{"id":5823,"date":"2015-09-18T12:00:36","date_gmt":"2015-09-18T02:00:36","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=5823"},"modified":"2015-09-18T12:00:36","modified_gmt":"2015-09-18T02:00:36","slug":"the-best-way-to-sell-a-property-population-growth-and-property-demand-2-big-mistakes-you-make-when-investing-in-property-cross-collateralization-of-properties-plus-more","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/the-best-way-to-sell-a-property-population-growth-and-property-demand-2-big-mistakes-you-make-when-investing-in-property-cross-collateralization-of-properties-plus-more\/","title":{"rendered":"The best way to sell a property | Population growth and property demand | 2 big mistakes You make when investing in property | Cross-collateralization of properties | Plus more"},"content":{"rendered":"

 
\nThis week on RET, we look at the best way to sell a property, by auction or private treaty.
\nCate Bakos<\/strong> has some great advice about how you can determine the true market value of a property without having to rely on your own judgment and the advice is FREE.
\nMichael Yardney<\/strong><\/a> tells us why he believes it is <\/b>not really population growth that predicts property demand.
\nWe answer an excellent question from Michelle about cross collateralization of properties and Jane Slack-Smith<\/strong> tells us the 2 big mistakes people make when investing in property.
\nWith almost a quarter of us living in strata property and with our obsession with renovation it is no wonder there is an increase in the number of problems emerging for property owners in this area. We look at the problems and how you can avoid them.
\n <\/p>\n

Transcripts:<\/h4>\n

Cate Bakos<\/span><\/h3>\n

Kevin<\/b>:\u00a0 It\u2019s so difficult when you\u2019re in the market to buy a property just to get a handle on what the prices are doing. In recent times, we\u2019ve seen some crazy prices coming out of Sydney and Melbourne. How do you get a bit of a handle on this, and how do you know that you\u2019re not paying too much when you\u2019re going to buy a property?
\nI\u2019m going to talk now to Cate Bakos who is a buyer\u2019s agent. No doubt, Cate, you face this challenge all the time, every time you\u2019re helping someone buy a property.
\nCate<\/b>:\u00a0 Every single time. Yes, that\u2019s right, Kevin.
\nKevin<\/b>:\u00a0 How do you work your way through that?
\nCate<\/b>:\u00a0 The first set of analysis that I\u2019ll conduct once we\u2019ve found a property that seems to tick all of the boxes or fit the brief <\/b>is to conduct a comparable sales analysis. What that means is you look at sales results that have taken place in the area for properties that are on similar land size, offering a similar number of bedrooms or layout, and then obviously, you can pinpoint where you think the subject property sits in relation to the ones that you\u2019ve assessed.
\nIt gets pretty tricky when you have a property that is very unusual or doesn\u2019t have a lot of comparable sales or, more importantly, recent comparable sales. You can look at a property that sold a year ago, but in this market with the pace that we\u2019ve been enduring, a one-year-old sale won\u2019t really be helpful because the market has moved quite a bit. You can\u2019t just put a blanket growth percentage on an old sale.
\nThen you have a few other things that you might look at doing. Obviously, if you\u2019re not feeling up to doing the analysis yourself, you can speak to a buyer\u2019s advocate or you can speak to a certified valuer who will give you a proper valuation report. But there are other avenues that you can go down to get a good idea of where the property value really sits without necessarily having to pay a professional.
\nKevin<\/b>:\u00a0 Are there any cost-effective ways that we can get a handle on that price, Cate?
\nCate<\/b>:\u00a0 Yes, absolutely. Aside from doing your own analysis, there are professionals out there who you can tap in to, and you don\u2019t necessarily have to pay for their advice; you just have to be nice to them.
\nOne method that I\u2019ll sometimes utilize myself is chatting to other agents in the area \u2013 obviously, agents who are in competition with the agency that is listing the property. They may or may not have been through that property and had an opportunity to list it themselves, so not only have they met the vendors and they\u2019ve assessed the property, but they will have conducted their own research, as well. Obviously, a local agent with local knowledge is a highly valued person to have on your team when you\u2019re trying to assess what price tag a property could go for.
\nThe other person I find really valuable in this circumstance is a rental manager \u2013 not necessarily one from the same agency who is selling the property, but a rental manager who is dominant in the area. If you can get an idea of what sort of rental appraisal they would assess the property with, you can then look at the going yields in the area. Knowing your rental yields calculates what price tag that could deliver you.
\nObviously, assessing these methods in tandem is really helpful because that can give you a range of prices, but it also gives you some data to overlay.
\nKevin<\/b>:\u00a0 I remember talking to you a couple of weeks ago, Cate, about putting a value on a property. I think we talked at the time about a property that you\u2019re going to buy and live in is probably one that you may end up paying a slight premium for because of your requirements. But certainly, if it\u2019s an investment property, it\u2019s more of a business decision. Is that the way you look at it?
\nCate<\/b>:\u00a0 Every day, absolutely. Any investor who\u2019s looking at an investment property with even an element of emotional criteria can really get themselves off track. Whether it be something that they could put their children in or something that they could one day live in themselves, it will muddy the waters, and it will take away their ability to be pragmatic.
\nIt\u2019s vital to get the numbers right and to remain focused on the numbers and your reasons for selecting the property. Obviously, you have growth, yield, and vacancy rate targets that you\u2019re looking to achieve. Try and keep the emotional hat off and put the business hat on only.
\nKevin<\/b>:\u00a0 Great stuff. Cate Bakos from Cate Bakos Property. Thank you so much for your time. I look forward to catching you again soon.
\nCate<\/b>:\u00a0 Thanks for calling, Kevin.
\n <\/p>\n

