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In NSW this can't be done, unless it is specifically stated in the agency agreement between the owners corp and strata manager, and it would be an additional item because it is not covered under any of the main industry agreements.
Hi Peachey1
What state are you in, and is it a complex of villas, townhouses or community title? Each state is slightly different so need to know that first.
Actually, in NSW it is largely because of govt intervention that levies have been rising. For 40 odd years it was up to the owners corporation how much they contributed to their sinking fund (which is effectively the savings account for longer term, more expensive building maintenance). However very few owners corps were putting sufficient money away to cover these costs and as a result special levies were often required. New govt legislation came in 2005 that now requires an owners corp to have a 10yr sinking fund plan prepared, preferably by a quantity surveyor but at the very least by someone who is qualified to estimate the life of common property components and the cost of replacing/upgrading them. The sinking fund contributions are supposed to be based on this report and subsequently there has been a significant increase in budgets and levies.
Plus, as IP Freely stated, the budget has to cover certain costs and these costs increase, just as your own personal water, power, insurance, petrol, food etc keeps increasing. If you have never been to an AGM then that is the time to question the costs. Every year you would be supplied with a financial statement showing all costs incurred for the past 12 months, and a proposed budget to cover those costs for the next 12 months. If you don't understand these, speak to the strata manager who can give you more details.
There is no benefit to the strata manager in increasing costs unecessarily. The levies go into your scheme's trust account, not the agent's bank account, and they do not earn interest on it.
We have had a property in Moranbah since 2004. We have a larger portfolio so were comfortable with the level of risk. Our first lease was $320pw for 2 years which we thought was great. However during that time rents increased to $450pw. 12 months ago when our last lease expired there was quite a lot of places for rent and we had to take a rent reduction, from $750 to $725 to get a tenant. At that time BMA would only sign two year leases without a rent review midway, so we accepted that because after all, its still fantastic rent!! However now, here we are midway through the 2 year lease and today we could be getting $1100pw!!! Someone asked earlier about 6 month leases. Ideally that would be fantastic in mining towns. In reality it's almost unheard of. The companies who lease the majority of the houses know the drill and want to minimise their rental increases.
The rents and demand do fluctuate, although obviously the trend overall is up, up, up.
Purchase prices are very much linked to yield, hence the crazy capital growth. If our place was vacant today or had a current market lease, we could sell for $530k easily. (we bought for $165k)
The downsides – getting any type of maintenance done takes forever and is very expensive. But perhaps the biggest downside is the quality of PM. We have a lot of different PMs across 2 states and I have rarely changed managers, however we have tried 5 for Moranbah and all promised the world, but their delivery was underwhelming. In the end we decided to self manage. Rent is paid on the first day of the month, and they are 2 months in credit. BMA emails me if there is an issue and we arrange a contractor. Having made several trips there over the years to carry out maintenance (sometimes cheaper that way) we have been able to source some contractors, and as long as we keep on their back after sending work orders the work gets done – eventually. But that's Moranbah.
Two things that make me smile when I think about Moranbah:
1. Quite a few years ago I was there for a working bee, and we were having dinner at the pub with perhaps 20 or so other patrons in the room. There were 3 ladies wearing the same top. At the time there was a Rockmans there (and little else for ladies) and clearly that's where they had all been.
2. There is (or was last time I visited) the most AMAZING shoe shop I have ever seen (boalywood.com.au) They had every type of shoe you could imagine, in every colour, along with accessories etc. In a town where flouro vests and work boots are the norm, this is so out of place, and very unexpected.Hi mixedup
Try books by Ron Forlee – "An Intelligent Guide to Australian Property Development", and "Australian Residential Property Development – A Step-by-step guide for investors".
Wake
My understanding is that the ATO can reject your claim if it can't be substantiated. Unless you really know what you are doing I wouldn't risk doing it yourself. Some of the companies have a policy that if they look at the property and you can't claim at least the cost of the report in the first year they won't proceed ie they won't go ahead if its not worth it for you.
