Time to Sell?

Hoping for some help with a situation with a challenging investment property.

I purchased approximately 18 months, simple 2 bed 1972 strata unit in South Australia in a group of 4. The property rented out quickly with about 15 applications and a yield of about 7.5%.

Since purchasing, there's been a number of works that have been required, totalling approx $20k across 4 units - 5k each. The issue is the block appears to be "sinking" and the 20k engineer's investigation thus far have not been to investigate what that root cause is.

The sinking has caused a lot of damage internally, cracks up and down walls, painting, silicone, doors need shaving back etc. It is not covered under strata insurance, there is a sinking fund with $1k in it only.

The tenant in the property has stated she wants them fixed of course, but they cannot be fixed unless strata approves, strata have not approved fixing until the cause is known and addressed.

Today received a quote from the strata group with quote to repair cracks etc totalling $28k across 4 units. My unit only contributes 4.5k, other units each range from 7-9k each, this is probably because I have done the most I can, such as some paint, shaving back doors, fixing cupboards where it can be to make the tenant happy. The strata group is strata data, who take commission from any maintenance repairs and at a high price ($600/quarter each). I've provided options for much more affordable management yet the other owners outvoted me due to the comfort of familiarity with them; I don't understand this when the group has no sinking fund, is facing at least 30k of works and no one seems to mind the constant levies and that they are very expensive.

The question I'm asking is, at what point is enough enough? Perhaps more seasoned investors can help here, as it seems like it was a bad mistake to buy and it's reaching the point where I'm asking if it's worthwhile, or should just cut losses.

I purchased with the hopes of holding for 30 years until retirement. At this point, I do not know whether the property will last that as there seems to be something fundamentally wrong with the property.

The tenant's (reasonable) demands to fix the cracks cannot be actioned due to strata, exposing risk of tenant taking it further. The other owners don't seem to mind the situation so would expect an incessant amount of levies raised for this.

 

The problem you will have selling, is that any purchaser doing their DD will have a strata report done, which will outline all the problems - copies of quotes to fix cracking issues etc. On top of that it would show a history of special levies being raised.

What to do? List it for sale in the hope for some purchaser who does not do their DD? They're out there!
Cut your loses and sell at the best price you can get, would be my thoughts.

 

The irony of the 'sinking fund' not having enough in it to allow for the sinking.
Is it possible the foundations need repairs and could be covered by insurance depending on the cause?

 

Thanks! that's what I'm thinking too but sucks with all the fees involved and wasting time with it all.

Worth asking thank you From what I understand it's not covered under the insurance, I think the insurance chosen was not based on merit rather how much commission the strata company got.