Michael Yardney<\/a><\/h3>\n

Kevin:\u00a0<\/b> There has been a lot written about Australia\u2019s strong population growth and how there\u2019s likely to be twice as many of us in the next 40 or 50 years. That\u2019s a frightening thought.
\nApparently, one baby is born every minute and 45 seconds. Sadly, someone dies every three and a half minutes, and the net gain from overseas is one migrant every two minutes. This results in an overall population increase of one person in every minute and 18 seconds. By the time you finish listening to this interview, there will be another four or five people living in Australia.
\nMichael Yardney joins me from Metropole Property Strategists. Michael, you\u2019ve been looking at this. What\u2019s happening with Australia\u2019s population?
\nMichael:\u00a0<\/b> Kevin, thanks. Population is being measured, and a lot of people who are interested in property want to understand what\u2019s going to happen to that population to understand what we need for property. But I\u2019m going to suggest it\u2019s not just population growth, but we also have to be aware of household formation \u2013 how many households we\u2019re forming.
\nCurrently our population, it\u2019s just under 23.9 million people, and it\u2019s projected to increase by 2036 \u2013 Kevin, that\u2019s not that far away \u2013 to 32.5 million people. The other thing, of course, is our median age is going to go up. We\u2019re going to be older in 2036. The median age is going to be about 40 years of age or so, compared to 37 years of age now.
\nThe other big thing, of course, is that the proportion of older people, people over 65 years, is going to be higher, as well. This means that we\u2019re going to have more people living on their own in the future.
\nKevin:\u00a0<\/b> You said 23.9 million. How many houses are there in Australia and how many people per household?
\nMichael:\u00a0<\/b> There are currently 9.2 million households, and the average size is 2.58 people per household.
\nKevin:\u00a0<\/b> With that population growth, Michael, how many dwellings are we\u2019re going to need?
\nMichael:\u00a0<\/b> In the past, we have been building about 164,000 dwellings per year. It is suggested in the five years ahead of us to 2021, our strong population growth underpinned by the migration is going to require 172,000 homes. Forget the population growth \u2013 172,000 households. That\u2019s about a 5% increase in demand in the next five years compared to the last five years.
\nKevin:\u00a0<\/b> I guess I could ask you questions about whether we\u2019re going to be able to meet that, but I guess we have to.
\nWhat does it mean? What are the households going to look like?
\nMichael:\u00a0<\/b> There are going to be fewer people living in the traditional family home, mom and dad and kids. While, of course, there are going to be more of them, the percentage is going to decrease a little bit. Over the timeframe, single-person households are expected to increase by 24% from 2.1 million to 2.5 million single-person households in the next five years.
\nKevin:\u00a0<\/b> Does that mean that we\u2019re probably going to be building more apartments? I think we can obviously fit more apartments on the land mass.
\nMichael:\u00a0<\/b> Sure, Kevin. More of us are going to want to live in apartments, but we\u2019re also going to need lots more houses. The number of people living in traditional houses is going to increase by about 770,000 over the next decade or so, but the number of single-person households and two-person households is going to increase proportionately more.
\nNot all two-person households want to live in apartments. Currently, there are 10 million people living as couples in 5 million dwellings in Australia. They come from both ends of the spectrum, Kevin. DINKS (dual income, no kids) \u2013 a bit like you and me \u2013 and some are going to have kids in the future. But others are actually older empty-nesters \u2013 I guess like you and I. Interestingly, these empty-nesters, the older ones, are predicted to grow by 14% over the next decade.
\nWe have to understand what sort of accommodation is going to be in strong demand in the future, because while this is important for the building industry, it\u2019s really important for investors because we want to own the sort of property that is going to be going up in value because other people \u2013 owner-occupiers \u2013 are going to want to buy them.
\nKevin:\u00a0<\/b> What does this mean for property investors?
\nMichael:\u00a0<\/b> As I say, demographics I think are going to drive our markets \u2013 how we live, where we want to live, the way we want to live. Over the next decade, in my mind, this is going to be more important than the ups and downs of the economy or the fluctuations in interest rates. They\u2019re going to come and go, but the big driver is how and where we want to live.
\nI think a growing affluent population whose housing requirements are slowly changing is going to underpin our property markets. That\u2019s why I\u2019m confident we\u2019re going to still do well. I think the bulk of the housing market is still going to require the traditional family home, but currently, 40% of the new dwellings that are being built are apartments, and it\u2019s going to be more in the future.
\nI think that we\u2019re building the wrong sort. I think a lot of these high-rise apartment towers are not where the affluent DINKS or the empty-nesters are going to want to live, and I think they\u2019re going to be the slums of the future.
\nOn the other hand, well-located, medium- and low-density apartments and townhouses in the inner suburbs of our capital cities I think are going to remain the preferred style of accommodation for an increasing demographic of people, and Kevin, I think they\u2019re also going to make great long-term investments.
\nKevin:\u00a0<\/b> Fascinating stuff. Michael, thank you so much for your time.
\nMichael:\u00a0<\/b> My pleasure, Kevin.
\nKevin:\u00a0<\/b> Michael Yardney there from Metropole Property Strategists. You can catch up with Michael, too, of course, on his very popular blog site, PropertyUpdate.com.au.
\nMichael, talk to you again soon.
\nMichael:\u00a0<\/b> Thanks, Kevin.
\n <\/p>\n

