NSW 5/6-8 Short Street Kogarah

Hi guys, I am a first home buyer and planning to buy my first unit here in Sydney soon.

I saw this unit in Kogarah, it is just adjacent to St. George Hospital (where I work) initially the asking price was 650k-600k, it's been in the market for long more than 3mos now and the price has dropped to 565k now. Here is the link

5/6 Short Street Kogarah NSW 2217 - Unit for Sale #127969098 - realestate.com.au

I was able to get a copy of the strata report and I discovered few things:

1. Bowing wall / crack 20-30mm separation on the units balcony if left undertaken, crack will further propagate or widen which may cause a structrural issues and will need urgent attention to brace wall - recommendation: installation of remedial cavity ties such as Helfix Helibar to bridge external brickwork skin with the internal to stablise the crack

2. Concrete spalling on balcony slab edge of the unit and the unit above - recommendation: waterproofing to protect structure for water ingress into the building internals

3.Maintenance / Levy Contributions are as follows:
Administrative Fund pq - $758.33(admin fund) + 234.75(Levy adj admin fund)
Capital Works Fund pq - 135.42(capital works fund) + 20.31(Levy Adj capital work fund)

Special Levy Contributions - N/A
Budget per annum:
Admin Fund: $28k
Capital Work Fund: $5k
Building insured for $3.5M

4. Asbestos Survey: Potential health risk to occupants of the building of the presence of asbestos or ACM

5. Another report goes like this dated Dec 2017
"We attend site to make safe a canvas awning that was in danger of collapsing

The pebblecrete balcony slab edfe on the 2nd floor above the driveway has a craked and broken away (unit 5). The damaged slab edge where the awning was attached to.

We have removed the awning and stored on site. We also removed all loose concrete from the balcony slab edge.

There is evidence of some concrete cancer that will need to be repaired to the awning being reinstated."

6. There is also a 15 year Levy Table from Dec 2018 - Dec 2032
2018 - $5k
2019-2021 - $7.4k-7.8k
2022-2028 - $8k - 9.7k
2029 - 2032 - $10k-11k

7. Rezoning:
George's Council declined the proposal for the rezoning of this property and nearby properties for a 11-12 storey buildings at this stage as per 2017

Also I have a question regarding lot entitlement, what does it mean? for this unit it is 65
Number of units entitlement: 600
Number of units: 9
and what does contribution per unit entitlement means?

I hope to get insights from the experts here about this unit if the discount is worth it of the current building condition.

Thank you very much!

Paul

 

Run. You want to buy a home. Not problems.

 

With about 3000 views, the property has either sat for a while or has a 'few' issues which have been identified in the information provided to you.

1. Balconies are non-compliant (ie climbing risk), possibly too low as well. The issue raised points to the brickwork bowing (extent unknown) but will become unsafe and may topple at some point in the future.
2. Concrete cancer - another issue to be remedied
3. Very little has been identified as being contributed to the capital works fund to pay for the issues you have identified.
4. What is the location & condition of the ACM?
5. Have these items been addressed? Otherwise, there's more concrete cancer and sounds like a lack of willingness by the owners to address the issues.
6. There are plans for the levies to increase (good news) but by very little. How long is it going to be before the issues can be addressed?
7. Rezoning - sounds like the owners want to sell up to a developer for a complete rebuild however council is reluctant to rezone.

You would own 65/600 of the building based on the entitlements.

 

That's true, that's probably the reason why it's been in the market for a while. This is the very first property I have inspected though.

 

Is this for you to live in, or to rent out?
Look at the satellite map and look for the big (H) marker on the roof of the hospital. Know what that stands for?
Do you know what it's like to have a careflight chopper landing across the road at 3am?
Same for ambulances pulling into the ED.

Street parking is a nightmare in that area, too.

 

Hi Scott!

Thanks for your insights,

1. I have also seen that part in the strata report about the climbing risk, did you based it in the picture from realestate.com.au?

3. I am just wondering why I can't find any report about fixing the structural problem as well.

4. ACM was found in the follwing areas: External Eaves; Balcony Ceilings, Electrical switchboards. all conditions are tagged as Good - no sign of damage or deterioration. There is also an ACM sign inside the main front entrance to the building that says: THIS BUILDING CONTAINS ACM

5. I couldn't find any information of addressing concrete cancer in the latest minutes of meeting.

6. So you think the increase in levy is still little? I find it very expensive hahaha

7. The agent said the next rezoning schedule will be after 10 years

Thanks for your reply!

