June 16, 2025 • 21 mins
Ever wondered what your strata levies really say about a building? Far more than just a quarterly bill, strata fees reveal crucial insights into property health that savvy buyers need to understand.
Think of strata as your building's compulsory savings account. Those quarterly payments fund everything from day-to-day operations to major future repairs. But contrary to popular belief, high levies aren't necessarily a red flag – they might actually signal a proactive owners corporation that's planning ahead. Conversely, suspiciously low levies could indicate an inactive strata unwilling to invest in proper maintenance, potentially leaving you facing surprise special levies later.
Diving deeper, we explore how to decode the real story behind strata finances. The capital works fund (formerly the sinking fund) should maintain a healthy balance to cover future projects without resorting to special levies. We analyze what those one-off special payments really mean – are they normal maintenance or signs of deeper problems? Plus, we reveal what to look for during inspections: from common area conditions to fire safety compliance and the enlightening details hidden in AGM minutes.
For prospective apartment buyers, this knowledge is power. We provide actionable due diligence steps including obtaining comprehensive strata reports, reviewing bylaws, researching developers' track records, and engaging specialists who understand the nuances of strata purchases. Don't make the mistake of judging a building solely on levy amounts – the story behind those numbers matters far more.
Have questions about strata properties or need guidance navigating your next apartment purchase? Contact us directly – we're passionate about helping buyers make informed decisions in the complex world of strata living.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Ladies, gentlemen, it's 8 pm, monday night.
Novak News, tavon Bubolo, joshWapshot.
Stay tuned, josh.
(00:26):
How are you Monday night?
Speaker 2 (00:28):
Nothing better than being in the office, so to speak
, getting a little bit crispyout here.
Speaker 1 (00:31):
Yeah, definitely Nothing better than being here
with the lovely people tonight.
But, ladies, gentlemen, we'regoing to be pretty quick.
Tonight We've got a relativelyI won't say hot topic, but it's
a topic of conversation thatcomes up all the time, and it's
stratas, strata levies, theconditions of strata.
We're not talking about stratamanagers, we're talking about
(00:51):
buildings and the health andquality of buildings.
And really, kind of leadinginto it was a lot of buyers we
have coming through our opensjust always ask what's the
strata levy?
Yeah, on a property, and theytry to dictate the health of the
building by the, the figurethat the strata levy might be.
Now, um, there can be a lot ofdifferent contributing factors
(01:12):
to this.
Um, and I'll explain strata ina way.
For as I like to put it to somebuyers pretty simply is, strata
is almost like a compulsorysavings account for your
building.
Now there's a few moving partsto it.
Essentially, you're paying itevery three months, quarterly
for the future maintenance,upkeep, running costs of the
(01:32):
building and anything you buy.
You buy a house.
You're not going to payquarterly until bank accounts
put money aside.
So strata is like a compulsorysavings account to a degree for
properties.
But a few little things.
Look do high strata leviesequal a poor strata?
No, you can find also when, say, it's a block of four, you're
(01:52):
splitting the bills with threeother owners, as opposed to a
block of 25 or 24 where you'resplitting those fees with 23
other owners.
But we have tried to come upwith a bit of a guide to help
you.
So we've come up with a list ofthings to keep an eye on that
can indicate that there might besomething behind the scenes or
undergoing with Strata Beautiful.
Speaker 2 (02:14):
Thanks for the intro.
Speaker 1 (02:15):
The first one, yeah.
Speaker 2 (02:16):
The first one is high levies.
Yeah yeah, definitely a bigtopic, guys.
We'd always say Strata leviesor strata rates is probably your
top three, besides price, andis it auction or private treaty?
It's definitely an importantfactor.
High strata levies with noclear reason.
So high levies aren'tinherently bad.
(02:37):
They can fund good maintenance,insurance and long-term
improvements.
So not always do we see that ahigh levy being a negative thing
.
Steph.
Sometimes, we can see it as away that a building's well
organised because they'repreemptively starting to save
for that fund in order to carryout the works.
Would you say.
Speaker 1 (02:55):
Yeah, absolutely.
And sometimes the opposite canbe said as well.
Like low levies you might thinkare fantastic I'm not chipping
in too much, but can you mayfind it that it's not a very
active owners corporation.
They don't want to spend money.
And then you're going to getput with some, with some giant
bill as well.
Speaker 2 (03:09):
Yeah, the big surprise.
Yeah, definitely a good pointthere, steps, because some
people look all low strata,fantastic, but you have a high
investor, uh, investor occupiedblock.
Obviously, the less they haveto have to put out, the better
in their eyes.
So, yeah, very good point.
Very good point there.
Speaker 1 (03:23):
Steph, on the lowest driver yeah, I tend to find that
sometimes with smaller blocksand particularly with older
residents, where you know incomeand cash flow and things like
that they may not have afull-time job are definitely
areas of concern.
So, yeah, something to thinkabout there, definitely.
The second one I'd say to keepan eye on is also a levy.
It's called the old speciallevy, say, to keep an eye on.
(03:46):
Is is also a levy.
It's called the old speciallevy.
Um, and a special levyessentially is an additional
cost.
Rather than raising thequarterly figure that you would
pay, you raise a one-off paymentor it could be multiple
payments to accommodate somework.
Generally it's got to do withwork, so it could be a new new
roof for for a building.
Uh, commonly now we see a lotof balcony works going on um
driveways, fire upgrades, thingslike that.
(04:07):
So special levies one or two.
It's pretty normal to have it.
It's a.
It's a way of topping up costs.
