Podcasts about owners corporation

Millions of Australians live in apartments and the number is set to grow as housing density increases in our biggest cities. Being part of a strata scheme is part and parcel of owning an apartment, but many owners are not taking an active interest in how the blocks are being managed. A Four Corners investigation has revealed a rot at the heart of the strata management industry that's draining the funds of owners. Today, investigative reporter Linton Besser shares stories of greed in many of Australia's strata firms and explains why it's worth owners' time and effort to scrutinise how their money is being spent. He highlights the systemic issues within strata management, including phantom fees and mismanagement of funds. The investigation uncovers shocking stories of financial exploitation and neglect, raising the need for stricter regulations and oversight.Featured:Linton Besser, Four Corners reporterKey Topics:Strata managementApartment livingHousing densityFinancial exploitationStrata committeesPhantom feesOwners corporationStrata regulations

Like a wayward teenager who stayed out too late, Airbnb is creeping back into our lives, hoping to avoid our parental wrath, but finding a less than loving reception waiting for it. As we discuss in this week's podcast, the holiday/retirement town of Noosa, on Queensland's Sunshine Coast, has had enough of badly behaved holiday renters' shenanigans. In a few weeks the shire council there will bring in a “rapid response” hotline on which neighbours can report disruptive behaviour – that's the old-fashioned version of disruption when it was a bad thing – and a designated responder will be expected to attend and deal with the problem. Also this week the University of NSW has issued the second stage of a comprehensive report that shows that wherever Airbnb and other holiday letting agencies are most active, residential rents go up and housing availability goes down. Before you file that in the “well, d'uh!” folder, bear in mind that this is the kind of credible information that politicians are obliged to consider when they are devising their policies in the great juggle of housing affordability, rents, investments and income and jobs from tourism. Perhaps in this pre-post-pandemic period, we should reflect on what happens in your favourite cafes when the waiters and baristas aren't around; now because of covid, but in the future when they are driven out by Airbnb-inflated rents. The forces closing in on Airbnb and holiday rentals generally will be the topic of this week's Flat Chat column in the Australian Financial Review but you can hear a sneak preview here. Also in this week's podcast we look at the 50-storey Sydney apartment block where the intercom hasn't worked for more than four years, meaning residents can't get deliveries and have to travel down in the lift to let visitors in. In the podcast we ask, if overseas students can rig up a mobile phone to trigger the access button on their overcrowded flat's intercom, how come the Park Regis owners corporation say commercial operators can't be trusted to fix the system? And, finally, prompted by this post to the Forum, we examine the standard strata management contract and flag the idea that it needs to be fairer and maybe even a standard mandatory document, like the residential rental lease. TRANSCRIPT IN FULL Sue  00:00 Suddenly, there's a lot happening, especially around Airbnb.  Yes, it's been a bit quiet for a while, hasn't it? Jimmy  00:05 Yes, I thought it had kind of settled, and because everybody went away, a lot of the Airbnb properties ceased to be and went back into the residential rental market... We'll be talking about that. We'll be talking about people saying that the standard strata management contract needs to be revised and we're going to talk about the woman who lives in an apartment, where she has to go down 20-odd flights and lift, to let people in, because the Owners Corporation won't fix the intercom system. Sue  00:41 Well, they say they can't, but the fact is, it's been broken for about four years, I think now. It's a pretty bad state of affairs. Jimmy  00:49 I don't believe that it is impossible to fix things like that; it's just difficult and it's one of these things that can find its way into a too-hard basket, but we'll talk about that, in what is going to be a pretty full podcast. I'm Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review. Sue  01:11 And I'm Sue Williams and I write about property for the Domain. Jimmy  01:14 And this is the Flat Chat Wrap. [MUSIC] Jimmy Airbnb, you just can't keep them out of the news. I think we discussed last week (briefly), their problems with riot police being called to an apartment block. In fact, a couple of apartment blocks (one of them in Ultimo), where 100 people were in a flat-wrecking party. Sue  01:50 Oh, god, yes, it was horrendous. But yes, they are back in the news this week again,

