To labour the old cliché, beauty is in the eye of the beholder.
But, often when it comes to a property purchase what real estate agents know very well is how much emotion is involved when it comes to buying the place where you want to live.
A dose of ‘I love it, the location is great and I feel excited’ is absolutely fine, given the importance of feeling at home.
But, when it comes to the wide choices now available in the NSW strata market – and more advice than you can absorb from various sources – we need to take a ‘reality tour’ beyond the shiny picture windows, manicured garden, close-to-work location and the fitness centre available at all hours.
While all of those elements may be ideal for your lifestyle and a future property capital gain, at IUM we regularly see the problems that arise after the event because potential unit buyers have not been equally diligent about what lies beneath.
Strata managers are not real estate agents and the stressful process of doing the rounds to view and possibly buy from the ‘for sale’ options is an entire subject of study in itself.
But, when it comes to getting a practical handle on this increasingly popular housing option, strata managers know the basic steps to understand and become well versed in before selecting from your unit.
It is only in this way that you can make informed decisions about what truly does stand out from the crowd.
Begin by studying what the rules are that apply to strata schemes in NSW (try our Smart Unit Owners’ Guide).
It is here you will gain an understanding of how these schemes are managed, how fees and costs are applied – and vary from scheme-to-scheme – and what to expect from strata management arrangements.
Know what you are buying into, whether it is a sparkling new scheme, or an older established one. The gloss can rapidly slide off if you start receiving bills for unforeseen repairs, especially if there isn’t enough in a the capital works fund to cover such eventualities.
This basic research is not so basic when it comes to your hip pocket. But, many people overlook it for fear of missing out on a purchase. You can find out how financially healthy a scheme is here. These reports can be done urgently.
And, don’t assume that because a development is brand new that it won’t be awash with potential costs that can creep up and blow the budget.
What are the ongoing maintenance issues and costs associated with all of those attractive facilities? From roof gardens to rapid elevators and from swimming pools to security systems. They all come with an ongoing maintenance requirement.
In older, more established blocks, determine how robust the actual building is and obtain a report on where the likely maintenance or refurbishment shocks may lie. A building report could be the best money you spend in the overall buying budget, whether a scheme is new or established.
Each strata scheme has an owners’ corporation to run its collective affairs. As an owner you are a member of this body. How much or little you become involved is your choice, but bear in mind that these largely volunteer decision-making owners are in charge of how well the collective asset is managed.
The owners’ corporation for each scheme appoints a strata manager and decides on the extent of what that strata manager will be paid to do on its behalf.
Generally, the strata manager’s role covers a range of administration, financial and lifestyle issues, such as the notification of meetings, invoicing, record keeping and helping with lifestyle issues.
A good strata manager will always work with an owners’ corporation on how things can be done better.
By checking meeting records, you can get a picture of how well run they are, what ongoing issues have emerged, how representative of owners’ wishes they are and their dedication to enhancing the value of the overall collective asset.
It is this attention to the health of the collective asset that will impact on your future capital gain.
Having a great individual unit in a scheme with a poorly presented and maintained exterior with little hope of seeing a collective improvement, could dramatically affect future sales expectations, or drain the budget just on a list of stop-gap maintenance requirements.
Having bought into a scheme, it can then be a shock to discover the beloved pet is banned, that timber floor you envisaged replacing the carpet with is a no-no, communal areas have limited uses and your visitors have nowhere safe to park.
Don’t assume the plans you may have to renovate, paint the front door bright red or change anything structural are automatically allowed.
Each scheme sets its own by-laws and these will impact heavily on your lifestyle. By-laws can be changed with the agreement of the majority, but if you are aware of what the by-laws are – both collectively and in regard to your individual unit – then a great deal of grief and disappointment can be avoided.
The Eyes Have It
When you begin the process of shortlisting your dream unit or scheme, get back to the basic premise we began with – namely, beauty is in the eye of the beholder.
The chances are that like many prospective buyers, the journey begins with online websites. Welcome to the world of photoshopping and real estate ‘spin’.
It may be a great way to eliminate what you don’t want, but nothing replaces doing the due diligence, shoe leather and rubber on the road to go and physically view what you have shortlisted and ask all the relevant questions, whether it’s off the plan, a just-released new development or an established property.
If you make the personal journey to begin with, you should rapidly notice what state the collective asset is in and be able to take its temperature. Is it a case of pealing paint, rusty guttering, unattractive communal areas, a roof that has seen better days, a little too much rubbish lying about and crumbling paved areas?
While it may initially appear to be an affordable entry into the housing market, will it prove to be a commensurate and constant exit from your hip pocket just to keep basic infrastructure in working order?
The ‘renovator’s delight’ might turn up the odd gem in the free standing housing market, but in that instance it is entirely up to the owner to spend what they wish to turn it a swan.
In strata scheme land, however, unless you can convince each individual owner to invest the extra money to bring the whole collective asset up to attractive par, then it is likely to remain an ugly duckling.
Be armed with the right knowledge to make informed decisions.
Or find out if our inspection services can help you: