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Separating units on one title

Discussion in 'Real Estate' started by -T-, 6th Apr, 2006.

  1. -T-

    -T- Well-Known Member

    Joined:
    2nd Apr, 2006
    Posts:
    194
    Hi All

    About two years ago, when I was ill-informed regarding the benefits of starting with CG properties, I purchased three studio apartments on one title. They are in a building with about 30 other apartments, so it's not like I own the block or anything. They bring in a good income, approx. $700 /week, but body corporate is a lot and they are studios after all. Also, I bought them in my own name, rather than through my HDT, which I created later.

    So I'm not sure what I should do with them. My options are:

    a) Sell them, buy a CG property through my trust for a similar amount. This would cost me RE fees and CGT on that property, plus stamps and fees on a new property. People say to never sell property unless you've made a big mistake, but I don't know if this qualifies.

    b) Hold on to them and go with the flow.

    c) Try to separate them and get a (hopefully) higher valuation. This seems like the obvious choice, but how hard would this be? Has anyone here done this to small apartments before?

    In the two years they have grown about 15%, so about 7.5% pa. So they're aren't all that bad, but they are in Brisbane, so they may have been riding the boom still when I purchased.

    This isn't really urgent, but I'm trying to find ways to kick-start my portfolio. As always, all opinions are much appreciated.

    -T-
     
  2. Tzaki

    Tzaki Well-Known Member

    Joined:
    20th Sep, 2005
    Posts:
    72
    Location:
    Canberra
    T

    Use the equity in them to get into annother investment, (property/shares etc). They are performing ok so are not dogs, so don't shoot em! :D

    The fundamentals of the Brisbane market are still good.
     
  3. Jacque

    Jacque Team InvestEd

    Joined:
    16th Jun, 2005
    Posts:
    1,885
    Location:
    Sydney
    Hi T
    From the information you've given, it appears that you've purchased 3 studio apartments under one title?
    Are the other 30 units all studios as well? Are they serviced apartments? If so, I would then imagine that they were also sold in lots of 3?
    If this is indeed the case, I think you will find it difficult (if not impossible) to get them strata titled at all. Often, with studio apartment developments of this nature, studios are "created" out of bigger floor plans that were meant to house larger units.

    I would be finding out from your body corp and local council exactly where your ownership stands. If you decided to sell, then it sounds like it would be all or nothing?

    I would also imagine that, even with 3 studios, the land content would be quite low and not make up 30% of the purchase price? I'd be surprised if they did, especially given they're in a largish block.

    In the end, it's your decision and only you can make the final choice.
    Are there any forumites here who have studios in Brisbane currently?
     
  4. -T-

    -T- Well-Known Member

    Joined:
    2nd Apr, 2006
    Posts:
    194

    Thanks for the reply Tzaki. I put them on the market prior to understanding that concept, so I'm not really considering it now. But it did cross my mind again because they are a bit of a pain. :)
     
  5. -T-

    -T- Well-Known Member

    Joined:
    2nd Apr, 2006
    Posts:
    194

    Hi Jacque

    They are the only studios in the block, one on top of the other over three floors. Most others are 2brm and 3brm. They are not serviced apartments either, they must have just been left-over space. :) They border on 50sqm (I think one over and two under) and that may have some influence on separating them. That is 50sqm of Brisbane measurements (including balcony and parking space). Just FYI, they are in Newstead/Teneriife.

    If I could separate them, I think that would be a really good investment of time vs $. One would think they'd be worth at least a little bit more on separate titles. I'm just not sure what is involved.

    Thanks for the reply!

    -T-