When you’re doing research into how to buy an investment property, you will undoubtedly come across the concept of “strata” or “strata title”. Understanding strata is critical if you are planning to purchase an investment property within a small block of units, townhouse complex or high-rise apartment development, because these types of property are subject to strata plans. Let’s look at four of the main things you should know about strata before investing in property.
1. What Is Strata?
Strata title was introduced over 50 years ago essentially as a way for property owners to be able to own an individual part of a property, while at the same time being able to share the costs and responsibilities of the common property in and around the building. Common areas can include driveways, gardens and landscaping, lifts, foyers and entertainment or recreation facilities.
Depending on your location this shared ownership is run through a legal organisation called body corporate, community association or a strata company. This body sets strata fees (or a strata levy) from the property owners, and the amount is decided each year at an annual general meeting.
2. What Is Strata Insurance?
Strata insurance, or body corporate cover, is a type of insurance that covers residential buildings. It is generally compulsory for owners to have strata insurance in each state in Australia, and it can help in the event of any legal liability claims that may occur. The insurance fees are usually paid as part of the owner’s strata fees.
As with any insurance, the actual costs will vary depending on a number of factors such as the type of policy and level of excess chosen by the owners’ corporation or body corporate, the building’s age, location and condition, the number and type of entertainment or recreational facilities within the development (such as swimming pools or gyms), and the type of property.
3. Property Management And Strata
Strata title may seem complex, and the regulations and legislation surrounding the responsibilities of property owners can seem extensive. Landlords can often feel overwhelmed with the mass of paperwork and schedule for attending body corporate meetings that they are faced with when they buy into a development.
This is why many professional property investors choose to use a property management company such as Ironfish to help them manage these aspects when they’re thinking about how to buy an investment property to boost their portfolios. A good property management company will be able to help inform you about your responsibilities as an owner, help you manage and organise the administrative side as well as help you with aspects of strata insurance.