Jane Slack Smith<\/h3>\n

Kevin:\u00a0<\/b> You would by now know that we\u2019re currently promoting your involvement in The Ultimate Guide to Renovation. It\u2019s a great video series we\u2019ve been running.
\nAre enrollments now open, Jane?
\nJane:\u00a0<\/b> Yes, they are.
\nKevin:\u00a0<\/b> Jane Slack Smith joins me. Jane, of course, is the mastermind behind that and the person you\u2019ll see right through the entire program. If you do want to get into renovation, this is going to be the opportunity for you. Enrollments are open right now. You can use the link on the homepage at RealEstateTalk.com.au.
\nJane, the question I have for you is, in this environment, can you renovate any property?
\nJane:\u00a0<\/b> No, you can\u2019t, Kevin. It\u2019s such an important question. In actual fact, we spend six modules over the 12 modules in The Ultimate Guide to Renovation course making sure that people understand how important location is in finding not just the right suburb but the pockets of potential within a suburb and then the property to renovate.
\nKevin:\u00a0<\/b> I guess there are so many questions to ask about whether it should be a two-, a three-, or even a four-bedroom property. Are those sorts of things important, Jane?
\nJane:\u00a0<\/b> Absolutely. I speak to people all the time, and they say, \u201cI want to buy a property. I know my own area so very well, so I\u2019m going to buy close to where I live. I don\u2019t want to travel very far, and I don\u2019t have a lot of time on my hands.\u201d
\nI often challenge them and say, \u201cHow well do you know your area? What was the capital growth last year? What\u2019s the current rental return? What\u2019s the pricing difference between a two- and a three-bedroom property or a three- and a four-bedroom property? What\u2019s the rental yield? What are the infrastructure plans or the information around the difference of a pricing disparity between an un-renovated and a renovated property?\u201d
\nThey look at me a bit blank, Kevin, and say, \u201cI don\u2019t know that information.\u201d That\u2019s what you need as an investor to know what property is ripe for renovation in the right area.
\nKevin:\u00a0<\/b> It just seems to me that by not asking those questions, you\u2019re approaching it totally from the wrong angle because you should be looking at this as a business. As such, in a business you do actually ask all those questions to get all that information.
\nJane:\u00a0<\/b> Absolutely. I think that\u2019s the problem with first-time investors and especially people who see shows on TV that show that it\u2019s really easy to renovate in a weekend and make money. The reality is that you have to start with the right property but that property has to be in the right area. You really need to have a plan, so before you even purchase a property, you need to be very clear on how much money you can make on it.
\nKevin:\u00a0<\/b> What about questions like whether I should go for cash flow positive or whether I should just look at capital growth. Are they important considerations?
\nJane:\u00a0<\/b> They are. A lot of people have a mentality that they have to choose. I know when I started over ten years ago, there were two camps and you really had to fall into one or the other.
\nOver the time when I built my Trident Strategy, I realized that if I renovated a property and could improve the rent, I could actually achieve both. You don\u2019t have to choose. I have my property portfolios that are going up in value and aren\u2019t costing me a lot of money. That is the thing that you can do with renovation as an active property investing strategy.
\nKevin:\u00a0<\/b> I talked at the opening of our chat about The Ultimate Guide to Renovation, which is actually open right now. What can we expect inside that, Jane?
\nJane:\u00a0<\/b> We open enrollments twice a year, and we do have a really hard deadline on that. It actually says there September 24, and that\u2019s so that we can jump straight in and help our students.
\nThere are 12 modules that are released weekly. There\u2019s a private Facebook group. We have thrown in so many bonuses this year, and I would really get your listeners to go to your homepage and have a look at what\u2019s involved.
\nWe really are dedicated to having successful students. We jump in boots and all and help people through that entire process. This year is going to be bigger and better than ever.
\nKevin:\u00a0<\/b> Use the button on our homepage, as Jane said, at RealEstateTalk.com.au. You\u2019ll find it there. Click on that link. It will tell you about all the bonuses. It tells you all about the program. If you\u2019re serious about renovation, this is the program that you need to lock into. It\u2019s called The Ultimate Guide to Renovation. Look for it on our homepage.
\nHey, Jane, all the best. Thank you for your time.
\nJane:\u00a0<\/b> Thank you, Kevin.
\n <\/p>\n

