Is this a Strata Buyer Red Flag? Or, Does it Matter?

If you’re a strata title professional [which means you’re involved in the management or service provision to strata buildings] you know lots and lots about strata title. 

But, do you know or can you identify what normal strata citizens or would-be strata citizens think about the strata sector generally or a strata building specifically?

Let’s see.

In a random post I saw on Property Chat one of those strata citizens asked the following simple question [which I’ve paraphrased to clarify it].

QUESTION:

Should a strata buyer be turned off by the following financial issues in a strata building?

• It’s a block of 17 apartments built in 2001 with a lift

• There’s $7K in total cash

• The admin fund is negative $38K

• The capital works fund is negative $47K

• There was water damage in 2020 that was only partly covered by insurance [not the lot owner loss claims]

• The 10-year capital works fund plan from 2019 recommended spending $187K over years 1, 2 and 3

• No capital works have been done in 5 years

• No strata levies for capital works have been raised in 5 years

So, what’s your answer? Do you have any recommendations for the strata buyer? What do you think the buyer will do? And, what do you think will happen in this strata building over the next 3 to 5 years?

Realistically, the correct answers are obvious, but so is what the buyer will do and where it will all end up in the future.

It’s neither a happy or desireable outcome for any of the strata stakeholders involved.