But if there's a history ofmultiple special levies or you
might see that they're generallyaddressed in anywhere from one
to four payments, um, forwhatever the building might be
targeting, if it's spread outover five years, there's
probably something that's goingon in that building that you
(04:30):
want to be a bit careful aboutOne other thing, I'll say
special levies.
I hope I've got this right.
It's not a tax deduction.
It's not a tax deduction.
Speaker 2 (04:39):
Someone told me Wow, there you go.
I could be wrong.
Number three poorly maintainedcommon property.
So the condition of sharedspaces reflects how well the
building is managed, guys.
So when you're at an open homeor visiting a potential property
you're interested in, pay closeattention to things like lifts,
reception areas, carpet onthose stairs yeah, that's a
(05:01):
giveaway and generally thebrickwork as well.
You can tell a bit by thebrickwork on the exterior.
But yeah, have a good look outfor common areas and property
Just shows that if someone'swilling to look after the
outside or not, their internalspace probably gives you a good
indication that it's awell-managed building,
definitely.
Speaker 1 (05:21):
And if there's a short flow, a shortfall, sorry
cash flow typically they'regoing to be cutting some of
these day-to-day ormonth-to-month type of operation
costs to try to accommodate,you know, a larger problem.
So a bit of a giveaway yeah, isfrayed carpet gardens out of
control.
Something else that you can doas a buyer that can give you an
idea I don't think I've got iton the list here is fire
(05:41):
upgrades.
Yeah, anything kind of builtcirca 1960 to 2000,.
Even more so.
We've got new fire regulationsthat come into play and there's
new requirements required, andso if you're a buyer and you're
walking through a propertychecking the common stairwells,
there should be hardwired smokealarms.
There should be sometimes fireextinguishers, depending on the
(06:02):
size, that can give you anindication of whether fireworks
have been done, and that couldbe an upcoming cost to the
strata as well.
Speaker 2 (06:09):
So, yeah, pretty surprising that looking for the
little things will give you ananswer to the big picture guys.
So, yeah, definitely have alook out for those fire upgrades
and your common areas.
If they're well kept, you knowit's a well-managed building.
Yeah.
Speaker 1 (06:21):
Another one to look out for, then, is your strata.
Levies are split into twodifferent categories.
One is called capital works,used to be called a sinking fund
.
It's like a savings account forthe for the building.
The other one is called anadministration fund.
That's more of day-to-dayrunning costs, um account for
the building.
Now your sinking fund.
You do want to see some moneyin there, if you can.
So if it's running very, verylow or hopefully not at a
(06:45):
negative.
If it isn't at a negative, umprobably a bit of a red flag
there or an area of concern.
But you want to see a healthyamount of money there, um, and
it's really a fallback or failsafe and it's also a budget.
It.
You know for future works aswell, that you won't have to do
a special levy because it's beenwell valued, well budgeted and
um and well managed up untilthen.
(07:05):
So, sinking fund, or what usedto be known as the capital works
fund, keep an eye on thebalance in there.
Speaker 2 (07:10):
Yeah, I think that's an important one because, like
you said, if with a well-managedbuilding and a good sinking
fund ready and available, you dolimit that that um that
opportunity for special leviesto catch you by surprise.
So again, very important steps.
Absolutely.
Um ongoing in historical legaldisputes, this could be an
interesting one.
I've seen I think we've seen afew uh strata reports with uh
(07:33):
some uh interesting notes inthere, but um legal conflict
with strata can drag out um anddrag the entire entire community
down.
So guys, that's with obviouslyindividual lot owners having
disagreements um agm minutes isa good one for that, Steph.
Speaker 1 (07:47):
Yes, definitely.
Speaker 2 (07:49):
When, looking at your strata reports, guys get real
deep into the minutes.
There You're going to unpackwhat's happening, what's really
happening in amongst it.
So definitely a good pointthere.
Agm minutes.
Speaker 1 (08:02):
Any issues as well between tenants or lot owners
goes through a process calledNCAT and that's basically a
litigation, a loose kind ofcourt system to try to work out
solutions between owners.
So you can actually search thatby going online.
I don't know the website, butif you Google NCAT you can
probably that's N-C-A-T.
(08:24):
You can probably find differentthings through there as well.
So something to look at a majordefects and, uh, or known
remedial works.
Real estate agents willsometimes hide this.
They shouldn't.
They should be honest andforthcoming with you.
Um, major defects, I get it allthe time.
There's that building out atolympic.
What is it?
Olympic park where the olympicswere, that was falling down.
(08:46):
Everyone had to move out of of.
All of a sudden that's gottower.
Speaker 2 (08:48):
Yeah, that's it.
Speaker 1 (08:49):
All of a sudden, 80% of buyers buying an apartment
think everything's falling down.
They're not, but it's a goodlesson to have Get out there.
Look, little giveaways areobviously scaffolding around
buildings.
There's a lot of balcony workgoing on with.
You know those properties builtfrom 1960s through to kind of
the late 80s, so things likethat are definitely giveaways.
(09:13):
So, yes, Sorry, what was Isaying?
It was major defects or knownremedial works.
You'd want to obviously be abit of a red flag?
Speaker 2 (09:22):
Yeah, definitely.
Speaker 1 (09:23):
And then, I think, the next step guys, ineffective
or unresponsive.
Speaker 2 (09:26):
strata management, now, I think as much as where
the money is going and how it'shandled is also a really
important factor here.
So things like a good stratamanager is proactive,
transparent and responsive.
So red flags probably thingslike delayed responses into
building issues and things likefailure to enforce laws as well.
(09:48):
So I think a big factor thereis not only the building itself
but the strata management thatyou've actually got, handling
the strata itself.