Andrew Mirams\u00a0<\/a><\/h3>\n

Kevin<\/b>:\u00a0 I spoke last week on the show to Andrew Mirams from Intuitive Finance. We had a good chat about cross-collateralization \u2013 cross-collateralizing properties and all of the pros and cons of doing it \u2013 which led to an e-mail from Michelle. Thanks, Michelle.
\nMichelle writes: \u201cI was interested to hear about Andrew Miram\u2019s warning about cross-collateralization and found myself confused between that and using equity in your home to purchase additional property. Are you able to elaborate on the distinct difference and potential gray areas between the two? Where is using equity in an investment property not considered cross-collateralization?\u201d
\nGreat question, Michelle. I\u2019ll refer straight to Andrew Mirams.
\nAndrew, a very good question.
\nAndrew<\/b>:\u00a0 A brilliant question, Kevin, and I think this is still a little area of confusion in the markets. I think the key point is whether you have one loan secured by two properties or two properties with individual loans against them.
\nKevin<\/b>:\u00a0 Is it that simple?
\nAndrew<\/b>:\u00a0 Well, it is to me, but this is what we do, of course. I think if you have one loan and there are two properties, and still if you have multiple facilities against that, but there are two properties held, they\u2019re cross-securitized. What cross-securitized means or cross-collateralized means is that there\u2019s more than one property that secures those loans.
\nThe question was \u2013 you\u2019re right, it\u2019s a great question \u2013 can you use the equity from one property to assist you to buy another property? That\u2019s not cross-securitized. That\u2019s using your equity to help you grow your portfolio, and that\u2019s really smart, really strategic. That\u2019s the way I think you should be doing it and the way we certainly encourage and advocate doing it. But not the other way around.
\nKevin<\/b>:\u00a0 Let\u2019s hypothetically say that Michelle is with lender A on a particular property. By going to lender A to secure another property, that is cross-collateralization?
\nAndrew<\/b>:\u00a0 Not necessarily. Not unless they\u2019re using the equity to assist. Let\u2019s just say, for rough numbers, the home is worth $500,000, and they have a $100,000 loan. So from bank terms, there\u2019s $300,000 in equity, using an 80% loan to value ratio.
\nIf you then go and you buy another property for $500,000, and you finance the $500,000 plus the stamp duties and fees and whatever it costs, it might be about $530,000, $540,000, and you do that all in one loan. The equity to be able to give you 105% against that property has to come from somewhere, and that\u2019s where they\u2019ll link the two properties together.
\nA more strategic way would be to take the balance of your equity from property A, as we said, Have a line of credit for the $300,000, and then use that as your 20% plus your fees and your contribution into property B for the $500,000. Do a loan at 80% loan-to-value ratio there, and they\u2019re now very separate. Still 100% tax deductible because you still used the funds out of property A to be able to buy property B.
\nBut they\u2019re just not linked. Should one go up or down or you want to sell or refinance because you have some equity gain, they\u2019re not linked, and they can’t be held against each other by doing it that way.
\nKevin<\/b>:\u00a0 That can be done with the one lender?
\nAndrew<\/b>:\u00a0 Absolutely, yes. We still do them. A little golden rule we have with most of our people is somewhere between two and four properties at a lender, because that gives us the opportunity to negotiate great rates, great outcomes for our clients, but also not get too deep into just one lender, and making sure then we look to have some other opportunities with other lenders so that we can at time, whether exploit or whether just take opportunities of different rates or fees or credit policies at times with different lenders.
\nKevin<\/b>:\u00a0 There you go. Great question. Thanks, Michelle, and we\u2019re going to send you a 12-month subscription to Australian Property Investor<\/i> magazine for that question.
\nAndrew Mirams from Intuitive Finance, thank you for answering it.
\nAndrew<\/b>:\u00a0 My pleasure, Kevin. Thanks.
\n <\/p>\n

