The saying goes you get what you pay for. Yet when it comes to owners corporation fees, investors are concerned that they are being hit with bills but are getting very little in return.
Cheapest isn’t best
For many clients, investing in an apartment is a good way to get into the property market. But that means dealing with the fees charged by the owners corporation (or body corporate) that manages the common areas and facilities of a building.
Investors need well-kept external areas to help attract tenants. Purchasing an investment property based on low owners corporation fees is not the way to go. Indeed, cheap owners corporation fees should wave ared flag to you. Will the building be well maintained in the long-term future? Has everything been factored into their calculations?
Owners corporation expenses have their pitfalls. But the costs can also work to safeguard your clients’ returns. Investors need to strike the right balance, paying the right level of fees for the right property.
Get it right from the start
You need to consider the long-term upkeep of the common areas. When buying an existing property, look at whether the property has been well maintained. What is the existing wear and tear? How is it going to stack up in 10 years’ time? If things are already looking even slightly shabby, you’re likely up for increased corporation fees down the track.
When purchasing in a new or off-the plan development, the key is to only deal with a reputable and experienced developer. A simple thing like providing access to roof space and rope anchor points means that the building’s finish can be cleaned and maintained at a lower cost. Invest in a development where care has been taken with such details.
What to avoid
Investors must also assess whether the building’s shared spaces are actually appropriate for a long-term investment.
The concept of a boutique development is an attractive prospect for investors. But while these developments do offer benefits, investors need to be wary of the owners corporation fees that come attached. Take, for example, a small development with a number of lifts in the building. Here, the lift maintenance cost alone can make the investment unattractive, The lift-to-apartment ratio needs to be such that owners corporation fees will remain reasonable.
A high-end boutique apartment equipped v an in-house gym and lap pool sounds enticing, yet the same rule of logic applies. The fewer owners there are to foot the bill, the higher that bill will be. In a larger development, these can fantastic amenities, enhancing your investments and ensuring you always attract quality tenants.
What to look for
You should assess common areas for the value they offer given their upkeep costs. An attract offering for tenants can be a simple outdoor communal area with barbeque facilities and bench seating, Upkeep of these sorts of outdoor spaces is also minimal, keeping costs low and providing a value-add to your clients’ investment.
Don’t get scared off by owners corporation fees. They are there to safeguard a property investment. The investment decision just net to strike a careful balance between having t right type of facilities and paying a reasonable amount for them.
