Danger: when good apartments go bad

By Robin Christie | 05 Jul 2012

If you think you’ve found the perfect apartment investment, then read this first. Sometimes behind the scenes shenanigans can scupper your investment dreams.

In short, if your building isn’t properly managed, then the value of your investment can be quickly eroded. So what can you do to avoid this catastrophe?

Fist up, it goes without saying that any investor worth their salt will obtain a strata report before buying. This will note:

  • the performance of the owners corporation;
  • the condition of the building;
  • any major upcoming expenses (such as lift or cooling tower repairs);
  • and the ability of the building’s sinking fund reserves to cover such repairs or replacements.  

As Daniel Brown, senior building manager with Waterpoint Asset Management (WAM), explains, a well-maintained and professionally managed property will present itself favourably to valuers and buyers when compared poorer managed buildings – and stands the best chance of appreciating in value. Ultimately, the test of whether a building is well managed or not is reflected in the resale prices of individual apartments, he says.

According to WAM, long gone are the days of unqualified ‘caretaker-cleaners’ living on the premises and doing odd jobs: As strata legislation became more complicated and environmental demands increased, so did the need for expert guidance on occupational health and safety regulations, security, financial, accounting, insurance and legal issues. Consequently professional building managers are now the norm.

“It is not uncommon for the total asset of a large strata development to be worth hundreds of millions of dollars, and it’s our job to ensure everything operates efficiently and looks its best at all times,” said Brown. “A professionally managed building contributes greatly towards a harmonious community and the asset value of the property.”

Do you agree with Brown? What are your views on building managers? Have your say by commenting below, or joining the debate on our online property investment forum.

More stories:

How to boost your property investment tax refund

Danger: how to avoid scuppering your chances of getting a mortgage

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