Any real estate specialist worth their salt will be quick to tell you that when it comes to property maintenance it’s easier to stop something from happening in the first place than it is to repair once the deed has been done.
Whether your investment strata property is a new build or has been well lived in, even the most immaculately maintained apartment or townhouse is likely to need servicing or a revamp at some point.
And with one in five Australians owning an investment property, with almost one in three of us owning two or more investment properties, it is clear that taking a well-balanced and informed approach to budgeting for preventative maintenance is key to future success.
The property management team at Brisbane agency Clark Real Estate says left unchecked, minor problems will become bigger and more expensive problems later.
They liken preventative maintenance on an investment property to servicing of a car.
“You have the option to look after it and follow the recommended service schedule to mitigate any major issues, or you can choose to just drive it until something goes wrong with the understanding that this will usually require a bigger more expensive rectification job.”
One of the first things you will need to consider is how much to spend on your ongoing maintenance program for the apartment. While it’s important you allow enough of a budget to cover your costs, over budgeting on preventative maintenance for your strata investment may mean that you run short in other areas of strata ownership such as mortgage repayments, strata fees or rates.
Property experts like to apply the 1 per cent rule when it comes to budgeting for internal property maintenance. They suggest that your annual maintenance cost should equate to around 1 per cent of the property value each year. That means if the value of your property is $300,000, then your annual maintenance cost should be around $3,000.
The Clark Real Estate team says that while no one particularly enjoys paying body corporate fees, the best body corporates have a plan based on sound economical advice for maintaining common property, which helps to manage the sinking fund while protecting building value for unit holders.
“The under-performing strata [properties] have unforeseen expenses and underfunded sinking fund reserves. When things go wrong with common property there’s not enough funds to address them, problems worsen, causing headaches and blow out costs for unit holders.”
Senior Community Manager at Ernst Body Corporate Management, Rikki Slaughter, says the sinking fund is essentially a savings account for the Body Corporate for future major expenses as the building ages.
“Having a healthy sinking ensures that the future upkeep expenses of the scheme is efficiently accounted for. It makes good management and smart financial sense.
“This fund covers non-recurring maintenance expenses such as painting, tiling, plumbing, carpet and plant and equipment, or the purchase of new Body Corporate assets.
“Depending on the type of plan your strata property is under depends on what is a preventative maintenance expense for the owner to cover and what the Body Corporate Sinking Fund covers. These two obligations collectively align to ensure that properties hold their value from now into the future,” says Rikki.
Christine Turner, a property management specialist with Stockdale & Leggo, says there are a number of easily avoided costs when it comes to maintaining your property.
These include ensuring regularly replacing fixtures within your apartment such as light fittings, carpets, and window treatments, as well as kitchen appliances such as ovens and range hoods.
Painting or re-staining of balconies and other areas of your strata property that may be exposed to weather every six or 12 months is another way to ensure you are not met with a nasty surprise after a period neglecting your maintenance obligations of your investment property, Turner says.
When it comes to smoke alarms, the rules are different altogether.
Turner says there are very strict building regulations based around their placement within a property.
It is also deemed a landlord’s responsibility to ensure the upkeep and functionality of the smoke alarm including changing of batteries, she says.
“For this reason it is highly important to employ a registered smoke alarm company to mechanically test your smoke alarms on a yearly basis. These smoke alarm companies will ensure the placement of the alarms are in line with current regulations, change batteries and replace faulty alarms when necessary. They will then provide a compliance certificate which protects the owner of the property should any disasters occur and insurance claims are required.”
Looking after your property will help to ensure your property will look after you in terms of return. Should you need any clarification regarding owner responsibilities vs body corporate and common property responsibilities, speak to your local Smarter Communities representative for further details.