If it's not an effectivemechanism there, all that money
and funds that are put together,it's not going to be effective,
as if there were someone who ishandling the building well.
So that's, I think, a veryimportant one strata management.
(10:09):
Who's handling it?
Speaker 1 (10:11):
Definitely, and you do come across smaller lots that
are self-managed strata, so theowners will manage it
themselves.
Be a little bit more cautious.
They're by no means a bad thing.
Sometimes in smaller blocks ofyou know three or four, they're
actually really good things.
But you just want to make sureyou're getting all the right
information, um out of them.
Like you said, josh with finesand things like that.
It's not a nice thing to to beliving in that environment.
(10:32):
But if you've got ownersparking in visitor parking all
the time and no one's you knowenforcing anything, it probably
shows a bit of a lax um, uh,focus on on how the properties I
can run it.
Speaker 2 (10:44):
yeah, and I actually had a bit of a point here at one
of the buildings Sorry guys,Toilet prank, Quick tech glitch
One of the buildings I've soldin DY in the last three months.
They were actually managed bywhat the owners called a poor
management or ineffectivemanagement and what that's
(11:06):
actually done.
This particular site hasactually brought in a lot of
levies because there's a lot ofwork.
They wanted to get done all atonce, but buyers actually like
to see that things areprogressing.
It's actually done quite wellin regards to future sales in
the building there, because theyunderstand that new strata's
come in.
They've taken the control.
They know what needs to befixed.
They're doing it right once andthe only time and that's really
(11:31):
really worked well with a lotof campaigns within that complex
.
Speaker 1 (11:33):
So very important point, value-wise as well, and I
like something on top of thatas well, josh, to what you were
saying is recently had a salehere as well, on the Northern
Beaches, the apartment pushingclose to 25 years of age.
So one of the first kind oftwo-bedroom, two-bathrooms to be
built right across the NorthernBeaches.
Over its span has definitelygone through, you know, its
(11:55):
share of strata work.
It's about $15,000 remaining instrata sorry, special levies.
Now you could look at that andsay, look, that's a red flag.
But the other side of it is isthat essentially had a I won't
say restoration, buteverything's been ticked off.
You know you're going to have afully functioning you know
apartment now in a complex, foryou know probably fully
functioning.
You know apartment now in acomplex, for you know probably
(12:16):
10 to 15 years before there'sany major costs coming up again.
So something to be wise of.
Just because there is workundergoing, don't necessarily
discount it as bad.
Speaker 2 (12:23):
Yeah, good point.
It's going to happen sooner orlater with the hot, hot, hot
summers, cold winters.
But yeah, exactly right, Steph,yeah.
Speaker 1 (12:31):
The next one.
Oh look, I don't know that it'struly accurate or not, but
percentage of tenants versusowners.
The only reason I've includedthis is that obviously, when
you've got a lot of ownersliving within a complex, there
tends to be a little bit of ahigher level of care.
Tenants I mean not alllandlords are going to be as
hands on as somebody who'sliving in that property day in,
day out.
So a complex that might have ahigher yield of owners compared
(12:54):
to tenants generally shouldrepresent, you know, better
management and better care andupkeep for that property.
Speaker 2 (13:02):
Definitely.
And then on to our next pointunapproved alterations.
So renovations done, guys,without the proper approvals,
and what this can do is actuallyaffect or avoid building
insurance by breach of bylaws.
So you can also create disputesover shared services, water,
gas.
So a big thing there aboutunapproved alterations.
(13:22):
Mainly to do with yourinsurance, because obviously the
older the building, the higherthe risk.
The insurance premiums increaseand that's transferred through
to your strata rates in terms ofthat cost.
Speaker 1 (13:34):
So another point there We'll jump through the
last few.
So a lack of transparency,missing records If for some
reason the information you'reseeking cannot be obtained,
generally, you know someone maybe trying to hide that from you.
So you want to make sure you'regetting access to the AGM
minutes, the annual generalmeeting minutes, any quotes for
any works coming up that mayhave been discussed and numbers
(13:56):
around that.
So sharing that informationobviously shows goodwill.
Hiding that information makessomething to think about.
Speaker 2 (14:03):
Yeah, definitely, I think we hit most of the points
there, steph.
Yeah, inflated or unusualinsurance premiums which we sort
of touched on there, a historyof claims, poor risk management,
unaddressed building issues.
Like we said, guys, speciallevies aren't always a bad thing
.
If you don't address problems,they only become worse and more
(14:24):
expensive to fix.
So I think that sort of ties inwith what we were speaking
about earlier before is it's notalways seen as a bad thing.
A good building or allbuildings are going to need
maintenance at some point intime.
So yeah, I think that that tiesin well with that point there.
Speaker 1 (14:39):
Yeah, so, look, how can you check these, these
issues out, or how can you raiseor find out these, these
concerns if you are a buyer?
Uh, we'll just put down a fewquick points as well.
Look, first and foremost you dowant to do and it's not
compulsory, but I stronglyrecommend to anyone buying
within a strata is that you geta strata report conducted by a
third party.
Okay, the agents will typicallyprovide it.
(15:01):
The ones that we provide areput together by a third party,
so there's no sphere ofinfluence on any of that data or
information put forward.
But imagine it as being ahealth check and a history check
of the entire complex.
So it's going to show you anycosts that have occurred in the
past.
It will show you all thefinancials and anything that may
have been discussed or upcomingwith works.
Is what you want to do as abuyer to make sure that you're
(15:22):
getting a full overview of thehealth and and what's ahead for
this, for this property?
Speaker 2 (15:27):
definitely that's that one.
