Things To Consider When Purchasing A Town House Or A Unit

Hi, I’m Kristal Everingham and I’m a buyer’s agent here at Pumped On Property. In today’s video I’m going to be talking about things to consider when purchasing a townhouse or a unit. What are the seven most important things to consider when buying a unit or a townhouse for you as an investor? Number one, the number of units in a complex. Number two, the age of the complex. Number three, the internal floor plan or floor size of the particular unit of choice. Number four, body corporate fees and quarterly rates. Number five, the amount in the sinking fund for that particular complex. Number six, are there any planned works or have any works just been carried out ,and number seven, the location of that unit.

So why are these seven things so important to consider when you’re purchasing a unit or a townhouse as an investment? First things first, let’s go back to point number one. So how many units are in that complex? Here at Pumped On Property as a rule of thumb we don’t purchase units or townhouses in complexes with any more than 30 units per complex. We even like to keep it under 20 where possible. This is super important when it comes to things like future capital growth, scarcity, and potential rent return. The less number of units there are in any given complex, the better change you have of having that scarcity factor, future resale value, and rental income. The more and more units there are in any given complex it really does begin to effect those types of things because all it takes is for four or five units to be on the market at the same time and that can really bring down the value of your unit if you did want to resell or if you did want to rent it out. So the number of units in a complex is really, really important and as I said keeping it under 30 is definitely a good guide as an investor.

Number two, the age of the complex of choice. Again this is really important to understand as an investor because you don’t want to take on investment that’s going to be extremely high maintenance. It’s the same with buying an existing property. You want to know what’s going to be associated and what future costs may come up, as an investor down the track. So the age of the complex is really going to help you understand if it’s new, hopefully there’s not too much to be spent on it. If it’s old, what works have been carried out, what works have got to be carried out, and if there are any risks associated with purchasing a townhouse in an older complex.

The third, and probably most important point is the internal floor size of the townhouse or unit of choice. Here at Pumped On Property we do not buy units or townhouses with internal floor sizes of under 80 metres squared. This is probably the most important thing when considering buying a unit or a townhouse because it’s really going to help with owner-occupier appeal and with rentability. The bigger the internal floor size the better. It’s the exact same as buying an existing property. The bigger the house, the better, the more appeal it has. So when it comes to buying a unit or a townhouse understanding how big the footprint of that unit is, is really going to help you with future again, resale-ability, future owner-occupier appeal. The bigger internal floor plan the better, keeping it under that 80 metres squared is not necessarily a good thing as an investor.

The fourth point, how much are the body corporate fees, and what are the quarterly rates? As an investor you’re holding costs and breakeven points, and everything to do with finance is the most important thing. You want to know what you’re up for quarterly. You want to know the costs involved with holding that property. You want to know whether or not you’re positively geared, negatively geared, and the effect that has on your financial situation. So understanding the costs associated with purchasing that property, like the body corporate fees, like the quarterly rates, and anything else that the real estate agent suggests are costs that you may have to brunt, really knowing what it is that you’re up for each month, each year, each quarter is going to help you as an investor really calculate whether or not that unit or townhouse is a smart investment.

The fifth point is the amount in the sinking fund. So the body corporate fees contribute to the sinking fund for that particular unit complex. The more in the sinking fund the better because at the end of the day that means that there’s more money there when works are planned for the complex. So for example if the whole complex needs to be repainted. If works pop up and maintenance needs to be done you want to know that there’s money in that sinking fund, that all of a sudden you’re not going to have to brunt, that won’t jack up the prices of your body corporate fees. Asking this question and understanding what there is sitting there, when you buy your unit is one of the most important things to ask of an agent and to get those figures. The sinking fund is your life safety net when it comes to maintenance and things required for that unit. So you want to know that the money is there. That you’re not going to have to come up with, if anything comes up for that particular unit complex.

Number six, brings me into the next point. Are there are planned works or have any works just been carried out? So understanding how much is in the sinking fund and understanding what’s just been done is really going to help you. So you want to know if anything has been done on the property or the complex, you want to know if there’s Minutes in Meeting, whether predicted or planned works for the particular complex because at the end of the day that’s going to help you understand the level of maintenance and upkeep that this complex is receiving. It’s going to help you understand how much you could be up for in the future for body corporate fees, if things are coming up. Understanding what’s planned, asking for a copy of the Minutes of Meeting from the agent when you are looking at purchasing is going to help with all of this as well.

The seventh, most important thing with any investment property is location. I can’t say it enough and I’m not going to get sick of saying it but location, location, location is the most important thing when buying any investment property, including a unit or a townhouse. The location of that complex is really going to help you get the capital growth down the track, so selecting the right suburb, selecting the right streets in those suburbs. Are you close to public transport, the shops, amenities, hospitals, work, infrastructure? All of these things come down to location, and knowing that you’re buying a unit in a complex that’s in the right location is only going to help you as an investor down the track.

Just to recap on today’s video the seven most important things to consider when buying a unit or a townhouse. So we’ve got: number of units in the complex, age of the unit complex, internal floor size of the unit, body corporate fees and quarterly rates, the amount in the sinking fund, are there any planned works predicted for that particular unit or have works just been carried out and the location of the complex.

Thank you so much for joining me today. I’m Kristal Everingham from Pumped On Property. I hope you’ve learnt something today and I’ll see you next time.

Ben Everingham

About

Ben founded Pumped On Property after building a multi-million dollar property portfolio over a 5 year period. His mission is to show you how to replace your income through property investing so you can do what you love…full time.