We have been amazed at the amounts we have been able to claim on older properties where we almost didn't bother having one done. Of course, for a new property it should always be done. Its also not as simple as using the whole construction cost as capital works because some components are classed as fixtures and fittings as opposed to building, and some costs of construction can't be depreciated. It's a specialist field.
Wake
My husband and I were recently at the supermarket. The elderly man in front of us was buying 2 bags of groceries and was trying to pay with his keycard, but couldn't remember his pin number. The lady on the register asked him if he had any other credit cards or cash, but he didn't. He was clearly confused about the pin – at a guess I'd say early stage dementure. In the end he said he would go to get some money.
As our groceries were going through I saw him at the ATM outside and I was worried it would swallow his card and he wouldn't know what to do. The next thing I knew my husband went out to him and spoke to him for a minute, then they came back inside and the man paid for his items.
It seems the elderly man was standing at the ATM not knowing what to do so my husband gave him $50 to pay for his food. He rejected it at first but my husband insisted and said "you can pay me back next time you see me" which seemd to make the man feel better.
We both felt it was the right thing to do. My husband was also influenced by the fact that my dad had recently been diagnosed with dementure, and the realisation that it could be dad in that situation with no help.
Although we hadn't said anything, the lady at the checkout must have realised what had happened and looked at us like we were mad. It turns out that also in our queue was the husband of one of our employees. At work the next day she told us how much they were blown away by our generosity.
I think it will be a sad world when helping people has become the exception rather than the norm. I know most of our friends would not hesitate to also spontaneously help someone in need, whether financially or otherwise depending on their means. The reactions of those around us reminded us that not everyone thinks like that..
Wake
PS. Hope this hasn't come across the wrong way – not trying to bring attention to our action, but rather the reaction to it.
Hi
In order to sack the body corporate manager you would need a copy of the agreement to determine what services they have agreed to provide for their fee. If they are in contravention of the agreement then the body corporate may be able to serve them with a termination notice. If however they are providing the agreed services, but you are not happy with the relationship/level of service etc you may be able to terminate the agrrement but may be forced to pay out the term of the agreement/contract before records would be handed over to the new managing agent.
The appropriate motion would need to be placed on the AGM agenda, and would have to be submitted to the agent prior to the notice being sent out. You can’t stand up at the meeting and propose the motion. You need to check with the relevant authority in Qld to determine what % of owners would need to vote for the motion. If there is a committee you should discuss your propsoal with them to determine whether there would be support.
Not sure why you would need insurance details to sack the manager??
Wake
Hi MLV
When you say they “voted”, did they register a by-law setting out the conditions of the handing over of maintenance responsibilities to owners? If so, this should contain info that would determine the rights/responsibiliteis of both parties ie owners and owners corp. Your solicitor will be able to tell you if a by-law has been registered on the cert of title for the common property.
Wake
We bought there in 2004 and have had good CG. Sales have slowed down recently, and returns are not as good as they were, but 8%+ returns are still available if you hunt them out. There has been a lot of new estate blocks of land sold, and therefore an influx to the market of new houses, which is impacting sales of older houses. Rental demand is still strong however.
One thing to be aware of is the cost of having repairs done, if required. Contractors charge pretty much what they want because they can make as much as they want from the mines, so if you want them, you pay for it!
Wake
A trip to research, or look at potential properties is not tax deductible. It doesn’t become deductible unless you are inspecting one that you already own there.
Wake
If you are not yet that familiar with the town, you need a lot of research. As part of this, you could speak to as many agents as possible to find out such things as if there are less desirable areas etc. ask property managers if there are areas/streets where they prefer not to manage properties etc.
Once you believe you have a good feel for the town, when looking at specific houses you need stacks of photos, which the selling agent should be able to supply, and a pest and building inspection. This will give you a fair idea of what the house is like.
Nothing beats going there yourself, and no, you can’t always trust the selling agent to be completely honest. however, many investors successfully buy “sight unseen”
Regards
WakeHi
http://www.fairtrading.nsw.gov.au
Select the real estate & renting link on LHS and go from there. It tells you about the rights and responsibilities of the landlord and tenant, what is required to self manage etc.
