Many potential property owners tend to look at a possible acquisition through rose-coloured glasses. If they fall in love with the location and the appearance of a building, they may have made a decision subconsciously before they're even ready. It's important not to fall into this trap, especially if you're buying an apartment which can be affected by so many other factors when compared to a single-family home. Why should you take a deep breath and what should you be looking at before proceeding?
How to Reveal the Facts
An apartment, townhouse or single unit is for many people a very affordable way to dip their toes into the property market. Such properties are generally part of what is known as a strata scheme and potential investors will need to focus on the information available in the strata report.
Getting Past the Cover
Understand that investors and property sellers will want to make their unit or structure as saleable as possible and it's not unusual for reports to be dressed up with slick presentation, fantastic pictures and a positive overall vibe. You need to look very deeply into the content of the report for the bare facts.
Big Questions to Ask
Principally, you're looking for assurance that the strata scheme is well managed, that the building is well maintained and that the whole project is properly financed.
What type of financial structure is involved, first and foremost? Are there any levies in place to cover present or likely alterations, or are any discussions in place with regard to any future building works? Have a look at the 10-year budget plan put forward and go into detail to uncover all the expenses for the last couple of years.
It's not unusual for a building to have some defects, but what's most important is the action being taken to address them. Is there an adequate sinking fund, or are plans that are being made to deal with any issue finding some resistance among existing owners?
Pay particular attention to any evidence of disputes between current property owners, management, builders or other providers. All of this data will give you a good feeling for your potential purchase.
Will Your Plans Be Okay?
When you're considering the scale of your investment and how you're going to service the cost, make sure that your budget is not too restrictive. Will you be able to afford any quarterly levies, or more importantly have any leeway to allow for future additions? If you're planning alterations or renovations to a unit, will your plans be approved? Remember, local bylaws may overrule the opinion of the property management, anyway.
Finally, have you considered ALL the possible angles? Have a word with an expert to help you unravel the prepurchase strata report so that you don't overlook something crucial.