And then, delving deeper, guysrequest the last one, two years
of the strata meeting minutes.
So that's what we spoke aboutearlier.
There again, under the, thesummarization of a normal strata
report, you'll get, uh, you'llget the words from the, the
owners themselves in the stratameeting.
What they're seeing is issues.
So definitely get involved withuh, requesting those, uh, that
(15:49):
history of agm minutes extremelyimportant and they'll.
You'll find things in therethat you wouldn't find on a
glance over a summary, so tospeak.
Speaker 1 (15:56):
So read your bylaws, read your strata bylaws.
They're going to be within thecontract of sale so you can
obtain that from an agent,typically going to be about a
third of the way through acontract.
But your bylaws are essentiallythe rules for the building,
what is allowed, what isn'tallowed, and it can sometimes
give you some hints into thehealth of the building as well.
Speaker 2 (16:15):
Yeah, next one do a physical building inspection
walkthrough.
Well, obviously you do that atthe open when you're looking
through, but I guess look forthings that mould, smell, all
those types of things and, likewe said before, checking on that
common property as you enteryou'll get an idea.
It's quite easy to tell awell-managed from a
not-so-well-managed building.
(16:37):
Guys, but just those littlepointers there to look out for
when inspecting.
Don't worry about it yet Don'tget sidetracked from prices
negotiations.
Speaker 1 (16:47):
Have a proper look and you'll know what to look for
.
Yeah, definitely, definitelyNCAT again any disputes between
owners.
You can access all thisinformation um through through
the uh geez, I should know whatit's called.
It's a tendency tribunal systemat ncat.
You can google that, um, andyou can access complex buildings
and addresses to see if therehas been any history of of uh
(17:09):
challenges between owners.
I'll put it that way guys.
Speaker 2 (17:12):
Pretty simple one here research, developer or
builder, that's a good onewhether yeah, whether old or new
, I think that's quite a big, uhbig point.
History will always repeatitself.
So go back over previous builds, previous um projects.
Get an idea of how that projecthas gone since it's been built
um, give you a few clues orheads up if, if other people are
(17:34):
experiencing any issues withprevious developments by that
builder or developer.
So big, big point there.
Speaker 1 (17:41):
It's always good to drive by, like I.
Try to find what people, whatdevelopers would have built five
or six years ago.
See how the external facadesholding up things like that.
Sometimes you can approach aresident.
Whether or not they're going tohelp you too much, I don't know
.
Look there is.
You can approach your str.
Whether or not they're going tohelp you too much, I don't know
.
Uh, look there's.
You can approach your strata.
They're not always going to beforthcoming because you won't be
the owner of a property.
So, um, divulging informationcan sometimes be a challenge
(18:04):
from the strata managers, but itmay be worth to try to just
reach out and see what they canshare with you.
Um, from experience, becauseyou're not the owner, um, they
don't tell you a whole lot, butworth giving it a go all the
same as well, definitely.
And then the last one.
I'd say is just make sure you'vegot a good solicitor conveyance
or someone that is experiencedin real estate transactions,
(18:25):
knows what they're looking for,has got obviously a wealth of
knowledge behind them.
They are not going to be, youknow, they're not going to be
favouring the vendor or theagent.
They're there to represent youas a purchaser.
Speaker 2 (18:36):
So they're going to be doing, you know, their due
diligence in making sure thatyou're looked after.
And I think that's yeah, Stev.
I think that's anotherimportant point.
I've come across some buyerswithin the market.
They may have a friend who's asolicitor but doesn't specialise
in that residential buyer areaand think, you know, oh, he's my
mate, he's going to look afterme.
I've had a few instances therewhere that sometimes they don't
(18:58):
get the service or the level ofservice that they require.
So definitely a big point there, someone that specialises in
the field, because sometimesthat can create some hiccups
down the track or not get thebest advice possible to you.
So definitely, definitely, Ithink that's a big one.
Speaker 1 (19:13):
Yeah, that's kind of it, guys Some things to be aware
of, some solutions to thosechallenges, and thanks again for
joining us Monday night.
Novak News Question excuse me.
Speaker 2 (19:22):
Sorry, I've got a question.
I've got a question from leftfield Bape shops.
Speaker 1 (19:26):
What about them In your strata?
Speaker 2 (19:29):
Bape shops in your strata?
I don't know, I don't know.
Speaker 1 (19:33):
I don't know what do you mean.
What do you mean?
So you've got an?
Speaker 2 (19:36):
off-screen question here.
Call me Dickie From.
Speaker 1 (19:39):
Dickie, dickie Nee.
We've got Dickie Nee in thegreen room.
He's raised a question,something to do with vapes.
You can speak up, dickie.
Everyone can hear you.
Speaker 2 (19:47):
Yeah, well, guys, I think it's yeah, yeah, with
vapes I think it becomes astrata, it comes to strata.
Let's talk to your stratamanager, um, they'll be able to
account for that, and then speakto the, you know, representing
agencies or their propertymanagers, um, but yeah, that's
something to raise with them,because sometimes, obviously,
with a lot of your, your stratasnow you've got commercial along
your bottom floors, so you doget some shops or tobacconists
(20:09):
and we've seen a quite colorfulum uh there's a lot of yeah,
yeah, there, yeah, yeah yeah,well, yeah, crazily enough what
happened down in Collaroy on theweekend.
So just be vigilant, guys.
You know you will always getyour legitimate businesses out
there, but be vigilant.
You'll see what's happeningfrom day to day.
If you get an idea ofanything's wrong and just flag
(20:29):
it with your strata managerwithin the building and it can
also indicate, yeah, your values.
