Generally speaking, strata properties are the most affordable way to invest in real estate – and they can really pay off too. However, when buying into a strata scheme for investment purposes, it’s important to keep certain considerations in mind. Today, we’ll go through some of them so that you can make a smart and safe strata investment.
- Do some digging – maintenance plans & financial histories are key
This might seem obvious but when you’re buying into a strata scheme, there are different things you need to research compared to buying a free-standing unit somewhere. For strata properties, you should have a close look at both the history of the scheme and the maintenance plan.
Ask to see the owners corporation’s books to make sure you’re not suddenly involved in a lawsuit or subject to major repair or renovation expenses once you become an owner. On a related note, it’s incredibly important to know whether the strata you’re buying into does regular maintenance, has a reasonable budget for that maintenance, and plans ahead, because all of these can become incredibly expensive if they’re not done well – so ask to see the strata’s maintenance plan before buying in.
- Pay attention to how the strata community operates
Strata schemes are so popular because they allow people to own an apartment or unit while sharing the responsibility for areas outside of their allotment. However, as you can imagine, things can go awry in strata communities, so it’s important to know whether the owners corporation of your chosen strata scheme gets along or is constantly in-fighting.
Even if you seem to have found a harmonious community, it’s always good to know how they resolve conflicts. As questions such as: How quickly have decisions been made in the past? Was a mediator involved? How involved is their strata manager in resolving conflict? This can make a big difference both in how much your tenants will enjoy living in your unit and how pleasant the experience of being an owner will be for you.
- Know your strata fees
When you buy into a strata scheme, it’s possible that the price seems low because the fees are really high – or, if the fees are also low, it could be because the strata scheme has an underfunded capital works fund, which can also turn out to be very expensive in the end. That’s why you should make sure you know how much you have to pay, how often and whether fees are known to suddenly increase – and also make sure to check for special levies. You can also learn more about what types of levies you will need to pay in our handy guide to strata levies.
Of course, there are also some general considerations that apply to all investments – make sure you look over the strata plan to see the exact specifications of your unit, ensure that you are buying in a good, sought-after location and consider things like the age and state of the building before making a decision. There’s a lot of preparation involved, but if you choose the right strata property to buy, you can make it into a stable, profitable investment.
You can get more strata advice from our friendly and experienced team here at Jamesons today. Get in touch to arrange your first consultation.