5 units /flat complex 3.5k sinking fund

Dear fellow investors

I am Looking at unit deal, everything looks fine so far except sinking fund is 3.5k which seems low as i would expect atleast 25k (5k each unit). Whats your thoughts on this. Building is 1975 built. (506msq land) Good land content in the heart of Gold coast.

 

It's not unusual to have low funds in the capital works (sinking) fund. Just be prepared for a special levy to be struck if something unforeseen eventuates. Have you looked at the strata report yet? What is their history of raising special levies? Any reports from building consultants or engineering companies recommending works that have not been given approval by the BC? Do they have a 10yr plan for how they intending spending the capital works fund monies?

 

Thanks for reply. Yes i am going to ask strata report . Hopefully i will understand it. If not , which professionals should i go to, TO look into all of this that you mentioned.

 

What are the yearly sinking fund contributions?

 

3k a year per unit . There are 5 units in that complex.

 

Hard to say anything until you see the strata report

 

Depends on the condition of the building. Fund may be low if there has recently been some upgrades. A run down building and a low sinking fund is a different matter.

 

So they are raising $15k a year but there is only $3.5k in their currently? Maybe they recently did some works and drained the fund or maybe the other owners aren't paying their funds in.

 

If it's the first strata search report you have ever read, then with no disrespect, you will likely not understand all the important things you need to. (I can say this having read many, many hundreds of these reports over the last decade).

I'd be asking your solicitor / conveyancer.

 

Thanks