I lives in a unit which sits on a master title consisting of 6 units. I would like to buy the unit off from the owner.
I'm unsure of its feasibility and appreciate any advice from the community :
– as the unit sits on a master title, can the owner sell the units individually,
– will the bank be happy to secure this unit for its collateral,
-.should I approach the agent to made an offer to the owner or should I write to the owner directly. (My concern is should the agent comes to know that I approach the owner directly, he might think that I hijack him. He might give me some hard time in the future should the purchase did not go through).
Many thanks.
Do you mean there is one title for the whole block?
If so the owner will not be able to sell this unit separately. They would be to be strata titled.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
If you advise the agent that you want to buy the unit, there may be some provision in the managing agency agreement which makes them entitled to a commission as they have introduced the buyer to the owner (yes, there are such clauses).
Do you want to buy the unit because it is a good investment, 'it seemed like a good idea at the time', or just because you like the place and want to continue living there? There may be several other units in the same price range which will make better investments.
Can you explain what you mean by Master Title?
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks for your response.
There is one title (which is being referred as a Master Title) for the whole block.
I wanted to buy the unit and convert it to an investment property one year down the road due to its strategic location.
As the units are not strata titled, all units would have to be sold en bloc. I intend to purchase the block, strata titled and sell off x units and keep the remaining. How should the loan / finance be structured.
Can anyone recommend someone in Melbourne who is an expert in this area.
Finance should be structured under normal principals. Initially you would want to borrow as much as possible. Ideally 104%. Borrow the costs to strata title too.
Once strata titled sell off the units you want to and then split the loan so there is a portion for each unit. All loans IO and an offset account attached to the one you are living it. You may need advice on how much each portion of the loan will be. Probably won't be equal depending on the valuations of each units – ideally you want to attribute higher loans to the ones that will be investment.
So separate the loans first and then sell. Using the proceeds to pay down your PPOR loan first (or into the offset). If you sell first and then split you will end up with lower tax deductions.
Also factor in income tax and GST on the sale.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Not many lenders will accept 6 units in a single title. There are only 2 that will accept it. Your biggest issue with be valuation so you need to address this upfront as much as possible.
Are each of the units fully self contained?
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
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