Strata levies - low levies can be a false economy

Sometimes when pensioners or investors dominate the ownership of a building or complex we see historical pressure to keep strata levies low. The discretionary portion of the levy is the sinking fund contribution, so when building issues arise, or upgrades are required, there is no money in the pot. So, what happens next? Either the issues are ignored, the building begins to look shabby, or a special levy is struck. And, if you are interested in capital growth, all these outcomes can negatively impact the value of a unit or townhouse.

It is now mandatory for owners’ corporations to undertake a 10 year maintenance plan and levy forecast. Those buildings with low levies will face sharp rises if the recommendations in their report are adopted. Those buildings that have been responsible in their financial management and avoided the temptation to keep levies too low will see much more modest increases.

For more information on buying property: http://www.gooddeeds.com.au/

Strata reports - often a long list of repairs is a good sign

When you read a strata report that documents a litany of building issues it can be easy to be scared off a property. And sometimes it is a warning of impending inconvenience and cost. However, it can also indicate a pro-active strata manager and an owner’s corporation that cares about maintaining their investment. In addition to the list of problems, look for a concerted and continued effort to address the issues. And keep an eye out for potential special levies. This is a sign that there has not been sufficient sinking fund levies in the past to cover these expected repairs.

For more information on how to avoid pitfalls when buying property: www.gooddeeds.com.au