Strata titles

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From: Michael Franks


Has anyone got any experience on investing in residential property which is covered by a strata title with respect to renting. I am considering purchasing such a property but I am cautious because of strata fees - the property in question has recently had a two year increase in strata fees to cover some major work. I understand from the agent that the normal strata fees have no slush fund for these sorts of problems. Does the strata body corporate have special powers - how does democracy work under such circumstances.
I would appreciate any assistance.

Regards Michael Franks
 
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Reply: 1
From: Duncan M


Hi Michael,

I hold a number of units in Strata Groups, ALWAYS ask for copies of the
minutes for the last few meetings of the Strata Group (if they're held),
this will give you insight into:

1) Ownership breakdown, I'm always wary of complexes that have a large
percentage of the units held by a single owner.
2) Pending plans for maintenance that may result in a special levy being
applied to units
3) The degree of professionalism that the Strata Group is run with.

Regards,

Duncan.
 
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Sim

Administrator
Reply: 1.1
From: Sim' Hampel


On 4/9/02 10:50:51 AM, Duncan M wrote:
>
>1) Ownership breakdown, I'm
>always wary of complexes that
>have a large
>percentage of the units held
>by a single owner.

Of course as an investor, holding a large percentage of the units yourself allows you to influence the outcome of strata meetings ;-)

sim.gif
 
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Reply: 1.1.1
From: Duncan M




That raises a problem I have Sim!

I hold a unit in a classy suburb of Adelaide, Glen Osmond, the land is worth
around $300K, there are 4 units in the complex, and they are worth around
$65K each, a total of $260K each.. I've been trying to buy the other 3 for 4
yrs now! If I can get 2 more, I can just raise the strata fees until the 4th
is forced to sell! :)

Oh well, I'll sit and wait I guess :-(

Regards,

Duncan
 
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Reply: 1.1.1.1
From: Duncan M




> a total of $260K each.

Whoops, that should read $260K in total.

Duncan.

-----Original Message-----
From: propertyforum Listmanager
[mailto:listmanager@bne003w.webcentral.com.au]
Sent: None
Subject: RE: Strata titles


From: Duncan Margetts <duncan.margetts@cispl.com.au>



That raises a problem I have Sim!

I hold a unit in a classy suburb of Adelaide, Glen Osmond, the land is worth
around $300K, there are 4 units in the complex, and they are worth around
$65K each, a total of $260K each.. I've been trying to buy the other 3 for 4
yrs now! If I can get 2 more, I can just raise the strata fees until the 4th
is forced to sell! :)

Oh well, I'll sit and wait I guess :-(

Regards,

Duncan


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Reply: 1.1.1.1.1
From: Glenn Mott


Further to Duncan's suggestion about continuing to purchase properties in a strata group until you hold a controlling interest and then increasing the strata fees, has anyone attempted this and have their been any legal ramifications??

I would assume that if the fees went above a level that a reasonable person would consider fair, a court could set a reasonable fee to be paid by the strata owners and maybe even fine the offending owner.

Glenn
 
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Reply: 1.1.1.1.1.1
From: Anony Mouse


Glenn,
Body corporate's are "deemed' to be companies, but because of the "mutuality principle" they are different from normal companies.
As far as I know, each state and territory has strata title legislation (which is constantly changing), which governs what the body corporate can or can't do.
Levies are imposed in defined proportions, usually in the same proportion as the voting power.
So I doubt that levies can be raised above what is reasonable.

he difference between truth and fiction: Fiction has to make sense. Mark Twain
 
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Reply: 1.1.1.1.1.1.1
From: Duncan M


Define reasonable?

If I decide the driveway needs repaving, I can collect a special levy for
that, hold it in the bank accounts of the Strata Group, on acquisition of
the final property in a group we'll hold another strata group meeting (a
total attendance of 1 person) and decide we're going to knock down the group
and build some modern townhouses, partly using the funds in the sinking
fund..

Duncan.
 
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Reply: 1.1.1.1.1.1.1.1
From: Glenn Mott


Duncan,

Need and want are 2 very different things.

Incremental increases in strata fees can be justified to cover such things as increased costs due to inflation and wear & tear.

Wanting to improve the value and rental return of an entire complex is a valid desire and this can be attained without stirring a hornet's nest.

A couple I know in Perth started buying units in a complex of around 100 quite a few years ago. They now own around 50 of them in this complex and have advised me that while they have increased the levies to perform capital works, most of this has been maintenance, ie gardens, painting, lawn, with some being for undercover parking, security, carpets in common hallways and pictures on the walls. Their idea is to help themselves and others at the same time.

Good luck

Glenn
 
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Reply: 1.1.1.1.1.1.1.1.1
From: Duncan M




I guess the difference being that they dont own a unit built on land thats
worth more than the value of the units themselves as do I. (my first PPOR,
and a REALLY bad buy :) )

Duncan.
 
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