Westwood Conveyancing

Are you looking to purchase a strata property?

4 things to look for when buying a strata property

1. Owners vs. investors

It’s usually better to have more owners occupiers than investors because they’re more likely to proactively keep the building to its optimum level.

Now that’s not because investors don’t care.

It’s more to do with the fact that investors aren’t onsite and can’t physically see any problems.

One of the other keys to successful strata investment is buying into a smaller complex because they are more desirable to future owner-occupiers who are prepared to pay more for property.

A smaller body corporate also means fewer owners to deal with and fewer owners who need to agree before a decision can be made.

2. A numbers game

In the rush and excitement that goes into buying a unit, many buyers fail to have a professional scrutinise the books and records of the body corporate.

This leaves them clueless about their current finances and unaware of the issues they might be facing.

A bad example might be that as a new owner you will automatically have exposure to major expenses or even lawsuits with neighbours!

The secret is to make sure that you check out the financials before you buy.

3. Repair history

Similar to checking out the books, you must complete a thorough investigation into the history of the building.

Has the building got ongoing problems that are costly to fix?

Will you be landed with a share of the bill to get a new roof within weeks of buying the property?

Most of the new multistorey buildings I’ve been involved with over the past few years have had water issues with their balconies.

While sellers legally have to disclose any material facts about a property, some are actually selling because they don’t want to deal with an ongoing repair problem.

Don’t get lumped with a problem that you can avoid.

It’s as simple as getting a hold of past committee meeting minutes, which can save you thousands of dollars in the long run.

4. Maintenance schedule

It’s an unfortunate fact that many bodies corporate don’t adequately plan for future maintenance.

This can be especially true with older schemes, which means you could inherit a property that hasn’t been adequately maintained over the years.

And that usually means money out of your pocket when the inevitable repairs (that could’ve been prevented!) start cropping up.

As well as assessing committee minutes for major problems, check whether the sinking fund is appropriately financial to undertake a long-term maintenance regime.

The bottom line:

Despite the various issues related to strata and the levies you may need to pay, I’d rather own an apartment in a high-growth inner suburb than a house in a lower growth outer suburb.

As always, it comes back to weighing up all the factors of the property.

A strata property may still be the best investment for you if all the ducks line up.

But as I explained, strata schemes are only as good as the owners within them.

If you have a dormant body corporate that usually spells trouble for the future profitability of the complex.

Like I’ve said, investing in investment-grade units and townhouses can provide capital growth potential and solid yields.

But not if you buy into a scheme that doesn’t even have any money saved for a rainy day or one where the owners don’t seem to care about the upkeep of the building.

Over the last few years, we’ve built too many of the wrong type of apartment – many in high-rise towers aimed at overseas investors.

Smart investors are steering clear of these investor-dominated buildings for many reasons including no likely capital or rental growth for a decade and the scare of poor-quality building issues.

However, buying older established apartments (those that were previously called flats), villa units, or townhouses, which are located in the right inner and middle-ring suburbs of our capital cities, can make good investment sense.

Source  :  https://propertyupdate.com.au/what-you-need-to-know-before-buying-a-strata-unit/?

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