How much to admin fund?

[churchado]

Just got a strata report for IP unit we are about to buy.

Strata is high - and the majority of it is going towards $25000 p.a admin fund (+$1000 p.a in sinking)

Total expenditure in the last 6 months is only $5000 so I'm trying to work out where the other $20000 is going to go.

Also, if it's not spent what happens to it? Does it just stay in the bank?

FYI current sinking fund is about $45K, Admin fund $8K

 

[Rentwithpets]

Just got a strata report for IP unit we are about to buy.

Strata is high - and the majority of it is going towards $25000 p.a admin fund (+$1000 p.a in sinking)

Total expenditure in the last 6 months is only $5000 so I'm trying to work out where the other $20000 is going to go.

Also, if it's not spent what happens to it? Does it just stay in the bank?

FYI current sinking fund is about $45K, Admin fund $8K

That sounds like a lot of money sitting around doing nothing! If the admin fund isn't going to be spent, you're better off reducing the strata fees? Could some of the admin fund expenses be more approrpiate for sinking fund? Are there any anticipated expensive maintenance or legal bills? Most stratas invest the excess, need to find out where.
My recommendation is to make an appointment with the strata manager and physically go through all the financial records yourself to see where the money is going, and why they are collecting so much.

 

[churchado]

That sounds like a lot of money sitting around doing nothing! If the admin fund isn't going to be spent, you're better off reducing the strata fees? Could some of the admin fund expenses be more approrpiate for sinking fund? Are there any anticipated expensive maintenance or legal bills? Most stratas invest the excess, need to find out where.
My recommendation is to make an appointment with the strata manager and physically go through all the financial records yourself to see where the money is going, and why they are collecting so much.

There's nothing specific in the AGM minutes that seem to refer to any upcoming issues. I have tried to get some info from the strata manager but am getting the run around. I asked the vendor's real estate agent to ask for information but he is referring me back to my solicitor.

 

[marg4000]

Obtain a copy of the minutes of the last AGM which will give the full budget for the year and breakdown of expenditure. Some expenses are paid annually, insurance etc so figures for the last 6 months are only part of the picture.
Marg

 

[churchado]

Obtain a copy of the minutes of the last AGM which will give the full budget for the year and breakdown of expenditure. Some expenses are paid annually, insurance etc so figures for the last 6 months are only part of the picture.
Marg

I have the minutes of the last AGM (provided in the strata report I purchased) - They talk about "the attached financial statements" being adopted but are not actually attached.

 

[travelbug]

Admin funds are usually pretty close to what the expenditure is. ie there shouldn't be massive differences between what goes in and what comes out. It's for Administration only (strata management fees, insurance, gardening, cleaning etc).

Any excess funds are usually banked in the sinking fund. That is where repairs etc are taken from. This can be low or high depending on the sinking fund analysis (see if you can get a copy). It will highlight expected costs.

The strata report should let you know of future plans for expenditure. Did the strata report highlight any concerns or recommendations? If not ring the company that did it and ask for more information.

 

[marg4000]

I have the minutes of the last AGM (provided in the strata report I purchased) - They talk about "the attached financial statements" being adopted but are not actually attached.

Then you do not have the complete report. I would go back to whoever you purchased the strata report from and request the complete document including attachments.
Marg

 

[Rentwithpets]

Sorry, have been away for a while. I have experience with both purchasing strata reports, as well as inspecting strata records myself.

Strata reports are just a summary of key aspects of a strata that would commonly affect purchasing decisions. They are prepared by authorized persons going to see the records of the strata and looking up information according to certain criteria. So a strata report will not contain the exact details of financial statements, AGM minutes, etc as these are confidential.

As a potential purchaser, you can obtain permission from the strata management to inspect the records yourself. These records are required by law to be kept confidential. It takes a few minutes for the selling agent to give you a letter of authorization. Then you can take the letter and open up huge folders containing all the financial statements, minutes of AGM, names of committee members, work orders, complaints, changes to by-laws, etc. You can take a pencil and paper to write down whatever you like, but can't take anything with you. That is where you will find out where the money is going in the admin funds and sinking funds.

Alternatively you don't have to go to the strata just to get a financial statement about where the money is going. All the owner occupiers are given a statement every quarter. If you knock enough doors you will probably find an owner occupier that is willing to dig up the statements for you to see. Hope it helps!