Rod Amos<\/h3>\n

Kevin:\u00a0<\/b> A question that\u2019s commonly asked is, \u201cWhat\u2019s the best way to sell my property? Should I do it through auction, or should I do it through private treaty?\u201d
\nMy next guest is Rod Amos. Rod is professional auctioneer who works around New South Wales. His company is East Coast Auctions.
\nI guess we come across this quite often, Rod, where people genuinely want to know: is it about the property? Is it about the market? Is it about the price? What makes a good auction?
\nRod:\u00a0<\/b> Good question, Kevin. I\u2019ve been an auctioneer for 15 years. Going back to 15 years ago, there was a bit of a belief in lots of areas that I do that auctions really benefited something that was a little bit unique. Why would you take a property to auction, for instance, in the estates where the only difference might be the color of your front door?
\nBut when you look at the agents and offices who do specialize in it, they understand the dynamics of it. It has pretty much been proven that even where you\u2019re looking at like for like, it\u2019s a matter of really getting the clarity and, importantly, the competition of people on the day. That\u2019s a big difference.
\nAs a buyer, it\u2019s taken with a grain of salt when you\u2019re told, \u201cThe offer\u2019s not high enough, and there is somebody else who is also looking at it.\u201d The big thing for buyers is that on auction day, they\u2019re actually able to see and listen to the competition, as well.
\nTo me, that\u2019s oftentimes a bigger advantage for the buyer because they get to see that the market is just in favor of that property as they are. But it also means they have some clarity there that they\u2019re not the only ones who definitely want to get their hands on it.
\nKevin:\u00a0<\/b> There is a common saying in the industry, too, that if you want to get a premium price, the only way to do it is to go to auction. Do you subscribe to that?
\nRod:\u00a0<\/b> Every property I\u2019ve sold myself \u2013 which is only a handful \u2013 I\u2019ve always taken to auction. Naturally enough, I\u2019ve employed another agent, and then I\u2019ve had to entrust and put the pressure and responsibility on another auctioneer.
\nIt\u2019s also the case that the thing for me different to most people is that because it\u2019s a day-to-day occurrence, I\u2019m familiar with the process, I understand how it works, and naturally enough, that\u2019s what gives one the confidence to go forward with it. It\u2019s a little bit different, obviously, if it\u2019s a vendor, and for most people, you\u2019re selling every ten years, or as a buyer it might be the same time in between purchasing property.
\nI think in general when we look at some of the major markets, Sydney and Melbourne in particular, it is the preferred way of selling. The reason it\u2019s preferred is the vendors see that it\u2019s working for their neighbors and buyers also get a little bit on clarity of the fact that they\u2019re exactly where their competition is on the day when it gets down to finding out who the new owner is.
\nKevin:\u00a0<\/b> I think sometimes, Rob, we ask the wrong question. We ask whether this is the right property to be taking to auction when we should be saying, \u201cAm I the right person to have my property auctioned?\u201d Properties are properties. They don\u2019t make the decisions about whether they should sell or not. It\u2019s really the buyers and the sellers who make those kinds of decisions.
