specific advantages to community title?
Not that I know of – except , the up keep of the common areas ie: gardens, halls etc – the expense is shared by a monthly strata levy (which includes building insurance) – the larger apartment buildings have a regular caretaker.
Are there any specific disadvantages to community title?
may reduce the number of buyers. buy not much. I do not generally hold and rent, I reno & sell.
Anything I should watch out for?
I got caught by a major repair – new roof – I got a phone call on settlement day for an extra $1500.00. I did not worry to much as it added value to my apartment which is on the top floor. now colorbond instead of asbestos.
Basically you will receive extra paperwork – one piece is a ” form 28 – disclosure statement” which frankly is useless, I now add a clause in the offer allowing me to ring the strata manager to ascertain whether there are any repairs, law suits ( I read this one somewhere, so I now add it) pending or in progress that may result in extra strata fees/ payments by owners. I ring them and get them to fax me their answer.
Otherwise sit outside for a while and see what the other tenants are like. I buy in older medium to large lots 15 – 112 apartments, cheaper rent etc.
I have just purchased a pair of duplex’s on an old 1966 Strata (all the land around the 2 houses, which share a common wall, is common area) so I am doing a conversion/merger – basically spliting the block in half using the common wall, it is as good as a green title ( normal title) as I can get and I only have to go through the dept of land. I could subdivide but need to go through the planning dept and get surveys etc big bucks.
Each apartment/studio has a seperate title with extras.
Hope that helps[biggrin]
Celeste
Thanks Celeste.
What was putting me off regarding community title were things like there being less car parks than there are individual units. Car parks are on common land in this complex, so it’s first in best dressed. The fact that you get two units per title that you can rent out individually also appears unusual. I’ve not seen that before, but the council appears happy with it. I also didn’t know whether you required permission from the body corporate to sell or something. I gather not. Thanks for the info.
I’m also concerned about a couple of other things like the small size of the units. Not too bad a position, but with artificially inflated rents etc. One tenant is apparently the owners’ son and the other pays less rent and wants to break the lease. Plus, so far, the banks seem a bit dubious about lending on anything less than 50m2. The units have a combined area of more than that, but an individual area of less. Plus, the units’ carpets and general presentation both need some serious work. Come to think of it, so does the lobby. And there’s no mailboxes; instead they have a table in the lobby. And currently no phone connection to these two units. That’s just weird.
They’re not going to like my offer.
Not dead yet.
Hi OriginalSinner
I would be wary of these units for the following reasons.
The state of the common areas would indicate that little has been spent on their upkeep for some time. Ask for a copy of the Strata accounts and minutes of the AGMs. You are entitled to the most recent but try to get more than that. Unless there is a substantial ballance in the sinking fund account for repairs and other matters, then I would be budgetting for a charge in each of the next few years. And I would also be budgetting for a big argument at each AGM for several years to get essential repairs done.
Check recent sales of units in the complex and similar units close by. Is this purchase at a discount to the others or at a premium? With the artificially inflated rent, they may be at a premium and unless you have long leases and tenants who wish to stay, your premium will evaporate very quickly. Budget for normal rents unless the area has very low vacancy rates. Never budget on your inflated rents lasting more than 3-6 months.
Many apartments have got around the limited parking by putting it on common land. I would be concerned. I got caught out with this when I came to sell a unit in a complex with not enough spaces recently. Most people have cars these days and expect to have off-street parking. I found it less of a problem with tenants than with owner-occupiers but potential landlords didn’t like the idea of hassles with tenants over the lack if parking.
Most lenders do not like multiple dwellings on the one title as the market for these is small. And, since the market for studio apartments is small, most lenders also don’t like studio apartments. If you are still having trouble with finance and you still want to purchase, try the non-bank lending sector. You just might have to use a non-conforming lender who doesn’t use the main mortgage insurers. PM or email me for details of one of the latter, if you wish.
Mum
Hi Originalsinner
Questions for you
1. how many apartments in the complex?
