Strata report results - inner west Sydney

[propertynoob]

Hi guys,

I have received the results from a strata report regarding a 2br apartment in Sydney's inner west built in the 1960's

Small block of 13 apartments (no lifts, pools, gym etc) going to auction soon.

Levies are $500 per quarter

Sinking fund $13,000.00
Admin fund $500.00

Current owners are $3000 arrears on levies.

My concerns are;
-the amount in the sinking fund is not enough to cover emergency one-off expenses
-Owner is in arears (what happens if they are also behind council rates etc)
- recent Safety assessment Report from suggests "presumed bonded asbestos" in exterior and interior locations around the property

Should I walk away or these concerns aren't that bad?

The apartment is in an excellent location, near restaurants, public transport and schools.

What are your thoughts?

 

[DaveM]

Depends on what has been spent. Funds might be low as they have just spent $25k on works. Or it may be falling apart and owners wont raise levies. What condition is the complex in?

More concern is the admin fund... its low. Will be helped by the $3k from your vendor.

Asbestos, its everywhere cant be avoided

Nothinig really screams walk away.

 

[Terry_w]

Arrears can be taken into account at settlement - assuming enough equity!

 

[propertynoob]

Depends on what has been spent. Funds might be low as they have just spent $25k on works. Or it may be falling apart and owners wont raise levies. What condition is the complex in?

More concern is the admin fund... its low. Will be helped by the $3k from your vendor.

Asbestos, its everywhere cant be avoided

Nothinig really screams walk away.

Hi Dave,
I don't believe any recent (last 4 years) works has been done. But the apartments appear to be in good, well maintained condition from my visits there. I know it varies from a complex to complex, but what is a healthy sinking fund amount for one this size and age?

Re: admin fund, their new financial period starts 1st of May, so could that explain it and that they are going to go over budget?

 

[travelbug]

Admin funds shouldn't have too much money in them. Usually the payments are adjusted to cover costs, not to hoard money.
Extra money is usually kept in the sinking fund.

$13,000 is not heaps but not cause for alarm I don't think. It's difficult as there could be a big expense coming up or they may have just done a big spend. What does the report say about this?

Do they have a sinking fund analysis? That is an outline that gives a guideline of what needs to be done. They are usually written for 10 years.

I bought one unit with $30 in the sinking fund (no I didn't leave some 00's out.
Another one had $120,000 but had been building up as a big expense was due (lucky for me).