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VIC I want to avoid "bad" apartments in Melbourne

Discussion in 'Where to Buy' started by Zod, 30th Jul, 2015.

  1. Zod

    Zod Member

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    Hi, I've been thinking of getting an apartment in Melbourne for a while now. I want one that I might want to live in, but might also want to rent out (depending on a few things).

    I'm not in a rush to do it, but I keep reading that Melbourne has some very poorly designed apartments around. I hear some are way too small for anyone to want to live in (smaller than the average bedroom in some cases and poorly designed with kitchens in hallways etc as mentioned here).

    What I want to know is this:

    1. What are the bad buildings known for having terrible apartments so I can avoid them?
    2. What are the good ones so I can consider them?
    3. Would it be possible to buy a couple of consecutive rooms in a "bad" building and add doors between the rooms / renovate? I doubt I could afford to buy multiple, but maybe I could get some cheap if they are having no luck selling them.

    Any thoughts? Also any ballpark cost estimates would be great.
     
  2. KoopaTroopa

    KoopaTroopa Active Member

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    The first question I would have is why an Apartment specifically?

    You didn't mention units, villas, or townhouses. So I would be interested in why you are only targeting apartments.
     
  3. Tekoz

    Tekoz Well-Known Member

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    @Zod: if you are looking for investing, ... do not buy Off The Plan, that's the great piece of advice from the experts here.

    Where about you are looking ?
     
  4. The Y-man

    The Y-man Moderator Staff Member

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    I better not say which are good or bad - or I'll need to self-moderate :p. Just talk to people who live there, go to open inspections (sales or rental)

    Some things that makes an apartment good or bad:
    - noise suppression - particularly from neighbouring apartments (and can be from above)
    - repairs/maintenance - look at Owners corp minutes to see maintenance/repair/upkeep budget. Poorly built places need constant fixing (and very high OC rates). And no, you can't improve them. Having said that, floor space is a huge factor.




    Don't exclude buildings just because they were developed by XYZ, because it can come down to the builder subcontracted to the project.

    The Y-man
     
  5. Tekoz

    Tekoz Well-Known Member

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    @The Y-man: But it cost you at least $300 approximately in NSW to get the strata report to know that ? Because it cannot be obtained like the proeprty contract of sales.
     
  6. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Your report should include detail around:
    • Pending or past building works;
    • The cost of current levies;
    • The likelihood of special levies;
    • A 10-year budget plan; and
    • All expenses for the past two years.
    Really important in my opinion. Buying a unit without looking at a current strata report is playing with fire. Result could be lovely fireworks or just a BOOM-A-SPECIAL-LEVY :D
     
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  7. Tekoz

    Tekoz Well-Known Member

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    @Leo2413 and @The Y-man: So when do we start to get this report if it is under Auction there is no cooling off period ?

    My assumption during the nromal / private treaty selling is that we cannot ask the vendor for this report, thus we have to purchase it ourselves once the vendor accepted the price during unconditional offer.

    Rescinding the offer woud lose the 0.25% of the price accepted plus the $300 strata report. We can't haggle down the price anyway if it is accepted by the vendor.

    But what can we do suppose the strata report is not so good as per your suggestion above ?
    back out the Unconditional / cooling off period (~ 5 days) ?
     
  8. Leo2413

    Leo2413 Well-Known Member Premium Member

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    @Tekoz Well personally this is what I do.

    If I am seriously interested to buy a unit (regardless if its private sale or auction) and I have the contract etc and our lawyers are doing the usually back and forth with the contract and clauses, its at that time I would get the report. I just see it as a business expense. Even if I pay $300 for 7 units I look at and only purchase 1 unit, the cost of the $1,800 extra I just see as a business cost. Alternatively you could always get the report before you engage a lawyer. But not getting a report is not one area to try and save on imo, the consequences can be horrific. Not too long ago an acquaintance of mine bought a unit and 2 months later was hit with a 15k special levy.

    The worst part was he purchased a strata report which mentioned this, but in is excitement and lack of experience he just glossed over it!! :eek::eek:
     
    Last edited: 31st Jul, 2015
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  9. The Y-man

    The Y-man Moderator Staff Member

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    In Victoria, the minutes of the AGM (inc financials) and an OC certificate is required to be included in the Vendor Disclosure (Section 32) Document which must be provided prior to accepting an offer or going to auction.

    The Y-man
     
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  10. Tekoz

    Tekoz Well-Known Member

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    @Leo2413 How is that possible a "special" levy is charged or increased all in a sudden ?
    is that even legal ? So far my Strata and other outgoings fee is increased modestly slightly above inflation annually.
     
  11. Tekoz

    Tekoz Well-Known Member

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    @The Y-man : whoa, that's cool. II guess that's not the case here in NSW.
     
  12. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Hi @Tekoz, It was my understanding that it was agreed by the strata board, and not something that just happened arbitrarily. He just missed it when reading a report. Currently I have 1 unit that strata want to upgrade the building via a special levy and I know its going to a vote soon too.
     
  13. Depreciator

    Depreciator Moderator Staff Member

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    You're not in a hurry, Zod, so just pick the area you may want to live in and go to lots of inspections. You will soon get a feel for various buildings. You'll want to avoid areas where there is a huge concentration of apartments - and perhaps avoid hug complexes.
    Re: This question:

    3. Would it be possible to buy a couple of consecutive rooms in a "bad" building and add doors between the rooms / renovate? I doubt I could afford to buy multiple, but maybe I could get some cheap if they are having no luck selling them.

    It would rarely work. Let's say you buy two dwellings for $400K each and join them. Combined, they are unlikely to be worth 2 x $400K.
    People making money doing that sort of thing do it the other way around i.e. buy something and split it into two dwellings.

    Scott
     
  14. The Y-man

    The Y-man Moderator Staff Member

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    @Tekoz,

    A special levy may be required for all sorts of reasons - they are usually one off fund raisers for major repair work (that was not foreseen).

    For example, a fault in the building may have been found, or a sinkhole has appeared next door etc

    The Y-man
     
  15. jaybean

    jaybean Well-Known Member

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    The scary ones are things like concrete cancer, where each owner could be slugged with tens, maybe even hundreds of thousands.
     
  16. The Y-man

    The Y-man Moderator Staff Member

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    @Zod

    As crazy as it sounds, maybe find a building you are interested in and rent in it.
    This gives you 3 perspectives: what's it like as a "community", build quality, and potential PM to use or avoid.

    The Y-man
     
  17. The Y-man

    The Y-man Moderator Staff Member

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  18. Depreciator

    Depreciator Moderator Staff Member

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    Unless it's for an emergency fix, Special Levies rarely come out of nowhere. There will be a trail in the strata minutes sometimes going back years. The owners will have talked about it often and it will have come up in the annual meeting. The owners often resolve to kick the can down the road for another year.
    We had a client who was hit with a $61K Special Levy the year she bought her apartment. She was a bit upset and I ended up having a chat with her. She didn't even know what a strata report was. The threat of that massive Levy would have been kicking around for years before the owners corp finally had to bite the bullet and do the work. In the meantime, there would have been owners in the know trying to flog their apartments and crossing their fingers that prospective buyers didn't get a strata report.

    Scott
     
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  19. jaybean

    jaybean Well-Known Member

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  20. Tekoz

    Tekoz Well-Known Member

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    What is that concrete cancer ?
    some sort of building defect that comes due to some things unknown ?

    if it is termites, then yes I understand that fully. But Cancer ? how is that possible.