Dilemma in Strategy

[Peter Griffin]

Hi All,

I have recently had a cross leased block of flats (3x 2 all on individual cross lease) in Central Palmerston North valued after owning them for 6 months. The Value was far below what I had gauged based on recent sales, current listings, The GV ($495k) and an evalue ($525K). His registered value was $455K. The Valuer explained it was the cross lease title that deemed that the units were valued lower than I thought. He explained that if they were on a unit title the values would be where I assumed they'd be ($530-540K). In order for the crosslease to be changed costed fees are;

Legal fees $3700 + GSt
Linz disbursements $2000
surveyor fee ???

The size of the flats are 183sq on a 978sq section. The guttering only has two down pipes off the roof. So I assume I'd have to run another couple into the storm water if I had to change the title.
The property has an LVR of 81% (using the valuers value) and 7.85% net return. I would like to recycle the deposit I paid to purchase this property but other than that I'm happy to hold this block.


My Question is, Is it worth doing? any idea on Survey fees? Your thoughts or experiences are welcomed.

P. G

[charlotte30]

Yes I believe it is worth it to increase the value as they could be sold individually further down the track. Talk to a surveyor with regard to fees. Are there any council requirements that would get in the way of crossleasing /subdivision. eg shared drains, firewalls, parking.
Cheers
Charlotte30

[orion]

Hi All,

I have recently had a cross leased block of flats (3x 2 all on individual cross lease) in Central Palmerston North valued after owning them for 6 months. The Value was far below what I had gauged based on recent sales, current listings, The GV ($495k) and an evalue ($525K). His registered value was $455K. The Valuer explained it was the cross lease title that deemed that the units were valued lower than I thought. He explained that if they were on a unit title the values would be where I assumed they'd be ($530-540K). In order for the crosslease to be changed costed fees are;

Legal fees $3700 + GSt
Linz disbursements $2000
surveyor fee ???

The size of the flats are 183sq on a 978sq section. The guttering only has two down pipes off the roof. So I assume I'd have to run another couple into the storm water if I had to change the title.
The property has an LVR of 81% (using the valuers value) and 7.85% net return. I would like to recycle the deposit I paid to purchase this property but other than that I'm happy to hold this block.


My Question is, Is it worth doing? any idea on Survey fees? Your thoughts or experiences are welcomed.

P. G

How much did you buy them for 6 months ago Peter?
Valuers vary hugely in what they will value properties at, and it's always best to get them to give you an idea of what they think it may value to before they do it. Another valuer may value it for $550,000.
Banks will often only allow the valuations of certain valuers too, although you can sometimes get around that.

[Rosco]

Hi PG,

Easy starting point, talk to a surveyor and ask them an idea of fees and also if there are any complications. Sounds too easy to me and too cheap.

Will spending the extra money give you any extra rent? Obvious answer is no, so I would be careful spending this.

Do you need the properties to value higher or do you have enough other equity anyway?

If you can borrow more, can you find a good investment that you want to buy at the moment?

Ross

[Peter Griffin]

Thank you for your sage answers.

I will get in touch with a surveyor and find out what 'the damage is'. I was hoping someone else had gone through a similar experience.

Under the current crosslease they can be sold individually.

I believe the only 'fish hook' with the Council will be the storm water run off. The roof only has two downpipes and this is probably insufficient for the roof size. In saying that I really don't know untill it's looked at.

I do have other avenues to fund further purchases, equity in other properties and cash.

I borrowed the deposit from my Trading Trust (yes, all was properly documented) I wanted to recycle the deposit to 'pay back' the Trust.

Thanks

P.G

[artemis]

I don't have any useful info about surveyor fees, except that they are probably more than would be thought possible! However, a couple of random thoughts.

As you own the whole complex, if you do decide to convert to unit titles you may be able to provide for an extra unit or two at the same time.

Also, unit titles come with a whole raft of legislative requirements, and there are more changes in the pipeline.