Regards
Wake
You can definately get landlords insurace on a strata property. Landlords ins has nothing to do with the building itself, and therefore it makes no difference whether it is a free standing dwelling or a strata unit.
Make sure you understand clearly what the different types of insurances cover, so you are not left exposed anywhere.
Wake
Hi Tom
Body corp fees are paid for 2 purposes:
Admin Fund covers items such as cleaning, lawns, gardens, repairs and maintenance to buildings, pools grounds etc, management fees, common electricity and water and insurance.
The Sinking Fund raises money for the long term repair and replacement of the major items such as painting, fences, roofing, guttering, garage doors etc etc.
You contribute to both each quarter.
Therefore, levies can vary considerably depending on the size of the complex, the facilities it has, how realistic owners are about their expenditure, its age etc.
All owners can have a say in the amount paid, but you must be realistic. ie you can’t pluck an amount out of thin air because it sounds “affordable”. If there is a managing agent, they will prepare an annual budget based on past/known expenditure etc.
Strata insurance covers the building and common contents (carpet, paint etc in stairwells or common areas). You need your own landlords insurance for the contents in your unit ie paint, light fittings, window coverings, carpets etc. (tenant insures their own furniture and belongings)
Hope this helps.
Wake
We have bought 2 in the last 90 days. Both settled the same day.
1.Minor reno, tenant moved in 2 weeks after setlling, plans already submitted to Council to build a duplex at the rear.
2.Major reno, tenants moved in 4 weeks after settling, working on plans to build another free standing house plus a duplex at the rear. This buy consisted of two adjacent blocks with a house at the front of one.
Think all that will keep us busy for quite some time!
Wake
Hi
Martin is running a 3 day seminar from 27-29 Oct in SA. It was promoted last month by Steve. I doubt there’s any places left, but you could investigate through the website.
There has been no mention of anymore in the near future.
Wake.
Hi Frank
Just to clarify – a surveyor would prepare the strata plan for you ie draw up a plan showing the lots and common property, relevant measurements, UE’s and required notations etc. The solicitor would handle the registration of the strata plan at LPI (Land Titles Office). In between, someone would need to submit the application to Council. It could be either party or yourself.
Regards
Wake
Hi Danhob
The local Council will be able to answer most of your questions, or maybe a surveyor familiar with the local requirements.
They will have minimum requirements for land size etc to determine whether you can subdivide the older house off. It isn’t necessarily a problem if they all share a driveway, as this can be addressed in a few different ways so that all parties concerned share the maintenance of the driveway, if ever required.
To strata title the units is not too difficult. A surveyor will draw up a strata plan showing the boundaries of each unit, and marking what common porperty there is. I suggest that you have as little common property as possible by attaching as much grounds to each unit as is practical. This goes to Council for approval and when finalised is then registered at Land Titles office or equivalent. That’s a short version. Council would be able to give you an idea of their costs, and a surveyor may charge a few thousand depending on the complexity – they would be able to give you an idea.
If you can’t subdivide the house off, it could be included in the strata title, but you need to consider that it may need more maintenance than the newer units so may need to have a higher unit entitlement which means the owner pays higher levies.
Once you have an idea of the cost/fees involved you can better determine whether the value of the units once strata titled is enough increase to warrant the work.
Regarding the depreciation, it doesn’t matter what titles they are on – it’s the age of the dwelling and fixtures and fittings. You may even find you can claim some depreciation on items in the older house, even if the building doesn’t qualify for capital allowance. A depreciation schedule will ensure you can claim everything you are entitled to.
Regards
Wake
Unfortunately thats impossible to answer without more details. Depending on where the house is, you could get between $200 and $550 per week, and possibly even greater variance.
As a rough idea, if the house was built post 1985, you should be able to claim capital allowance (2.5% annually of the building cost) plus depreciation on fixtures and fittings. How much depends on the value of each, and is usually best worked out by a quantity surveyor. In addition, all legitimate expenses in owning the house are deductible – agents fees, rates, insurance, repairs, interest on loan etc. How much you benefit from the deductions depends on your income. The higher the income, the higher the tax bracket and the greater the benefit. The lower the income, the lower the deduction.
Wake
