Is $77,000 large or small for a sinking fund in a block of 30 units (6 stories), built mid-70's, in apparent good state of repair – at least externally – property has an external pool, underground carpark and gardens to maintain
Thanks!
This big.
Thanks for the helpful post!
You're welcome!It should be pretty clear that it wouldn't take much in a 30 unit property to clear out a $77,000 fund.
So: This big.
So what sort of fund would you expect for that sort of property?
I've just spoken to a property solicitor who reckons $77K is ok.
Well why ask here? If your solicitor says it's okay, I'd assume that not only is he more familiar with statistics on sinking funds for multi-unit properties than myself, but that he also has some fairly intimate knowledge of the current state of the property and all scheduled or expected repairs over the next say, 5 years. I expect he also has checked the history – how often is the fund tapped and to what degree? For what purpose (regular/ongoing/special). Is the fund growing or shrinking over time in relation to, say, general costs of construction?
Nah, she knows nothing about the details.
How would I find out information such as how often the fund has been tapped recently, etc. Is that publicly available?
maybe i should rephrase my question…
As a rule of thumb, how much per unit would you expect to be in a healthy sinking fund?
brownie74 wrote:Nah, she knows nothing about the details.
How would I find out information such as how often the fund has been tapped recently, etc. Is that publicly available?Ask for a copy of the 'body corporate certificate' I think it's called here in Vic. This should detail any pending legal action, upcoming works etcetera. Ask for a copy of the body corporate AGM minutes for the last 3 years. These should contain sufficient financial detail to form a general understanding of the outgoings.
You can also simply ask the real estate agent or vendor a series of questions (in writing):
– What is the average annual expenditure on maintenance over the last 5 years?
– Are these expenses less than incoming BC fees or are they drawing down the fund?
– Please list any proposed repair or maintenance work
and so on. Others here should be able to provide you with more suggestions.As for the actual $ amount it all depends on the above. Ideally a sinking fund will GROW over time slightly in excess of inflation. This is to compensate for the fact that the building is aging and costs will rise. Who knows, $77k might be enough. Then again, the carpark might be about to be tarmacked at a cost of $100,000. Then you’ve got zip left in the fund and a ‘special levy’ notice under your door before you know it!
So basically its $2500K per unit. That sounds okay unless there are pending repairs or maintenance that is being ignored. I have a unit in a complex of 30 that has about 90K sinking. Check the strata report and previous strata meeting minutes for outstanding issues.
You're welcome!
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