There are many commonly used rules of thumb when it comes to buying strata property and they can basically be split into two categories – those that relate to the building or complex and those that apply to the individual lot.
Let’s consider the first category… Not all buildings are good. Some have been poorly run for years, with little or no investment in maintenance and upkeep, a paltry capital works fund balance (formerly known as the sinking fund), and looming special levies as unavoidable expenses creep up on the owners corporation. Many complexes look OK, but that’s all they are, just OK. A select few have been very well managed, the owners have respected their shared investment and created a fabulous place to live. In fact, we have created a checklist of signs to look for.
Now, if you follow conventional rules of thumb about choosing the best apartment block, you’d go for something that is small (maximum 12 units over a maximum 3 levels) and doesn’t have a lift, a pool or a gym. The thing is, while some are great blocks, there are many that are not necessarily well managed. Conversely, there are some huge complexes with impressive facilities that are extremely well managed.
So, if I wanted to complicate things (as I often think is necessary in order to achieve the best outcome…), I’d create a third category – rules that can be broken. For example, I’ll buy in a large complex if there is a history of tenants and owner occupiers wanting to upgrade within it, where the record keeping by the strata manager is excellent and it can clearly be seen that the owners corporation is organised and efficient, where capital works expenditure is proactive and they maintain a healthy fund balance, and where there is evidence that tenants pay a premium to live there and this offsets any higher levies.
What about the second category? Even when we find a good building, not every apartment in the block will be good. And when we consider the best apartment in a block, it doesn’t have to be the penthouse! Noise, privacy and natural light are key determinants that we consider and they are all dependant on the side of the building that the apartment occupies.
The next consideration is the floorplan. In some buildings, every apartment has the same layout, however in others there can be a great deal of variance. Flow and balance are what we look for. For instance, one two bedroom apartment might have a long tunnel-like hallway and a small second bedroom adjacent to the main while another in the same complex might have no wasted space and two evenly proportioned bedrooms separated by a bathroom.
Then there is the outlook. It doesn’t have to be an ocean view, it just needs to be pleasant. It goes without saying that we don’t like to look from the living area and see a blank brick wall, the garbage room or a neighbouring hoarder’s backyard.
And lastly, there is the street address. Many buildings are located on busy roads and in larger complexes there can be a number of different street addresses, depending on the building and location of the entrance. An apartment situated at the rear of a block, away from road noise, can be negatively affected if its address causes buyers to think it’s on a main road. These apartments can often sell for less than an equivalent in the same complex – but they will always be the bridesmaid, never the bride.
Not all apartments are created equal. To buy well you need to be able to recognise a good complex, know which rules to break and then identify the best apartment. That’s step one – then you need to do your due diligence! If you need help with that, consider our Evaluation & Negotiation Service.
Published 6 September, 2017
DISCLAIMER: Good Deeds buyers tips are intended to be of a general nature. Please contact us for advice that is specific to your individual circumstances. You may also need to get advice from other professionals such as an accountant, mortgage broker, financial planner or solicitor.