{"id":21728,"date":"2018-07-27T01:00:29","date_gmt":"2018-07-26T15:00:29","guid":{"rendered":"https:\/\/realestatetalk.com.au\/?p=21728"},"modified":"2018-07-27T01:00:29","modified_gmt":"2018-07-26T15:00:29","slug":"5-big-risks-of-strata-titled-investments","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/5-big-risks-of-strata-titled-investments\/","title":{"rendered":"5 Big Risks Of Strata-Titled Investments"},"content":{"rendered":"

Owners corporations serve a number of important functions. From keeping the lights on in common areas, to maintaining the garden and pool, to ensuring the complex is insured, they are responsible for making all sorts of decisions on behalf a building\u2019s collective owners, to keep things ticking over.<\/p>\n

The job of an owners corporation, also known as a strata committee, is not an enviable one. Comprised of all of the owners in the complex \u2013 which can be anywhere from two to 2,000 \u2013 its very reason for existence is to ensure the exterior and common areas of the building are cared for just as well as the homes inside each unit are.<\/p>\n

1 Risk 1: High levies\u00a0<\/strong>
\nAs an owner in an apartment or unit complex, you will be required to pay regular strata levies (see boxout for a breakdown).
\nAt the higher end of the scale levies can cost $5,000 to $10,000 annually \u2013 or more.<\/p>\n

This equates to several hundred dollars per month, which can chew through your cash flow and profit.<\/p>\n

2 Risk 2: Low levies<\/strong>
\nLooking to avoid high levies by finding a property with low strata fees? A word of caution: extremely low levies ($30 or less per week) could indicate that the building hasn\u2019t been well maintained and may therefore need expensive repair works in the future. A glance through the minutes of the most recent annual general meetings of the committee will shed some light on the matter.<\/p>\n

3 Risk 3: Big egos\u00a0<\/strong>
\nIn strata committees, it can be the loudest and most persistent voices that get heard above all else, which can make achieving even the smallest tasks, such as choosing a paint colour for the fence, arduous.<\/p>\n

“The loudest and most persistent voices get heard above all else, which can make achieving even the smallest tasks \u2026 arduous”\u00a0<\/strong><\/em><\/h2>\n

\"\"<\/strong><\/em><\/p>\n

4 Risk 4:<\/strong>\u00a0Lack of control<\/strong>
\nThe owners corporation is comprised of all of the owners in the building who wish to be on the committee. In some cases, this can result in an unfair balance of power. For instance, if an investor owns three units in a complex of six, they would have half of the decision-making power.<\/p>\n

Similarly, if a group of owners band together and form an alliance, they can skew decisions to suit their own agenda, rather than listening to the wants and needs of all owners.<\/p>\n

5 Risk 5: Special levies<\/strong>
\nThese are lump-sum levies that are issued when an expense needs to be met and there isn\u2019t enough money in the administrative or sinking fund to cover it. It could relate to urgent building works, such as repairs, or a capital item, such as painting the exterior of the complex or replacing the window awnings. A special levy can only be raised at a general meeting of the owners corporation by an ordinary resolution.<\/p>\n

With so many risks to be aware of, does this mean strata-titled properties should be avoided from an investment perspective? Far from it! Units and apartments can be very profitable investments, so they shouldn\u2019t be filed in the \u2018too hard basket\u2019 simply because they can attract an added layer of complexity.<\/p>\n

Instead, our advice to strata titled property investors is to play an active role. Ask to see copies of previous AGM minutes to see what kinds of decisions have been made in the past.<\/p>\n

Call your strata manager and introduce yourself so you can be kept in the loop. Make sure you vote when committee papers are mailed out, and if time allows, join the committee yourself.<\/p>\n

It doesn\u2019t involve a huge investment of time; you\u2019ll answer a few emails and perhaps attend a few meetings a year (which you can even phone into if you don\u2019t live locally).<\/p>\n

However, the positive impact it could have on your investment overall could be worth its weight in gold.<\/p>\n

OWNERS CORPORATION LEVIES EXPLAINED<\/strong>
\nAdmin fund<\/strong>
\n– covers ongoing expenses to maintain the common areas, such as gardening and pool cleaning<\/div>\n
Insurance<\/strong>
\n– is a premium that protects the physical building, along with liability and indemnity insurance<\/div>\n
Capital works fund<\/strong>
\n– is the budget for bigger-ticket items, like repainting the exterior of the complex<\/div>\n
Special levies<\/strong>
\n– are raised if\/when needed, to pay for items not budgeted for in the admin or sinking fund<\/div>\n

Can you afford to buy in this suburb?\u00a0Find out how much you can borrow<\/a><\/p>\n

Originally published by :\u00a0https:\/\/www.yourinvestmentpropertymag.com.au\/strategy\/5-big-risks-of-stratatitled-investments-248614.aspx<\/a><\/strong><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Owners corporations serve a number of important functions. From keeping the lights on in common areas, to maintaining the garden and pool, to ensuring the complex is insured, they are responsible for making all sorts of decisions on behalf a building\u2019s collective owners, to keep…<\/p>\n","protected":false},"author":176692473,"featured_media":21729,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[13,25,31],"tags":[70],"class_list":["post-21728","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-story","category-sponsored-channels","category-your-investment-property","tag-featured"],"yoast_head":"\n5 Big Risks Of Strata-Titled Investments - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/5-big-risks-of-strata-titled-investments\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"5 Big Risks Of Strata-Titled Investments - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"Owners corporations serve a number of important functions. 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