Show notes – The Comprehensive Guide to Townhouses – Performance, Selection, Property Planning and Development Projects (Ep. 257)

Cate circles in on what technically defines a townhouse. She shares an example and talks about the differences between apartments and townhouses when it comes to land on title.

Mike asks a tough question, “how do townhouses perform, as compared to houses?” but as Cate points out, it’s not a hard and fast rule. There are elements that can bolster up the value (and performance) of a townhouse such as vista, prestigious locale, water views etc. Of course Land to Asset Ratio comes into play, but it isn’t fair to classify all townhouses the same.

Dave talks about the complexities of buying a townhouse that is yet to have it’s subdivision registered. This is technically deemed an ‘off the plan purchase’ and this does carry lending risk for some buyers.

But what can buyers do when they need to move in to their new home by a certain date, but title registration is delayed? Cate shares an interesting possible solution …. a license agreement.

Cate runs through the various subsets of units; apartments, villa units, and townhouses. She breaks down the hierarchy of land ownership for each subset and details some of the formats of townhouses and common land versus no common land. And how do some townhouses qualify for no owner’s (or strata) corporations?

“These types of townhouses are inherently more valuable”.

The Trio delve into the attributes that developers look for to optimise their profits on a multi-unit development site, but Cate also talks about some of the investor mistakes associated with medium-density development activity areas.

What are some of the attributes that Cate looks for when assisting developer clients? Tune to find out…

Lending is not always straight-forward or easy for developer finance and Dave shares some of the categories of lending and LVRs, from small-time residential to larger-scale commercial. Buckle in for some valuable, technical insights and explanations, and Cate points out the risks.

And what are some of the things that developers get wrong?

Gold Nuggets:

Cate Bakos’s gold nugget: Bedroom count can create a difficult compromise. Is the bedroom too tight? Is the proportionality of the unit not feeling right? You have to ask yourself the question; “Have you bought yourself a lemon?” Overcapitalisation risk challenges the profitability of making changes, so buyers need to search in the right area for the right townhouse.

Dave Johnston’s gold nugget: If a townhouse is going to be a stepping stone home or an investment, it can be quite feasible for first time buyers. Dave implores buyers to consider buying into a great location that is close to where they would ultimately like to live in their family home.

Mike Mortlock’s gold nugget: Mike likes townhouses! Provided, of course, that they are well-located. He notes the stronger rental yields, but his concern is that of scarcity.