Apartment Living: Buying for Investment
Many people love the ease that apartment living provides but it's important you know what you're investing in when it comes to apartments and townhouses. Buying a property that's strata titled is very different to purchasing one that isn't, especially for those intending to live in it.
Michael Matusik says that there is an increasing trend of first home buyers considering alternatives tofree-standing houses, especially with most apartments and townhouses about 20% cheaper than a detacheddwelling in the same area.
There are rules and regulations by which you must behave as an owner of an apartmentand it's better to know these up front before you sign any purchase contract.
What is a strata scheme?
A strata scheme is a building or collection of buildings, where individuals each own a small portion (a lot) but where there is also common property which every owner shares ownership over.
The strata scheme is managed by a body corporate (a body representing all the owners of the lots) and the owner's corporation will engage the services of a professional strata managing agent to administer the day-to-day running of the scheme.
What do I own?
One of the major differences between owning a house and owning a unit or townhouse in a strata scheme is that the external walls, the floor and roof do not usually belong to the lot owner. These areas are usually common property and the maintenance and repair of these parts of the building is the responsibility of the owners corporation.
In most strata schemes, the lot owner owns the inside of the unit but not the main structure of the building. Usually the four main walls, the ceiling, roof and the floor are common property. The floor coverings such as carpet and fixtures are all the property of the lot owner. A lot owner effectively owns the airspace (and anything included in the airspace) inside the boundary walls, floor and ceiling of the lot.
What are levies?
The role of the owners corporation is to run the strata scheme. To carry out this role, they must set up and manage an administrative fund (for day-to-day operational expenses) and a sinking fund (for long-term future expenditure).
The owners corporation must estimate how much money is needed each year for the funds to cover all the expenses and needs of the strata scheme. This amount is then divided between the lot owners and becomes known as the levies and are usually paid every quarter.
What meetings will I have to attend?
While it is not compulsory for any lot owner to attend owners corporation meetings, you may want to take an interest in the building's affairs. There would usually be several meetings of the owners corporation each year, although the annual general meeting is the only meeting required by law, and probably the most important meeting you should attend.
By-laws are a set of rules that all people living in a strata scheme must follow and are the main way in which strata living differs from owning your own home. By-laws are made in relation to issues such as parking, noise and the keeping of pets.
If you're the party-loving kind, then apartment living might not be for you unless the rest of the building loves a party too. Under by-laws, any person wishing to entertain must take into account the peace and enjoyment of other tenants. As an owner you are responsible for the behaviour of any guests too.
Planning on using the unit as an investment opportunity? No strata scheme can prevent an owner from renting out their lot but any tenant must abide by the strata scheme's by-laws.
The successful outcome of your decision to buy a particular property will be influenced by the amount of research you do, and of course, money will always be a major factor.
If you are looking to buy a residential property and require expert assistance to gain more advantages with your purchase, call Prosper Group now on 1300 664 373 or email us on firstname.lastname@example.org.