The PROPERTY DOCTORS, Sydney Australia Novak Properties
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The PROPERTY DOCTORS, Sydney Australia Novak Properties
NOVAK NEWS - Unlock the Secrets of a Strata Report: Become a Strata Report Pro Today!
Ever wondered how a detailed strata report might be the key to a successful property purchase? Get ready to unlock the secrets behind these essential documents and equip yourself with the knowledge needed to navigate the complex world of real estate transactions. We'll walk you through the ins and outs of strata reports, from financial health and past works to the nuances of unit entitlement and minor resident disputes. Our discussion breaks down a sample report, giving you a step-by-step guide on when and how to obtain this critical information, whether during the inspection phase or upon your solicitor's request.
But that's not all—we also tackle the age-old debate between building inspections and strata reports. Is it worth spending extra on both? Find out how timely building inspections can prevent you from losing a property to another buyer who might only rely on a strata report. We'll explore the hidden benefits of strata reports for owners and answer common questions regarding property conditions and pricing. By the end of this episode, you'll be a savvy property buyer, armed with the right tools and insights to make confident, informed decisions. Don't miss out on this invaluable guide to mastering the art of property acquisition.
Unlock the secrets of Strata Reports. We're going to tell you how to be pros by the end of the night. Stay tuned. Quick little 5 to 10 minute segment. Good evening, Sir.
Speaker 2:Good evening everyone A late night for me. Strata reports, dy has 11,000 units in it. So if you're looking to move sorry, 11,000 units in the suburb of DY, if you're looking to move to DY, possibly you'll read a strata report or you're requested if you're interested in the property. So, billy, what is a strata report?
Speaker 1:well glad you asked, glenn. We've actually got an example for you tonight as well of what a strata report looks like. We'll get to that in just a moment. But a strata report is pretty much the most useful tool a purchaser can have at the pointy end of a negotiation to get to the bottom of the overall building health health of the building really. It talks about the financials. It talks about the past, the previous, the approved works, any upcoming work. I suppose it just gives you a summary of everything.
Speaker 2:So what a strata report is is basically, if you think back to the 1980s, 1950s. Billy was just a twinkle in the eye up to about 2000,. So he wouldn't know. What a strata report was was just a review of all the documents inside a Manila folder in a filing cabinet in the strata manager's office.
Speaker 2:Now those documents are kept in a folder inside a computer and it shows you the past performance of the property and also now, with a lot of Strata managers and body corporates getting a 10-year plan for renovations. It predicts the future costs in the building as well. So it has everything in there from this neighbour didn't like the other neighbour's cat right through to major works and major levies that may come up.
Speaker 2:It's also really really good to check if what the agent has told you about the history of the property is correct, basic things like I was selling a property the other day and the strata was $2,000 and people were telling me that the property below the strata was, for that property a quarter, $1,300. They were identical properties, so the strata report would soon show that it wasn't 1300. So, yeah, really handy tool when when would you get a strata report?
Speaker 1:Billy. Well, that's what some buyers, some buyers feel they should have it, you know, on inspection. And if the agent's providing one for free through their vendor, then sure, have a quick flick through it. But generally speaking, most buyers will download a Strata report once they've started the negotiation process or their solicitor's requested one to firm up their offer Right.
Speaker 2:Okay, so you might want to have a look at the strata before you make an offer. That can be a handy way to go about. Often in DY, to get a strata report, the buyer will have to pay $49. Yep, but it is a great reflection of the building. Billy, let's run through a Strata report how you read one.
Speaker 1:Well, they're all a little bit different but the layout will tell you know by layout, but the information is reasonably the same. This is one that we sold back in March. Pretty typical the front page obviously got your address. Just check the dates, that's probably the most important thing to look for here. You'll see the lot number sometimes different, and that's helpful because if you know the lot number you can then refer back to the contract and look at what's actually on title. But the front page really just tells you Well, sort of the first couple of pages really just tells you the sort of the formal address of the property, who manages the property, um, how many lots are in the in in the building. People like to know that so lots.
Speaker 2:You mean how?
Speaker 1:many other, how many other units, mainly um, and then this. This sort of third page is generally what people are looking for. What's in the admin fund, what's in the capital work fund? Is there any outstanding special levies and you know what are the sort of the trends look like yeah, so this one's a really interesting one.
Speaker 2:Blow it up a little bit, billy. Um, I came across this where an agent couldn't explain how in the admin fund it was $23,000 in deficit and the capital works fund $55,000. Was in there and there was $5,000 in arrears. So, that $23,000,. There's no line of credit, there's no overdraft in these accounts.
Speaker 2:What has happened is that they've spent $23,000. $3,000 more than they've allocated and they've taken that from the Capital Works Fund, and that's just showing you know what's occurred. Now that could be that there was, you know, a roof blew off or there was some major repair. Quite often, insurance it could be insurance as well. This one, it could have been. Insurance could be insurance as well. This one, it could have been insurance. What we're finding is this block here had a component of commercial in with the residential and the commercial insurance has gone through the roof and that they might have drawn from the capital works fund to pay the premium and then they'll have to adjust their payments moving forward to cover that.
