There's no doubt that apartments as part of a strata managed complex can make attractive investments. Not only do they typically require less maintenance than homes, apartments are attractive to both buyers and investors for their relative affordability in premium suburbs. However because you are buying into a property with other owners, it's important apartment owners strata managed complex assess certain critical factors and take these into account before buying:
Understanding Strata Levies/Body Corporate Fees
Buying into an apartment complex means paying shared expenses that each owner is liable for. The amount of these levies can drastically vary, but essentially are used toward maintaining the building and common areas. Depending on facilities, quarterly levies can quickly add up based on how many owners are able to split the cost. Before buying, assess the condition of the building.
Some buildings requiring maintenance in the next few years such as major plumbing, painting or other repairs could represent a major financial burden if there are not already sufficient funds in the body corporate's sinking fund. Be sure to also check if there are any special levies imposed in addition to existing levies as these are often listed separately.
While strata fees will vary from building to building and in different neighbourhoods, buyers should do their research on several buildings in the same area of a similar age and size to determine what is a reasonable figure to arrive at. For those buying into a new complex, examining strata fees for nearby and similar sized apartment blocks that are around 10 years old will give a representation about what costs you can expect in the future.
Some strata managed properties have strict regulations voted by a majority of owners in the complex. If you plan on knocking down a wall, playing loud music or getting a cat, it may mean a breach of by-laws and can mean penalties are enforced. In some complexes, restrictive by-laws may not suit an owner's lifestyle so its important to be aware of these as they must be legally abide by.
Buyers also need to understand what part of the building represents their 'lot' and what part represents common areas as this can differ between buildings. Front doors, balcony railings and garage doors may considered 'common' property and influence your ability to make changes or modifications.
Obtaining a Strata Inspection Report
To avoid buying into a costly trap, a strata report is essential to gain a detailed picture into the maintenance and management history of the building. Strata reports detail information about the building's owners, the management of the property, previous disputes among neighbours, and what issues the building may face in the future.
Strata reports can uncover bad management, higher than expected levies and give a picture of the likelihood of special levies that may need to be paid in the future. On the positive side, a strata report can give you the peace of mind that the property you are considering is well managed is well financed.
An apartment can be a solid investment, but all buyers should exercise due diligence to understand what they may be taking on, and whether they can afford levies and be willing to abide by by-laws. Only then will they be able to make a truly informed decision about the suitability of their investment. To learn more, contact a company like R. Jackson Pty Ltd with any questions you have.