It can.
It can impact property valuesas well.
And insurance and insurancecards.
Yeah, I think ever since themelbourne fiasco, um, those sort
of premiums have increased forany of those uh shops related to
(20:50):
that.
So also have that in mind whenuh selecting units with maybe
commercial uh floor, uh shop, uhshops on the floor.
Speaker 1 (20:56):
Good job, thanks, dickie, nee.
Any other call-ins?
Any other call-ins?
No, that's it.
Speaker 2 (21:01):
Thanks guys, have a great night.
Thanks for joining us.
Any questions, feel free tocontact Steve, and I More than
happy to help.
Have a great night.
Thank you, bye, bye so.
Ladies, gentlemen, it's 8 pm, monday night.
Novak News, tavon Bubolo, joshWapshot.
Stay tuned, josh.
(00:26):
How are you Monday night?
Speaker 2 (00:28):
Nothing better than being in the office, so to speak
, getting a little bit crispyout here.
Speaker 1 (00:31):
Yeah, definitely Nothing better than being here
with the lovely people tonight.
But, ladies, gentlemen, we'regoing to be pretty quick.
Tonight We've got a relativelyI won't say hot topic, but it's
a topic of conversation thatcomes up all the time, and it's
stratas, strata levies, theconditions of strata.
We're not talking about stratamanagers, we're talking about
(00:51):
buildings and the health andquality of buildings.
And really, kind of leadinginto it was a lot of buyers we
have coming through our opensjust always ask what's the
strata levy?
Yeah, on a property, and theytry to dictate the health of the
building by the, the figurethat the strata levy might be.
Now, um, there can be a lot ofdifferent contributing factors
(01:12):
to this.
Um, and I'll explain strata ina way.
For as I like to put it to somebuyers pretty simply is, strata
is almost like a compulsorysavings account for your
building.
Now there's a few moving partsto it.
Essentially, you're paying itevery three months, quarterly
for the future maintenance,upkeep, running costs of the
(01:32):
building and anything you buy.
You buy a house.
You're not going to payquarterly until bank accounts
put money aside.
So strata is like a compulsorysavings account to a degree for
properties.
But a few little things.
Look do high strata leviesequal a poor strata?
No, you can find also when, say, it's a block of four, you're
(01:52):
splitting the bills with threeother owners, as opposed to a
block of 25 or 24 where you'resplitting those fees with 23
other owners.
But we have tried to come upwith a bit of a guide to help
you.
So we've come up with a list ofthings to keep an eye on that
can indicate that there might besomething behind the scenes or
undergoing with Strata Beautiful.
Speaker 2 (02:14):
Thanks for the intro.
Speaker 1 (02:15):
The first one, yeah.
Speaker 2 (02:16):
The first one is high levies.
Yeah yeah, definitely a bigtopic, guys.
We'd always say Strata leviesor strata rates is probably your
top three, besides price, andis it auction or private treaty?
It's definitely an importantfactor.
High strata levies with noclear reason.
So high levies aren'tinherently bad.
(02:37):
They can fund good maintenance,insurance and long-term
improvements.
So not always do we see that ahigh levy being a negative thing
.
Steph.
Sometimes, we can see it as away that a building's well
organised because they'repreemptively starting to save
for that fund in order to carryout the works.
Would you say.
Speaker 1 (02:55):
Yeah, absolutely.
And sometimes the opposite canbe said as well.
Like low levies you might thinkare fantastic I'm not chipping
in too much, but can you mayfind it that it's not a very
active owners corporation.
They don't want to spend money.
And then you're going to getput with some, with some giant
bill as well.
Speaker 2 (03:09):
Yeah, the big surprise.
Yeah, definitely a good pointthere, steps, because some
people look all low strata,fantastic, but you have a high
investor, uh, investor occupiedblock.
Obviously, the less they haveto have to put out, the better
in their eyes.
So, yeah, very good point.
Very good point there.
Speaker 1 (03:23):
Steph, on the lowest driver yeah, I tend to find that
sometimes with smaller blocksand particularly with older
residents, where you know incomeand cash flow and things like
that they may not have afull-time job are definitely
areas of concern.
So, yeah, something to thinkabout there, definitely.
The second one I'd say to keepan eye on is also a levy.
It's called the old speciallevy, say, to keep an eye on.
(03:46):
Is is also a levy.
It's called the old speciallevy.
Um, and a special levyessentially is an additional
cost.
Rather than raising thequarterly figure that you would
pay, you raise a one-off paymentor it could be multiple
payments to accommodate somework.
Generally it's got to do withwork, so it could be a new new
roof for for a building.
Uh, commonly now we see a lotof balcony works going on um
driveways, fire upgrades, thingslike that.
(04:07):
So special levies one or two.
It's pretty normal to have it.
It's a.
It's a way of topping up costs.
But if there's a history ofmultiple special levies or you
might see that they're generallyaddressed in anywhere from one
to four payments, um, forwhatever the building might be
targeting, if it's spread outover five years, there's
probably something that's goingon in that building that you
(04:30):
want to be a bit careful aboutOne other thing, I'll say
special levies.
I hope I've got this right.
It's not a tax deduction.
It's not a tax deduction.
Speaker 2 (04:39):
Someone told me Wow, there you go.
I could be wrong.
Number three poorly maintainedcommon property.
So the condition of sharedspaces reflects how well the
building is managed, guys.
So when you're at an open homeor visiting a potential property
you're interested in, pay closeattention to things like lifts,
reception areas, carpet onthose stairs yeah, that's a
(05:01):
giveaway and generally thebrickwork as well.