\nRod:\u00a0<\/b> That\u2019s right. The point being that I find with auction, too, the pressure goes back onto the agent. I\u2019m in an area where lots of agents who probably aren\u2019t quite as effective in the marketing and negotiation and doing the hard yards will say to people, \u201cDon\u2019t go to auction because it\u2019s a really strong market. We\u2019ll sell it probably in less time, and you\u2019re going to be really happy with the result.\u201d We know when we have that level of competition, in most cases they\u2019re probably going to achieve more at auction or through an auction campaign.
\nBear in mind, not everything sells under the hammer; it may well be that the pressure of going to auction will often draw forward an offer from the buyer well beyond the vendor\u2019s expectations, and we do see properties selling prior to auction. That\u2019s generally because you have one buyer well out beyond the rest of the pack due to the competition.
\nKevin:\u00a0<\/b> As I\u2019m speaking to you, Rod, of course, you told me off air that a number of your properties this weekend have actually sold prior to auction. Is that a good idea for a seller to accept an offer before auction?
\nRod:\u00a0<\/b> There\u2019s only one person who can make that decision, and that\u2019s certainly the vendor. What it basically comes down to is obviously when an agent is listing a property, the vendor and the agent deciding, \u201cBased on where the market is and on comparables, where do I see it?\u201d and obviously, a vendor would like to see a higher figure than a lower one.
\nYou\u2019re working on a figure for the vendor that the agent\u2019s responsibility is to deliver and exceed. Throughout the campaign, it\u2019s often a case of there\u2019s one buyer who, for whatever personal reasons, is well beyond the indication other buyers are giving leading up to the auction. Now, generally that will only happen in the last week of the campaign where the agent knows who they\u2019re working with and is aware of who is prepared to be there on the day.
\nI should make a distinction. It\u2019s one thing to make an offer. What any good agent should be doing is saying, \u201cWell, if you do want to move forward and purchase this property, there\u2019s no point in just giving me your price. What I\u2019m going to need to do is have a signed contract with that with that 66W to ensure that it can go forward. I\u2019m going to need to have a check to deliver to the vendor. Once I have that, I\u2019m to leave it with the vendor to make a decision.\u201d
\nIn fact, there were three instances out of six this weekend where there was one party who was well beyond the expectations of the rest of the market.
\nKevin:\u00a0<\/b> It goes to show, but as you say, it\u2019s really up to the seller to make that decision.
\nRod, we\u2019re out of time, unfortunately, but it\u2019s great talking to you. Rod Amos has been my guest from East Coast Auctions talking about whether or not you should go to auction or private treaty.
\nWe have a lot more to cover, Rod, so we\u2019ll come back in future shows and talk to you again. Thanks for your time.
\nRod:\u00a0<\/b> Thank you, Kevin.
\n <\/p>\n

