Before you purchase a strata unit consider the cost of owning that unit. I am not talking about your initial outlay such as the deposit, mortgage payment or even the full cash price. I am talking about the costs related to the maintenance fee that you are stuck with as long as you remain the owner of the unit.
A relatively low monthly maintenance fee does not necessarily mean you are getting a better deal compared to a strata with a higher fee. It’s what is included in the fee and the value of what you are paying for that counts. Below are four ways a strata corporation can get the best value for its owners’ maintenance fee.
Collect Property Tax
Include property tax in the maintenance fee and pay the tax for all units in the complex. In every parish, the National Solid Waste Management Authority (NSWMA) if requested, collects garbage for residential strata free of cost. Here is the catch, the property tax payment for the complex must be up to date. Your strata could realize a saving of $250,000 to $400,000 per year on your strata budget by relying on the NWMA to collect your garbage instead of a private company. To achieve full tax compliance of the complex and be eligible for free garbage collection, it is best to pay the property tax on behalf of all owners.
Insure the Complex
A strata that refuses to insure the common area may be guilty of being “penny wise and pound foolish” for two reasons. First, in the event of a disaster, the repair costs will be met by all owners. Secondly, mortgage institutions are refusing to finance units in uninsured properties. It means that an uninsured complex could dampen the sale price of your unit should you wish to sell, or the uninsured nature of the complex could become a deterrent for a prospective purchaser. That is a cost to you as you may not get top dollars had your complex been insured. An insured complex saves you money in the long run.
Install Individual Water Meters
Individual water meters give owners full control over the usage of the water supply to their units. No such control exists when the supply is from a communal water meter – one which serves the common area and the units. Where individual meters exists, you are accountable for what you use and the impact of waste is immediately felt, so residents tend to conserve. A faulty plumbing in one or two units can quickly add $20,000 to $50,000 to a monthly bill with a communal meter. Such an excess has to be paid for by all owners even though the excess may not have had anything to do with you. Individual meters save you money.
Create a Contingency Fund
A few strata corporations set up a contingency fund item in their annual budget and invest the proceeds in a fixed deposit accounts. The interest the account earns becomes an additional source of revenue for the strata corporation and provides a saving to all owners. The contingency fund pays for major capital expenditure such as painting the buildings, paving the parking lots or any major emergency. A contingency fund is an example of a cost saving measure in any strata budget.
Before you purchase a strata unit investigate the amount and use of the maintenance fee. If you already own a unit in a strata corporation, persuade your Executive Committee to adopt some or all of these cost saving measures and help save on your maintenance fee.