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Investigating Strata Levies

Discussion in 'Real Estate' started by Bluebags, 31st Jul, 2009.

  1. Bluebags

    Bluebags Member

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    I'm looking at an IP in Sydney that seems to have a very high strata levy relative to the value of the Unit and the state of the building (small and simple).

    The agent has no clue why this is.

    The Unit seems good value to me, but the strata is putting me off.

    How do you go about getting information on whats making up the Strata levy?
     
  2. Billv

    Billv Getting there

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    It could be that they have a lot of repairs or that they are cautious and want to have money saved up in case they are needed for repairs/maintenance.

    If it's a relatively new development another possibility could be this.
    Sometimes the developer when he finishes a project he hands over the strata management to his mates and they charge mates rates :eek:
    But as long as there is no long term contract in place the owners corp can change strata company and lower their costs.

    I'd start by getting a strata report.
    You can buy 1 from the strata company.
    If you see that there are many repairs, it could be that they are one of's.
    For example, one of my IP's is in a complex where they are fixing the tiling of 8 balconies, this type of work will be finished in the next 6 months and the issue won't be revisited for at least another 10 years.
     
  3. Billv

    Billv Getting there

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    Also, the strata fees are mainly to pay for maintenance, lawn cutting, building insurance, for the cleaning of common areas, cleaning of gutters, electricity for outdoor lighting, painting of fencing and all general maintenance of the building.

    They do all those things for you so that you don't have to do them yourselves.

    Some of those costs you'll incur even when you own a house.
     
  4. Bluebags

    Bluebags Member

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    Thanks Bill.

    There's nothing much to the building or the site, so it sounds like the strata report would be the way to go. Its a pity agents don't do their job and be able to answer these questions without all interested punters having to go that expense.
     
  5. Billv

    Billv Getting there

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    I don't know how easy it is to talk to the neighbours
    Often they'll tell you if there are any issues.
    I spoke to a guy once who was an owner and was happy enough to let me read through the strata minutes
     
  6. Jacque

    Jacque Team InvestEd

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    Actually it's not the real estate agent's job to provide you with a full rundown of strata matters. In the past, buyers have relied on verbal information from agents only and not bothered to investigate themselves (big mistake) and many agents will now respond with the line, "It's best to make your own investigations" when enquiring about strata matters. Don't forget that their fiduciary responsibility is to their client, the seller, not the buyer. It really is up to you as purchaser and even if you don't want to pay for a strata search (around $250), then you're free (for a small fee) to go and read the records yourself. Simply contact the strata manager (contact details should be on the front page) and organise. After all, when you're spending hundreds of thousands of dollars, why skimp on necessary diligence?