Matthew Wrigley<\/h3>\n

Kevin:\u00a0 <\/b>Almost a quarter of the Australian population live in a strata title home, and with the rise in apartment living, the number is increasing every day in parallel with the obsession for home renovation. Influenced by the promise of instant profit, Australia has become a renovation nation. Rarely is any renovation experience straightforward, but when it\u2019s compounded by the lack of or lax strata bylaws, it\u2019s only a matter of time before there is a problem.
\nMatthew Wrigley is the managing director of Perpetual Strata Management. He says there is an increase in the number of disputes arising from strata property renovations. He joins me.
\nHi, Matthew.
\nMatthew:\u00a0<\/b> How are you, Kevin?
\nKevin:\u00a0<\/b> Matthew, I\u2019m well. Thank you. Tell me, what\u2019s the basis of these? Are you surprised by the increase in the number of these?
\nMatthew:\u00a0<\/b> Not at all. With many homeowners now looking to property to invest in, they\u2019re looking for quick capital growth areas, and that\u2019s why they\u2019re buying un-renovated properties and then adding value to them.
\nKevin:\u00a0<\/b> What do most of the strata issues and disputes relate to?
\nMatthew:\u00a0<\/b> Most of the disputes relate to noise and damages. The damages can be from knocking a brick through the common wall into your neighbor\u2019s property or even the time they start work.
\nKevin:\u00a0<\/b> In that case, what steps then should someone take if they\u2019re in a strata property before actually planning a renovation?
\nMatthew:\u00a0<\/b> Communication is key. You need to work with your strata manager. The strata manager is there to give you the best advice possible and help you through all these things. They\u2019re not there to work against you; they\u2019re there to help you get through the whole process of getting it completed.
\nKevin:\u00a0<\/b> You mentioned that noise is one of the factors. I think, too, getting tradies onsite and the general confusion down in the common areas can also be a bit of a problem.
\nMatthew:\u00a0<\/b> Yes. Stopping the lifts, where they\u2019re parking all their vehicles \u2013 it all contributes to basically just annoying other tenants and owners. That\u2019s one of the big keys. When a jackhammer starts at 7:30 in the morning, I can say I\u2019d probably have at least a couple of calls that morning.
\nKevin:\u00a0<\/b> It would be quite disconcerting, too, if someone was actually knocking a hole in the wall and a few bricks came through into my apartment. I think I\u2019d get a bit upset about that, as well.
\nMatthew:\u00a0<\/b> Yes, and it does happen.
\nKevin:\u00a0<\/b> What about the changes you make inside? Making sure that you\u2019re not knocking down any supporting walls? Do you need to get some sort of professional advice about that before you go ripping walls out?
\nMatthew:\u00a0<\/b> 100%. You need to have a structural engineer involved. You need to get that all approved prior. You need to have it approved once it has been taken out and the structural beams have been put in and signed off. You just need to have the correct paperwork.
\nKevin:\u00a0<\/b> What about liability? Are there any rules that people might not know about if they\u2019re going to go into these things?
\nMatthew:\u00a0<\/b> The liability is with the owner. However, there is a gray area if the lot is then sold with the problem because then it goes back onto the owners corporation.
\nKevin:\u00a0<\/b> What are the guides to a good strata renovation?
\nMatthew:\u00a0<\/b> The first thing to do is consult your strata manager. Advise them of what you\u2019re looking at doing. Also, investigate and research to find the correct builder to do it. If you can find the correct builder who will be willing to work with the strata manager, you\u2019ll be always able to get through the project a lot smoother.
\nKevin:\u00a0<\/b> Do the rules change around Australia? I know this show goes all around Australia. Are they different state by state?
\nMatthew:\u00a0<\/b> They are different. New South Wales, I would say, would be one of the strictest with Queensland closely following. It all comes down to the owners corporation and how they want to run the building. If you can set the building up initially to have correct bylaws in place that allow people to do renovation but they must follow a certain process to do so, it allows them to do the renovations. Unless the buildings have correct paperwork, the owners hold responsibility for it and it doesn\u2019t fall back onto the owners corporation to maintain it, look after it, or problem-solve the issue.
\nKevin:\u00a0<\/b> As you said, going right back to the start, Matthew, it\u2019s all about communication. Make sure that you communicate well, and before you go slipping into getting any renovations done, make sure you\u2019re talking to the appropriate people in your organization.
\nMatthew Wrigley, managing director of Perpetual Strata Management, thanks for your time.
\nMatthew:\u00a0<\/b> Thanks, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

  This week on RET, we look at the best way to sell a property, by auction or private treaty. 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