You can tell a bit by thebrickwork on the exterior.
But yeah, have a good look outfor common areas and property
Just shows that if someone'swilling to look after the
outside or not, their internalspace probably gives you a good
indication that it's awell-managed building,
definitely.
Speaker 1 (05:21):
And if there's a short flow, a shortfall, sorry
cash flow typically they'regoing to be cutting some of
these day-to-day ormonth-to-month type of operation
costs to try to accommodate,you know, a larger problem.
So a bit of a giveaway yeah, isfrayed carpet gardens out of
control.
Something else that you can doas a buyer that can give you an
idea I don't think I've got iton the list here is fire
(05:41):
upgrades.
Yeah, anything kind of builtcirca 1960 to 2000,.
Even more so.
We've got new fire regulationsthat come into play and there's
new requirements required, andso if you're a buyer and you're
walking through a propertychecking the common stairwells,
there should be hardwired smokealarms.
There should be sometimes fireextinguishers, depending on the
(06:02):
size, that can give you anindication of whether fireworks
have been done, and that couldbe an upcoming cost to the
strata as well.
Speaker 2 (06:09):
So, yeah, pretty surprising that looking for the
little things will give you ananswer to the big picture guys.
So, yeah, definitely have alook out for those fire upgrades
and your common areas.
If they're well kept, you knowit's a well-managed building.
Yeah.
Speaker 1 (06:21):
Another one to look out for, then, is your strata.
Levies are split into twodifferent categories.
One is called capital works,used to be called a sinking fund
.
It's like a savings account forthe for the building.
The other one is called anadministration fund.
That's more of day-to-dayrunning costs, um account for
the building.
Now your sinking fund.
You do want to see some moneyin there, if you can.
So if it's running very, verylow or hopefully not at a
(06:45):
negative.
If it isn't at a negative, umprobably a bit of a red flag
there or an area of concern.
But you want to see a healthyamount of money there, um, and
it's really a fallback or failsafe and it's also a budget.
It.
You know for future works aswell, that you won't have to do
a special levy because it's beenwell valued, well budgeted and
um and well managed up untilthen.
(07:05):
So, sinking fund, or what usedto be known as the capital works
fund, keep an eye on thebalance in there.
Speaker 2 (07:10):
Yeah, I think that's an important one because, like
you said, if with a well-managedbuilding and a good sinking
fund ready and available, you dolimit that that um that
opportunity for special leviesto catch you by surprise.
So again, very important steps.
Absolutely.
Um ongoing in historical legaldisputes, this could be an
interesting one.
I've seen I think we've seen afew uh strata reports with uh
(07:33):
some uh interesting notes inthere, but um legal conflict
with strata can drag out um anddrag the entire entire community
down.
So guys, that's with obviouslyindividual lot owners having
disagreements um agm minutes isa good one for that, Steph.
Speaker 1 (07:47):
Yes, definitely.
Speaker 2 (07:49):
When, looking at your strata reports, guys get real
deep into the minutes.
There You're going to unpackwhat's happening, what's really
happening in amongst it.
So definitely a good pointthere.
Agm minutes.
Speaker 1 (08:02):
Any issues as well between tenants or lot owners
goes through a process calledNCAT and that's basically a
litigation, a loose kind ofcourt system to try to work out
solutions between owners.
So you can actually search thatby going online.
I don't know the website, butif you Google NCAT you can
probably that's N-C-A-T.
(08:24):
You can probably find differentthings through there as well.
So something to look at a majordefects and, uh, or known
remedial works.
Real estate agents willsometimes hide this.
They shouldn't.
They should be honest andforthcoming with you.
Um, major defects, I get it allthe time.
There's that building out atolympic.
What is it?
Olympic park where the olympicswere, that was falling down.
(08:46):
Everyone had to move out of of.
All of a sudden that's gottower.
Speaker 2 (08:48):
Yeah, that's it.
Speaker 1 (08:49):
All of a sudden, 80% of buyers buying an apartment
think everything's falling down.
They're not, but it's a goodlesson to have Get out there.
Look, little giveaways areobviously scaffolding around
buildings.
There's a lot of balcony workgoing on with.
You know those properties builtfrom 1960s through to kind of
the late 80s, so things likethat are definitely giveaways.
(09:13):
So, yes, Sorry, what was Isaying?
It was major defects or knownremedial works.
You'd want to obviously be abit of a red flag?
Speaker 2 (09:22):
Yeah, definitely.
Speaker 1 (09:23):
And then, I think, the next step guys, ineffective
or unresponsive.
Speaker 2 (09:26):
strata management, now, I think as much as where
the money is going and how it'shandled is also a really
important factor here.
So things like a good stratamanager is proactive,
transparent and responsive.
So red flags probably thingslike delayed responses into
building issues and things likefailure to enforce laws as well.
(09:48):
So I think a big factor thereis not only the building itself
but the strata management thatyou've actually got, handling
the strata itself.
If it's not an effectivemechanism there, all that money
and funds that are put together,it's not going to be effective,
as if there were someone who ishandling the building well.
So that's, I think, a veryimportant one strata management.
(10:09):
Who's handling it?
Speaker 1 (10:11):
Definitely, and you do come across smaller lots that
are self-managed strata, so theowners will manage it
themselves.
Be a little bit more cautious.
They're by no means a bad thing.
Sometimes in smaller blocks ofyou know three or four, they're
actually really good things.
But you just want to make sureyou're getting all the right
information, um out of them.
Like you said, josh with finesand things like that.
It's not a nice thing to to beliving in that environment.