2. any other features ie pool / caretaker / security?
3. what are the strata fees?
4. I have never heard of 2 apartments on 1 title – was it 1 split in 2 or built like that?
5.brief description of complex & studio’s pleaseCeleste
Originally posted by mum:Hi OriginalSinner
I would be wary of these units for the following reasons.
The state of the common areas would indicate that little has been spent on their upkeep for some time. Ask for a copy of the Strata accounts and minutes of the AGMs. You are entitled to the most recent but try to get more than that. Unless there is a substantial ballance in the sinking fund account for repairs and other matters, then I would be budgetting for a charge in each of the next few years. And I would also be budgetting for a big argument at each AGM for several years to get essential repairs done.
There’s apparently $25,000 in the sinking fund. Er… is that good? I’ve not bought a unit before. The agent informs me that there are plans to paint, but the body corp agency is giving me gyp getting hold of minutes of meetings as I am not an owner. Go figure. I’ll ask the agent to get them for me.
Check recent sales of units in the complex and similar units close by.Done that. The poor current vendors were ripped off. They paid more for theirs than other buyers paid for bigger, much better units in the same complex. I know what everyone in the complex paid, when they paid it, and the size and positioning of their lots. Units in the surrounding area do not seem all that comparable, as there appear to be no studios and not too many one bedroomers in the area.
Is this purchase at a discount to the others or at a premium?Slight discount, albeit still at a really high price.
With the artificially inflated rent, they may be at a premium and unless you have long leases and tenants who wish to stay, your premium will evaporate very quickly. Budget for normal rents unless the area has very low vacancy rates. Never budget on your inflated rents lasting more than 3-6 months.Good call. I’m budgeting for a rent of about $35/week each less than quoted.
Many apartments have got around the limited parking by putting it on common land. I would be concerned. I got caught out with this when I came to sell a unit in a complex with not enough spaces recently. Most people have cars these days and expect to have off-street parking. I found it less of a problem with tenants than with owner-occupiers but potential landlords didn’t like the idea of hassles with tenants over the lack if parking.Good points.
Most lenders do not like multiple dwellings on the one title as the market for these is small. And, since the market for studio apartments is small, most lenders also don’t like studio apartments. If you are still having trouble with finance and you still want to purchase, try the non-bank lending sector. You just might have to use a non-conforming lender who doesn’t use the main mortgage insurers. PM or email me for details of one of the latter, if you wish.Mum
Might have found a lender, but would appreciate details of the non-conforming lenders.
Thanks for the help!
Originalsinner.
Not dead yet.
Originally posted by celeste:Hi Originalsinner
Questions for you
Ok. I’ll answer as best I can. I could well be wrong on anyrthing I say, so bear that in mind, as I’m relying on things like what the agent’s told me, what the questionably competent people at the council have told me, etc.
1. how many apartments in the complex?30, I think, on 15 lots. On building. The lots are all split into two units each, from what I gather.
2. any other features ie pool / caretaker / security?Pool, yes. If you can call it that. You ever see the movie “Envy” with Ben Stiller, with the pool he was planning on putting in his back yard? Just about big enough to bury a dead horse in? This pool’s a tad bigger than that, but not much. Also, there’s some weird lady who was sunbaking there. The agent who showed me the place (not the normal agent) pointed her out and told me that she often sunbakes next to the road instead. On the sidewalk.
Caretaker I don’t know about. I’m guessing they hire someone to mow the lawns etc, as the place does not appear too shabby.
Don’t know if there’s security. The complex front door was unlocked and there were no security screens. Car park has no front gate or anything of that nature.
3. what are the strata fees?Rates: $1314/yr
Body Corp: $1270.40/yr
Sinking Fund:$428.28/yr
Admin fund: $1294.96/yrTotal: $4308.04/yr. I think that’s it for fees, but could be wrong.
Hmmm. Come to think of it, I’m assuming they meant per lot, not per unit. Must clarify that.