Speaker 2:Down the bottom you can see that they have looked proposed at the next AGM to increase their admin fund so they're not drawing from the Capital Works Fund. So yeah, a little bit of accounting knowledge will help you with that. What's on the next page, Billy? We won't go through this page by page. No.
Speaker 1:It's mainly sort of the front 10 pages that are. You know the real details you're looking for. The proposed work's always interesting and if they do do the proposed works, what does it break down to? I sometimes find buyers get confused with the difference between entitlement. Unit entitlement is the calculation at which they work out what your percentage of the building is if they were to raise the funds. So you'll see in the report the contribution for lot six, six in this example, for every $10,000 they require by special levy, it's $600. The other thing that they're looking at.
Speaker 2:So that's really interesting If you added up those, if you said these were coming up, there were $60,000 in proposed works or past works. Yeah, so that would be six times $600. A levy to do the painting of the building over those periods, for $60,000 worth of work would be $3,600, which as an owner you're definitely going to benefit from. You've got a brand-new painted structure, so I think that's a really important thing to see. You know how much you spend every ten thousand dollars yeah and and look.
Speaker 1:You want to find a fine balance between a building that does progressive work, not a building that has heaps of savings and doesn't spend anything and waits for bigger problems to arise, and you don't want a building that has no money and a lot of spending. So there is a balance balance. But the past major works is always a good example of that, and you can see each year where they've put funds allocated.
Speaker 2:That the last one I think to look out for is fire upgrades and whether there's any sort of balcony works as well, and bearing in mind that a lot of the apartments that you will look at now are 20 to 50 years old and now, with the body corporates and the strata managers making sure there's a 10-year plan, all these properties will have upcoming works. All these properties will have upcoming works and that's a way of protecting the building, also protecting people on the body corporate and the strata managers that they've highlighted that this needs to be done. A lot of work in strata units was reactionary, so you know we'd fix the roof when the roof blew off. You know we'd fix the roof when the roof blew off. Now, to prepare that 10-year report, they'll get engineers in for all fields of the building and go through it and say, hey, this is coming up, that's coming up, that's coming up.
Speaker 1:So no more surprises as well.
Speaker 2:We are seeing a lot more levies and special levies in building, but I think it's because they're taking this proactive approach Possibly. You know, everything swings as a pendulum. So from a time where it was all reactionary to now where it's hyper proactive and we'll probably get back to a middle ground in a few years' time active and we'll probably get back to a middle ground in a few years time. So don't be concerned if you see upcoming works or getting quotes for works. That's just all part of it.
Speaker 2:If you're an investor, a lot of these special levies will be a deduction anyway, if you're an owner and your income's pretty fixed, it's a good idea to read through this and see, on top of your mortgage, what you may need to pay to hold the property.
Speaker 1:Yeah, but that's a quick snapshot of a strata report. They're really easy to get a hold of. Just ask the agent. They'll quite often send you over the flyer. You can download it from that and it'll just tell you just an overall summary of the building. Yeah, and this is only a recent thing where agents would provide strata reports around 2016.
Speaker 2:Um that, as we moved into 2017, that was the end of the lot, probably the biggest boom. Um, what was happening is everyone was going out and getting strata reports that the full report will cost you about 300. Yeah, and um, department of fair trading said that anyone that did a strata report you had to record that uh details and pass on the supplier of that strata report to any buyers that came through. So I use strata inspection people use before you bid. Let's say, colin, a guy that does our building inspections did strata reports too. We could give you those three names and you'd ring them up.
Speaker 1:As agents.
Speaker 2:We just thought it was a lot more efficient to go out and get an independent report, Bearing in mind these are independent Australian inspections. Don't even give us a copy, they just give it straight to the buyer. We might see excerpts of it if there's a problem that keeps it totally at arm's length.
Speaker 1:And you know we provide them to the buyers.
Speaker 2:But this is only a recent thing. You know we've been selling units since the 1950s. Only in 2016 was it became not mandatory. That agents picked up that. You know. Maybe we're better to get one source and we can supply it to you if you want to get your own independent strata report or your solicitor suggests it, the cost will be around $300. All the strata reports come with warranties, so they're incorrect. There's a warranty in place whereby you can take action on that as well. So very, very thorough. They tell everything nothing.
Speaker 1:Final question, glenn Do most buyers just use a strata report, or will they download a?
Speaker 2:building and pest. Well, the building and pest generally for strata properties. We don't go out and complete. What I would say is that if and a lot of agents will say to you oh, you don't need a building pest inspection, you'll get a strata report. Yeah, we'll have all the details. End of the day, it's your money. If you want to pay another $500 and have a building inspector go around and inspect the property, by all means do it as long as in the time you're getting that done.
Speaker 2:If you're not contracting on the property, you're not losing the property. I have no problem if people want to do a building inspection at their own cost. However, if the owner says I'd rather just go with this person that's using a strata report. I'm not going to wait for someone to do a building inspection in two days' time you might be settling the property. There you go.
Speaker 1:That's some sound advice. If you need any help navigating a strata report, you can always give us a call, and if you're an owner and you haven't organized a strata report, your agent hasn't talked to you about it. It's a great tool to have on hand. Definitely takes out the element of surprise. If there's any questions, most buyers will ask what's the price? And, second of all, what does the strata report look like? Those are your two top questions. See you later.