(10:32):
But if you've got ownersparking in visitor parking all
the time and no one's you knowenforcing anything, it probably
shows a bit of a lax um, uh,focus on on how the properties I
can run it.
Speaker 2 (10:44):
yeah, and I actually had a bit of a point here at one
of the buildings Sorry guys,Toilet prank, Quick tech glitch
One of the buildings I've soldin DY in the last three months.
They were actually managed bywhat the owners called a poor
management or ineffectivemanagement and what that's
(11:06):
actually done.
This particular site hasactually brought in a lot of
levies because there's a lot ofwork.
They wanted to get done all atonce, but buyers actually like
to see that things areprogressing.
It's actually done quite wellin regards to future sales in
the building there, because theyunderstand that new strata's
come in.
They've taken the control.
They know what needs to befixed.
They're doing it right once andthe only time and that's really
(11:31):
really worked well with a lotof campaigns within that complex
.
Speaker 1 (11:33):
So very important point, value-wise as well, and I
like something on top of thatas well, josh, to what you were
saying is recently had a salehere as well, on the Northern
Beaches, the apartment pushingclose to 25 years of age.
So one of the first kind oftwo-bedroom, two-bathrooms to be
built right across the NorthernBeaches.
Over its span has definitelygone through, you know, its
(11:55):
share of strata work.
It's about $15,000 remaining instrata sorry, special levies.
Now you could look at that andsay, look, that's a red flag.
But the other side of it is isthat essentially had a I won't
say restoration, buteverything's been ticked off.
You know you're going to have afully functioning you know
apartment now in a complex, foryou know probably fully
functioning.
You know apartment now in acomplex, for you know probably
(12:16):
10 to 15 years before there'sany major costs coming up again.
So something to be wise of.
Just because there is workundergoing, don't necessarily
discount it as bad.
Speaker 2 (12:23):
Yeah, good point.
It's going to happen sooner orlater with the hot, hot, hot
summers, cold winters.
But yeah, exactly right, Steph,yeah.
Speaker 1 (12:31):
The next one.
Oh look, I don't know that it'struly accurate or not, but
percentage of tenants versusowners.
The only reason I've includedthis is that obviously, when
you've got a lot of ownersliving within a complex, there
tends to be a little bit of ahigher level of care.
Tenants I mean not alllandlords are going to be as
hands on as somebody who'sliving in that property day in,
day out.
So a complex that might have ahigher yield of owners compared
(12:54):
to tenants generally shouldrepresent, you know, better
management and better care andupkeep for that property.
Speaker 2 (13:02):
Definitely.
And then on to our next pointunapproved alterations.
So renovations done, guys,without the proper approvals,
and what this can do is actuallyaffect or avoid building
insurance by breach of bylaws.
So you can also create disputesover shared services, water,
gas.
So a big thing there aboutunapproved alterations.
(13:22):
Mainly to do with yourinsurance, because obviously the
older the building, the higherthe risk.
The insurance premiums increaseand that's transferred through
to your strata rates in terms ofthat cost.
Speaker 1 (13:34):
So another point there We'll jump through the
last few.
So a lack of transparency,missing records If for some
reason the information you'reseeking cannot be obtained,
generally, you know someone maybe trying to hide that from you.
So you want to make sure you'regetting access to the AGM
minutes, the annual generalmeeting minutes, any quotes for
any works coming up that mayhave been discussed and numbers
(13:56):
around that.
So sharing that informationobviously shows goodwill.
Hiding that information makessomething to think about.
Speaker 2 (14:03):
Yeah, definitely, I think we hit most of the points
there, steph.
Yeah, inflated or unusualinsurance premiums which we sort
of touched on there, a historyof claims, poor risk management,
unaddressed building issues.
Like we said, guys, speciallevies aren't always a bad thing
.
If you don't address problems,they only become worse and more
(14:24):
expensive to fix.
So I think that sort of ties inwith what we were speaking
about earlier before is it's notalways seen as a bad thing.
A good building or allbuildings are going to need
maintenance at some point intime.
So yeah, I think that that tiesin well with that point there.
Speaker 1 (14:39):
Yeah, so, look, how can you check these, these
issues out, or how can you raiseor find out these, these
concerns if you are a buyer?
Uh, we'll just put down a fewquick points as well.
Look, first and foremost you dowant to do and it's not
compulsory, but I stronglyrecommend to anyone buying
within a strata is that you geta strata report conducted by a
third party.
Okay, the agents will typicallyprovide it.
(15:01):
The ones that we provide areput together by a third party,
so there's no sphere ofinfluence on any of that data or
information put forward.
But imagine it as being ahealth check and a history check
of the entire complex.
So it's going to show you anycosts that have occurred in the
past.
It will show you all thefinancials and anything that may
have been discussed or upcomingwith works.
Is what you want to do as abuyer to make sure that you're
(15:22):
getting a full overview of thehealth and and what's ahead for
this, for this property?
Speaker 2 (15:27):
definitely that's that one.
And then, delving deeper, guysrequest the last one, two years
of the strata meeting minutes.
So that's what we spoke aboutearlier.
There again, under the, thesummarization of a normal strata
report, you'll get, uh, you'llget the words from the, the
owners themselves in the stratameeting.
What they're seeing is issues.
So definitely get involved withuh, requesting those, uh, that
(15:49):
history of agm minutes extremelyimportant and they'll.
You'll find things in therethat you wouldn't find on a
glance over a summary, so tospeak.
Speaker 1 (15:56):
So read your bylaws, read your strata bylaws.
They're going to be within thecontract of sale so you can
obtain that from an agent,typically going to be about a
third of the way through acontract.
