Semi commercial title split buying to sell for cash?

by Readers Question

14:55 PM, 29th May 2017
About A year ago

Semi commercial title split buying to sell for cash?

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Semi commercial title split buying to sell for cash?

I’m soon about to start investing with my mum and we’ll be starting with a Buy to Sell strategy using cash. We cannot get a mortgage for now, that is not an option to consider at present.

I recently thought about buying a freehold semi commercial property with a flat/flats above then selling each unit separately.

What I’d like to know is, what’s the best way to sell the flat? Is it better to create a lease then sell the leasehold flat and freehold separately or sell it as a freehold flat to an investor who can sort out the lease themselves.

I’m not keen on keeping any of the freeholds or holding on to any property, the idea is just to buy and sell for now.

Thanks,
Jo



Comments

Neil Patterson

14:59 PM, 29th May 2017
About A year ago

Hi Jo,

If you do not split the freehold into separate leases you will have to sell as one property.

Then the question is; what value are you adding to the property in order to make a profit over and above Stamp duty, 2x Legal fees and sales commission?

NEIL T

13:44 PM, 30th May 2017
About A year ago

It seems a good idea to buy mixed commercial/residential property in order to avoid the additional 3% stamp duty for those who already own residential property.
As NeilP points out you would need to create a decent profit margin over and above the usual charges to make it worthwhile.

I own a small block in East London with a shop and storage on the ground floor with four s/c flats overhead.
I would make significantly more profit selling the units separately and in different tax years - by creating leases. But what happens if you sell the first, or second flat and the buyer moves undesirable tenants in, i.e. loud music, lots of comings and goings, rubbish in the communal areas etc. It would make it significantly more difficult in selling the remaining units at the full market price.

So at the moment, my money is on selling as one property.

Jo Ab

19:01 PM, 30th May 2017
About A year ago

Thank you Neil and neilt.

Neil, I was wondering if you could sell each unit separately both as freehold properties. I know a freehold flat is not seen favorably by lenders but it should be ok if a cash buyer purchases it and sorts out the lease, right?

I was just thinking through different strategies but think the semi commercial strategy may not be one to use right now.

neilt you make a good point about potentially challenging tenants in a separate unit that could make it difficult for the other unit/s to sell.

I'll continue to do more research and weigh up the pros and cons of different strategies that would work for us.

Thanks again.

Puzzler

11:44 AM, 3rd June 2017
About A year ago

You need to talk to someone with some knowledge on this, you can't sell two flats both with freehold unless it is a joint freehold - these do exist but there would need to be some form of lease specifying rights and responsibilities, defining and delineating the property etc. plus they would have to have separate titles or how could you sell them. No-one would or could buy what you are proposing. Why are you not prepared to do this yourself?


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