These figures were given to me as quarterly figures, but I converted them to yearly for ease of calculation.
BTW, rent is apparently currently $185/wk and $180/wk, for a combined rental of $365/wk. Agent seems to think they won’t take offers under $200,000, despite the fact that the place has been on the market for some time. Like I said, they’re not going to like my offer. If I bother to make one.
4. I have never heard of 2 apartments on 1 title – was it 1 split in 2 or built like that?It was built as a motel complex and later subdivided under community title. So, built like that. The units are across the hall from each other, if that helps. I rang the Council and they said that under community title it was ok to rent them separately. Or live in one and rent the other. Made sure I wrote down the Council person’s name and when I spoke to them, too!
5.brief description of complex & studio’s pleaseCeleste
-heh- You sound interested. Complex used to be a motel, apparently, it was later a backpackers, and then subdivided under community title in December ’02 with lots sold off individually. so the units look like motel rooms. They could do with a paint and with the carpet being replaced, but aren’t in too bad condition. Not sure if the smoke detectors are up to spec. The units are air conditioned and furnished and on the second residential level (bottom level is the car park so three levels total). There is a small bathroom in each, a kitchenette (no stove, but has a microwave and sink etc), and there is no laundry in the individual units, though the complex has it’s own coin operated laundry. Currently with one drier out of action, from memory. One of the two units in question has a tiny balcony (3m2). There is a tiny pool as I said, the landscaping isn’t bad, and apart from a fair bit of cracking in the driveway etc, the complex is externally well presented. Lobby really needs a paint. There appears to be a general storage area on the carpark level, well fenced off and locked behind wire netting. Which is good, because there’s not a lot of space in the units.
Not dead yet.
Ooh, almost forgot. No phone lines, but Telstra says that it’s no problem to install them.
Originalsinner.
Not dead yet.
Strata Titles are on the way out and have been replaced with community titles. My understanding is that with community titles there is much less shared property (eg you own the roof on your unit and you do not have to coordinate with other owners if you want to reroof).
Normally community titles are used because the council will not allow torrens titles and/or because it is a lot cheaper to provide water, sewer and electricity to the individaul allotments (no need for easements).
It may be possible to change two community titles into two torrens titles, but probably not worthwhile.
The main disadvantage with community titles is that you have to coordinate with other owners similar to a strata group. You cannot make major changes without the approval of the majority.What sort of title’ing do large (ie highrise) inner city apartment complexes use? Eg – big developments in southbank, docklands etc – what sort of title are they?
Just curious, not trying to hijack!Originally posted by Bridgebuff:Strata Titles are on the way out and have been replaced with community titles.
I am in the process of doing a conveyancy course in Perth, there is no mention of community title in the dept of lands training manual, must be an eastern states thing – Martin Ayles did mention them in his seminar, that was adelaide.
all of the apartments I have purchased have a carspace each, the larger ones usually have some tenants who do not drive ( some of these do have those electric buggies tho – the large one usually have a good % of older folk) and you could actually park 2 cars.
In Perth the large new apartment buildings are a strata set up.
If there is money in the fund for tarting up the common areas eg: letter boxes etc. make sure you attend the meetings (you can call one yourself) and push for the upgrades – Upgrading the common areas will increase the value of the apartments.
Is that 200k for both? If it is I’ll buy them.
Gee wish I could get that sort of rent for my apartments, I might keep them. Perth’s market for a 1 bed apartment of around 42sqm you would pay 210 – 230k – rent $150.00
I would tart them up and rent them no worries.
Funny one of the units I lived in when I was 20 and living in Melb (west brunswick) was a converted motel – pool was emptied and Later filled in for more parking. That an Idea for the parking problem if the pool is useless.
any way, I will stop yapping. Good luck
Celeste
Celeste, check your PM.
Thank you all for your responses. Much appreciated, and I’ve learned a lot.
Originalsinner.
Not dead yet.
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