Property: Company Title

[RazzaDazzla]

Half seriously looking at a 1 bedroom property in the guts of Sydney as an investment. Deceased estate (public trustee), the entire place needs to be gutted and re-done ($80K). Going to auction with an estimate of $250K+. chances are this is an underestimate to drive interest.

Renovated 1 bedroom properties in surrounding areas are in the ~$400K price range.

The property is Company Title rather than Strata Title. Now I understand that Company Title can scare potential buyers away; thus your market is limited.

From my limited understanding, the negatives of company title include;
-You don't own the property, you own shares in the company who owns the property.
-Banks will generally lend less as the security is shares in company rather than property.
-(Not sure about this one) Can't claim depreciation as the company owns the property, not you
-Company can deny potential tenants / buyers

One benefit I see is that if the Company Title is converted to a Strata Title this could have a 10%+ benefit to unit prices. I am aware that zoning, building checks, DAs etc need to be paid for to change from Company Title to Strata Title. I am also aware that 100% of Company Share holders need to be in agreement to change to Strata.

Can anyone give a % figure on how much a Company Title may reduce a property price? Eg. if the same property was sold as Strata Title, what kind of % difference would there be?

Any words of wisdom, warning about strata titles?

From my readings thus far; common perception is to avoid it like the plague! But could this fact be a potential benefit?

Edit:
Might be worth mentioning. There are currently about 4 of the nits being rented/used as commercial. Mainly Solicitors and also a couple of Acu-Puncture/Chinese medicine. So a benfit could be that this property could be rented as either commercial or residential. Quite a unique opportunity I would think.

Cheers
Ryan

 

[Knobby22]

My first place was company title.

I avoided paying stamp duty (laws may have changed now) as there was no title changing hands.

Sure I sold a bit cheaper but I bought a bit cheaper. Doubled my money!

Go for it, especially in this inflated market with interest rates to rise quickly over the next two years. The lower the debt the better. Make sure you are involved in running the company though once you buy your shares.

 

[RazzaDazzla]

Thanks Knobby!

Yeah, I am of the belief it could be purchased cheaper.

I assume getting involved in running the company is as per Strata and applying at the AGM for a position?

Now I just need to figure out how to raise the cash required before Thursday! Still, it's all a learning experience.

Another question; Where you able to claim depreciation? I've read some half assed reference saying that because the company owns the property, you can't claim depreciation.