HELP - strata report, historical building defects

[Cydneys]

I'm trying to decide whether to go ahead with purchasing a unit or not. After reading the strata report I have second doubts due to the structural engineering report dated 2009 (approx 5 years after the building was finished) that there has been cracks in the plaster in the walls within the unit and the common walls in the building hallways etc, as well as basement leaks. The cracks are still there even now (unsure if they are the same cracks, or new ones) when I recently inspected it.

The strata has also skyrocketed from $566 p/q in 2011 to $924 p/q in 2014 financial year, and a budgeted amount of $934 p/q in this financial year (so not much of a budgeted increase). So while there were alarm bells with the structural damage (the builder has since got delisted with ASIC!), the strata seems to be "OK" (in terms of not much more increase for next year). I'm a bit concerned with the history of the structural damage...but it is for a fairly good price and good rentability in the Southwest corner of Sydney.

I'm just wondering since it's also my first IP - is it a normal occurrence to have structural damages in the strata report i.e nothing is built perfectly?? As that is my main concern. Also the high strata cost worries me, I'm new to all this but all I can see is that there is a lift and parking lot that can contribute to the strata, so why is it so high? The unit is in Southwest Sydney, near Campbelltown region, and the building is approx 10 years old.

I'm in it for the long haul so I'd rather not buy something that will cause more problems later for me? Any insights from anyone who's been through all this?

 

[travelbug]

There seem to be some lots that were finished in 2003-5 with structural issues. I put it down to builders rushing to get blocks finished before the boom ended (maybe I'm wrong) but it seems strange to me that I have seen more than th average in these years with problems (in Sydney).

This may or may not be the case with yours. Why have the levies risen sharply? What does the expenditure report say? Are they planning for a big spend shortly? I know with one of mine we needed to spend a bit so put the levies up for 2 years instead of having a special levy. Then we lowered them.
You need to asscertain if this is the case or things are just falling apart and extra money is needed as ongoing maintenance.
Lifts and popols are big exp[enditure items so the levies will always be higher than a block without them.

Good luck.

 

[Cydneys]

Thanks for the reply. I have decided to walk away from this one because the structural defects are going to be reoccurring.

Within the strata report, the recent building engineer report dated in 2013 (so fairly recent) pointed out that the cracking in the masonry in the walls is "most likely" going to be reoccurring as it is due to the swelling/shrinking of the soil in that area which keeps changing depending on weather conditions.

Basically I think it will be messy and hard to re-sell later (so bad capital gains).

I really don't think the strata number justifies how much you get. Next year I'd potentially be paying close to $1k per quarter. There is a lift, a foyer, and some small patches of lawn. I can't justify paying so much strata for just that? I realize that the cost of high due to only 35 units in the entire complex... But for $1k I'd normally get a gym, pool and what else, somewhere else!

 

[Cydneys]

Just wanted to point out that I was aware of the high cost of the strata beforehand and was willing to go through with it.

But it was my understanding that the structural defects are not long term and once fixed that would be the end of it. But the strata report has proven me wrong...so that's why i see this as a risky investment.

Who wants to buy a unit with ongoing structural damage that requires yearly fixes to maintain? Not only is it ugly, but there is no end to it, as soon as weather changes and the soil swells/shrinks, cracks will appear.

I just see it as something to avoid, my lawyer also advised me...in his own words "I would not buy something with a structural defect".

No thanks.

Anyone else had anything like this happen to them?