But your bylaws are essentiallythe rules for the building,
what is allowed, what isn'tallowed, and it can sometimes
give you some hints into thehealth of the building as well.
Speaker 2 (16:15):
Yeah, next one do a physical building inspection
walkthrough.
Well, obviously you do that atthe open when you're looking
through, but I guess look forthings that mould, smell, all
those types of things and, likewe said before, checking on that
common property as you enteryou'll get an idea.
It's quite easy to tell awell-managed from a
not-so-well-managed building.
(16:37):
Guys, but just those littlepointers there to look out for
when inspecting.
Don't worry about it yet Don'tget sidetracked from prices
negotiations.
Speaker 1 (16:47):
Have a proper look and you'll know what to look for
.
Yeah, definitely, definitelyNCAT again any disputes between
owners.
You can access all thisinformation um through through
the uh geez, I should know whatit's called.
It's a tendency tribunal systemat ncat.
You can google that, um, andyou can access complex buildings
and addresses to see if therehas been any history of of uh
(17:09):
challenges between owners.
I'll put it that way guys.
Speaker 2 (17:12):
Pretty simple one here research, developer or
builder, that's a good onewhether yeah, whether old or new
, I think that's quite a big, uhbig point.
History will always repeatitself.
So go back over previous builds, previous um projects.
Get an idea of how that projecthas gone since it's been built
um, give you a few clues orheads up if, if other people are
(17:34):
experiencing any issues withprevious developments by that
builder or developer.
So big, big point there.
Speaker 1 (17:41):
It's always good to drive by, like I.
Try to find what people, whatdevelopers would have built five
or six years ago.
See how the external facadesholding up things like that.
Sometimes you can approach aresident.
Whether or not they're going tohelp you too much, I don't know
.
Look there is.
You can approach your str.
Whether or not they're going tohelp you too much, I don't know
.
Uh, look there's.
You can approach your strata.
They're not always going to beforthcoming because you won't be
the owner of a property.
So, um, divulging informationcan sometimes be a challenge
(18:04):
from the strata managers, but itmay be worth to try to just
reach out and see what they canshare with you.
Um, from experience, becauseyou're not the owner, um, they
don't tell you a whole lot, butworth giving it a go all the
same as well, definitely.
And then the last one.
I'd say is just make sure you'vegot a good solicitor conveyance
or someone that is experiencedin real estate transactions,
(18:25):
knows what they're looking for,has got obviously a wealth of
knowledge behind them.
They are not going to be, youknow, they're not going to be
favouring the vendor or theagent.
They're there to represent youas a purchaser.
Speaker 2 (18:36):
So they're going to be doing, you know, their due
diligence in making sure thatyou're looked after.
And I think that's yeah, Stev.
I think that's anotherimportant point.
I've come across some buyerswithin the market.
They may have a friend who's asolicitor but doesn't specialise
in that residential buyer areaand think, you know, oh, he's my
mate, he's going to look afterme.
I've had a few instances therewhere that sometimes they don't
(18:58):
get the service or the level ofservice that they require.
So definitely a big point there, someone that specialises in
the field, because sometimesthat can create some hiccups
down the track or not get thebest advice possible to you.
So definitely, definitely, Ithink that's a big one.
Speaker 1 (19:13):
Yeah, that's kind of it, guys Some things to be aware
of, some solutions to thosechallenges, and thanks again for
joining us Monday night.
Novak News Question excuse me.
Speaker 2 (19:22):
Sorry, I've got a question.
I've got a question from leftfield Bape shops.
Speaker 1 (19:26):
What about them In your strata?
Speaker 2 (19:29):
Bape shops in your strata?
I don't know, I don't know.
Speaker 1 (19:33):
I don't know what do you mean.
What do you mean?
So you've got an?
Speaker 2 (19:36):
off-screen question here.
Call me Dickie From.
Speaker 1 (19:39):
Dickie, dickie Nee.
We've got Dickie Nee in thegreen room.
He's raised a question,something to do with vapes.
You can speak up, dickie.
Everyone can hear you.
Speaker 2 (19:47):
Yeah, well, guys, I think it's yeah, yeah, with
vapes I think it becomes astrata, it comes to strata.
Let's talk to your stratamanager, um, they'll be able to
account for that, and then speakto the, you know, representing
agencies or their propertymanagers, um, but yeah, that's
something to raise with them,because sometimes, obviously,
with a lot of your, your stratasnow you've got commercial along
your bottom floors, so you doget some shops or tobacconists
(20:09):
and we've seen a quite colorfulum uh there's a lot of yeah,
yeah, there, yeah, yeah yeah,well, yeah, crazily enough what
happened down in Collaroy on theweekend.
So just be vigilant, guys.
You know you will always getyour legitimate businesses out
there, but be vigilant.
You'll see what's happeningfrom day to day.
If you get an idea ofanything's wrong and just flag
(20:29):
it with your strata managerwithin the building and it can
also indicate, yeah, your values.
It can.
It can impact property valuesas well.
And insurance and insurancecards.
Yeah, I think ever since themelbourne fiasco, um, those sort
of premiums have increased forany of those uh shops related to
(20:50):
that.
So also have that in mind whenuh selecting units with maybe
commercial uh floor, uh shop, uhshops on the floor.
Speaker 1 (20:56):
Good job, thanks, dickie, nee.
Any other call-ins?
Any other call-ins?
No, that's it.
Speaker 2 (21:01):
Thanks guys, have a great night.
Thanks for joining us.
Any questions, feel free tocontact Steve, and I More than
happy to help.
Have a great night.
Thank you, bye, bye so.
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