 

Hi Shireboy,

The unit is for me to live in because of it's proximity to my work, actually when I do night shifts I can hear the helicopter in the middle of the night. This make me think that it could be an issue specially in my work I need plenty of rest.

I agree that street parking is really hard in that area, but this unit has its own parking.

 

I think he does know what H is. The emergency entrance is on Gray but still very close. You also have the fire station further up the road too.

Apart from all the other issues within the building it's also prudent to consider everything surrounding the area too.

The street is constantly congested with people looking for parking, the school around the corner etc. Don't expect to invite friends over and find parking really

 

Hi Athikalaka,

I think H does stand for Hospital? Lol hehehe I'm getting your point guys, I went here this morning and as you have mentioned there are lots of people looking for a street parking including myself which makes the area appeared very congested. That's probably another reason why the council declined the proposed 11-12 story rezoning because it will make the street more crowded. I was just thinking it is a very good location because I work in the hospital across it (a little bit bias in this part) but yeah I can say the area is more of like a commerical area rather than a residential

 

The other big Q is whether you really want to live so close to where you work. Sometimes being a further away and not needing to see that building every day will be less stressful.

 

I lived once about 7 minutes walk from my work. Never again. Idea is great and might be fun initially (popping home for lunch, change).

In long run I hated it. I didn’t feel I separated from work in the evening. It felt to me like an extension of my workplace. Mind you I loved that job.

 

Another reason I want to buy this is to convert it to an investment property in the future after taking advantage of the government grant of free stamp duty. I think I can have this rented out very quick since it's close to hospital.

Also I am thinking of accessing equity from this unit after a year or so, since it is below the market value, I'm not just entirely sure if the bank will valuate this unit for 600-650k which is the value of the same property like in the area at the moment.

 

@SBGP

• The photo - looks to have only 900mm balustrade (doesn't comply with current standard)
• The concrete cancer report & brickwork issues may go back further than you have searched or no report has been completed
• ACM - may be an issue in the future & must be disclosed to any contractor attending the site who is likely to work in those areas affected eg. electrician or plumber
• How far is your $156/qtr going to go in addressing the major issues highlighted eg balcony waterproofing or brickwork issues? especially if this also affects other units.

I telecommute, I go out for lunch.

 

At the moment, I live 12 minutes walk away from work I feel to far from work specially if I have to walk when the weather is 7C or 45C

 

Wow you're very good at this, in the report it say 890mm balustrade - does not comply with the current regulations of construction code.

Is concrete cancer considered a major issue?

How much is usually the rate of strate fee of a 40-50 yr old building in NSW? I can see some properties nearby it is usually between 500-800.

 

@Scott No Mates
By the way I also found an report called "Anticipated Expenditures Table" from Yr 2018-2032
There is $5k budget for general building maintanance for 2018, $5800 in 2023 and $6700 in 2028. I think 5k is not enough to fix the building defects. If that is the case what do you think they plan to do with that? Just leave it since only 2 units are affected?

 

Concrete cancer can cause structure to fail

$800/qtr is OK where there are no known issues (IMHO), where there is identified outstanding maintenance to be addressed, you may be exposed to special levies to cover the shortfall eg: a $2k one-off contribution (by 9 units = $18k).

When was the last audit completed?
How long has the strata manager been in place?
Why is there so little in the sinking fund? ($5k covers very little)
What is the spread of owner occupiers vs investors?
Are any owners in arrears?

 

@Scott No Mates

I never knew that buildings can have cancer too!

The last audit was on April 2018



I can't find information about this questions: (it is really my first time to read a strata report)
How long has the strata manager been in place?
Why is there so little in the sinking fund? ($5k covers very little)
What is the spread of owner occupiers vs investors?

 

Well I think "Helipad" was what you meant since you discussed it earlier but I digress from the main points of the OP.

I'm agreeing with the very first post by @hammer
There seems to be a lot of issues to take on

If most are investors who aren't on the ground and see the issues (and don't have emotions backed in to it), they don't want to spend on fixing things unless they need to. Sometimes even owners will not want to spend because of its not directly affecting their unit, they think it's not their problem. Even then by the time it gets to the 11th hour the repairs can be very costly.