High Sinking Funds

[van75]

Hi

I am looking at buying a 1 br unit in a 13-unit block in Darlinghurst

The strata fees are approx: Admin $700 and Sinking $300 pq
These sounded pretty high to me

The strata report revealed that there is balance of
$178000 in Admin and $93300 in sinking

Does anyone have any idea if this sounds unnecessarily high for a unit block this size?
There is no indication of any planned major works etc in the strata report.

 

[BuildingBlocks]

How old is the building?

Is there a lift, pool, gym?

 

[Empty Pockets]

That's over $7000 per unit in the sinking funds. Sounds a bit too much to me! What are they saving for?

 

[Jamie M]

Is there a lift, pool, gym?

Was going to ask the same. These nice little facilities will cause the body corp fees to be quite high.

That sinking fund seems pretty healthy (if not excessive - depending on the age and facilities available within the complex).

Cheers

Jamie

 

[Tillie]

I have not bought apartment, so question to all of you that have done so. Does the value of sinking funds impact on the prices of flats E.g. if sinking funds are high and apartment block in good condition the value of apartment is higher than if no sinking funds? Or does it not matter in the end?

 

[Jamie M]

I have not bought apartment, so question to all of you that have done so. Does the value of sinking funds impact on the prices of flats E.g. if sinking funds are high and apartment block in good condition the value of apartment is higher than if no sinking funds? Or does it not matter in the end?

I doubt it has much impact on price. Unless it's the opposite and there's bugger all in the sinking fund - I've seen a unit drop in price by quite a bit due to this scenario.

Cheers

Jamie

 

[van75]

Thanks everyone for the replies

Art Deco bulding, circa 1930s I think.

No pool/lifts/gym - which is why I was surprised at the high levies.
No indication of what they are saving for.

Question, is it possible to get a history of strata levies/sinking funds over the years for a particular unit? Who would you contact to get that info? It's not in the strata report.

 

[van75]

Hi


The strata report revealed that there is balance of
$178000 in Admin and $93300 in sinking

Oops sorry mistype - balance is
$17,800 in Admin and $93,300 in sinking

 

[Jamie M]

Question, is it possible to get a history of strata levies/sinking funds over the years for a particular unit? Who would you contact to get that info? It's not in the strata report.

Yep, should be. You will probably need to grab written permission from the selling agent - you should then be able to call the body corp manager and ask to go over the previous years minutes. It's excellent for carrying out your due diligence.

Cheers

Jamie

 

[travelbug]

Glad you amended the admin amount, I was freaking out. Many blocks in the inner city have high fees though.

The admin fund is just for admin so is usually run close to zero. If the management company does their job they should know how much it costs to manage the building. This is the amount that should go in each year.
No idea why they would need a buffer of $17,000. That's the first question I would be asking at the AGM (assuming you buy). This can be transferred to the sinking fund should expenses occur.

The sinking fund is a different story. Lots of those inner city apartments need work. A few I looked at had very bad windows. To replace these you need a crane (very expensive). See if they have a 10 year sinking fund analysis (they should) and see what needs doing. It's better to have some money in the sinking fund otherwise you run the risk of special levies (which people hate). But having said that I don't like thousands of dollars of my money sitting around.

If you get permission from the owner you can look through all the strata companies books for that block. You could try ringing them and speak to the agent. Sometimes they are helpful.

The number of OO vs number of investors makes a difference also. OO want to spend the money because they live there. Investors want to see value for their buck (eg higher rent).

 

[RenoTeam]

How many of the units are owner occupied? Knock on a few doors and see if anyone can give you information about the last meeting as waiting for Body Corp to get information to you can sometimes take a while