Last week we analysed a very nice, well located property in Bayside suburb. It was in a fantastic location, extremely well presented, undercover parking, very light and airy and looked for all intents and purposes to be an extremely good investment. Value for money in the area, put this property in the mid to high $500’s.
After inspection and property report this apartment is standing up to scrutiny very well. BUT WAIT – the vendor’s statement is now examined. Title, council checks, Vicroads, building permits and outgoings – all OK.
Further investigation shows that the owner’s corporation fees are nearly $3500 p.a. This was not put into the summary of the vendor’s statement. It is also extraordinarily high for a standard Bayside apartment of this value.
Further reading explains that they have failed one of its essential services tests. This may result in a cost to fix of over $12,000. Further to this it seems that the well-presented façade, one of the very good points about this property, has not been paid for and that it is being paid off over the next five years.
When we read further through the minutes of the last annual general meeting we find another $7000+ of repairs needed to be done.
None of this has been set up with levies on the owner, which would need to be paid by the vendor at settlement. This has all been lumped in the “maintenance” fund, which effectively shifts the burden onto the new purchaser.
In reality a purchaser of this property should try and purchase at a similar price to that of an unrenovated property as the new owner will be paying of the renovations and repairs for many years to come. At a very good price this property is still worth purchasing, but certainly not at a price comparable to fully renovated, similar sized and located properties.
I attended the auction and unfortunately I was not surprised to see at least 4 people bid and I think a few others that didn’t get a chance to bid. The property sold a little under what it should have sold for if the paperwork was in good order and the owners corporation fees were normal for the area.
CAVEAT EMPTOR – Buyer beware. Neither the vendors, nor their agent, are under any obligation to bring any of this to a prospective buyer’s attention. If you are considering purchasing a property you should seek professional advice from a licensed buyer advocate.