If you've been hunting around for lucrative inner-city property investments, you have probably come across strata properties. These are (generally) apartment blocks where property owners have a legal responsibility to get together regularly and make decisions regarding the building. They also tend to come with restrictions on the changes owners can make to their properties, and generally include added surcharges to pay for administrative costs.
On the face of it, strata properties don't seem like a gold mine for investors. They may work well for tightly-knit communities and people with a deep sense of civic engagement, but they aren't geared towards investors who want to improve properties and sell them on for a profit or need to rent out their property to realise a regular income.
However, if you think this way, it's worth taking a second look. Here are some advantages of strata properties that you may not be aware of.
Strata Properties Can Have Added Attractions for Tenants
One of the best things about well run strata properties is the community feel they generate. This quality can make them more secure than purely private neighbourhoods, which helps to attract reliable tenants. Another lure for good tenants are the added amenities that strata properties often include. In many cases, residents pool their resources to provide facilities like pools and gyms, both of which can make finding reliable tenants easier. You'll have to pay a slightly higher surcharge, but it may well be worth it when you find a tenant who pays the rent on time and doesn't cause any damage.
Sinking Funds Share the Cost of Repairs
Amenities aren't the only shared overhead. Strata title properties should also have sinking funds in place that all residents contribute to. These funds are used to make communal repairs, keep the gardens in good condition, fix vital equipment like lights and lifts and generally maintain a clean environment. None of this can be guaranteed when all of the units in a building are private. Again, there's an extra cost, but it can save hassle when you need to fix a communal problem and help to maintain the value of your property.
Management is Simple With Body Corporate Services
The body corporate is the assembly of residents that makes up a strata community. In theory, residents are supposed to physically meet on a regular basis and approve any property changes or work on community areas. However, in many strata projects, much of the administrative burden is carried by professional property managers. Known as body corporate services, these professionals make it much easier to own and rent a strata property. As an owner, you don't need to sign documents every week or attend in person. Expert agents can report back if necessary, allowing you to take an arms-length approach.
Don't pass by strata properties. They may not give you total freedom to renovate and customise your property, but they have benefits that private homes and apartments don't possess - like extra amenities, clean communal areas and outsourced administration via body corporate services.