In the latest Flat Chat Wrap, listeners (and readers) get a preview of this week's Fin Review column which will examine the issue of access to other owners' email addresses. Do secretaries' and strata managers' oft-stated desire to maintain owners' privacy sometimes stem from not wanting ordinary owners to communicate? How do you balance the benefits of open communication with the risk of being bombarded by abusive messages from serial pests. And is it even legal to withhold email addresses that are on the records of strata schemes? Also on the podcast, we look at the drift back to offices from working from home, and ask if where we work will ever fully return to pre-pandemic patterns. And Sue gets a sneak preview of the upmarket renovation of the controversial Sirius building, which was once the public housing block with the best outlook in the world. That's all in this week's Flat Chat Wrap. TRANSCRIPT IN FULL Jimmy  00:00 Do you get a lot of emails that you really don't want, Sue? Sue  00:03 Quite a lot, Jimmy, quite a lot. Jimmy  00:05 One or two a day? Sue  00:08 Maybe about 30. Jimmy  00:10 A day? Jimmy  00:11 Today, we're going to talk about something that's been discussed on the Flat Chat forum, which is, should your strata manager or your secretary, give out all the email addresses for everyone in the building? We're also going to talk about working from home, as people might be facing a conflict of whether or not they want to do that anymore. And, we're going to talk about your visit to the Sirius building. Sue  00:11 Yes. Sue  00:39 Yes, probably one of Sydney's most high-profile apartment buildings. Jimmy  00:42 It is. I'm Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review. Sue  00:48 And I'm Sue Williams. I write about property for Domain. Jimmy  00:51 And this is the Flat Chat Wrap. [MUSIC] Jimmy You think everybody in an apartment block should be able to see everybody else's email addresses, is that right? Sue  01:14 Yes, it is, because I think we have to be transparent and it can be so frustrating, trying to get in touch with neighbors, or there's a big issue, and you can't actually communicate with anybody else, so I think it's really important. I mean, I think the people who say we shouldn't give out our email mail addresses are always saying "oh, yes, we'll get 100 emails from all these people we don't want," but in reality, you get very few emails from other people in the building. You might get just a few every year, about issues that they feel are really important and I think it's important to try and keep in touch with your community, about those kind of issues, really. Jimmy  01:49 So just to clarify, the law in most states says that owners in an Owners Corporation, are entitled to see all documents that relate to the Owners Corporation. In New South Wales, you are required by strata law, if you have an email address, to register it with the Owners Corporation. There is no requirement for that in Victoria and the law says that the owners are entitled to see anything that's on the register, which is the physical addresses of people. Often, those physical addresses are actually the addresses of their agents, or their registered business. So, there's a very good chance you could be sending letters to people and they don't get there. Sue  02:35 That's right, because often, buildings won't allow you just to put a letter in somebody's mailbox; you actually have to post it, which seems ridiculous, if you're trying to get in touch with the person next door or something, that you have to go to the post office, buy a stamp, print out a letter, post it, wait for the post, which is a bit uncertain these days; it takes ages. Jimmy  02:55 And there's also the fact that the people that you want to contact, may not actually be at that address,

This week in the podcast we take a long, hard look at the proposals – well advanced, it must be said – for every strata scheme in NSW to register all their vital statistics on the state's new Strata Hub. What kind of information will they want and why do they want it?  And what happens if old Geoff, the rusted-on secretary in Flat 4b, forgets to fill in the form or just doesn't think it applies to your strata scheme . Are there penalties for failure to comply with this Big Brother-like intrusion into our lives? (Yes.)  And how much are they? (A lot … plus GST.) NB: By “Big Brother” I mean the state snooping in the novel ‘1984' by George Orwell, not the imprisonment of wannabe celebrities for our voyeuristic pleasure. And if you think this only applies to NSW, just wait. If it works it'll be coming your way before you know it. Anyway, a couple of minor corrections: You will find all the links to the various portals where you can post your observations and fill in your surveys here in this story on this website. And the fine for not updating your information will be up to $2200 not $2500 as only slightly mis-stated in the podcast. LISTEN HERE Meanwhile, as we emerge from our Covid cloud, it seems we can get back to Australia's other favourite topic of conversation – apart from the weather – and that's property prices. And to get your water-cooler chats going (are we allowed to have them yet?) Sue has discovered a city where apartment prices have gone up 25 per cent in the past year.  Want to take a guess which one? And finally, we discuss the measures in the new NSW short-term letting registry that should put paid to sneaky tenants sub-letting their apartments without their owners' knowledge or permission. That's all in this week's Flat Chat Wrap. TRANSCRIPT IN FULL Jimmy  00:00 Something big is happening in strata, in New South Wales. Sue  00:03 Good! Is that a 'good' big, or 'bad' big? Jimmy  00:07 That remains to be seen. Fair Trading is creating what they call a 'strata hub,' where they are putting together all the information they can gather about apartment blocks in the state and they're making it compulsory that every strata scheme has to provide a certain amount of information. Sue  00:29 Is this coming from the Building Commissioner's office? Jimmy  00:31 No, it's coming from, I think, Victor Dominello, who is a bit of a... Sue  00:38 Champion of apartments. Jimmy  00:40 I was going to say, a data geek. Sue  00:44 Maybe, the two coincide, sometimes. Jimmy  00:46 We'll be talking about that and we're going to be talking about some strange movements in apartment prices. I'm Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review. Sue  00:57 And I'm Sue Williams and I write about property for Domain. Jimmy  01:00 And this is the Flat Chat Wrap. [MUSIC] Jimmy Out of the blue last Friday (as often happens, just before the weekend), Fair Trading dropped a bombshell, which is that they are going to be conducting, initially, discussions leading to legislation... New regulations in strata, requiring strata schemes to, basically file all their details. Sue  01:43 Is this out of the blue? I've never heard of this before. Jimmy  01:46 Well, apparently, it's phase two of a three phase process. Sue  01:51 What was phase one? Jimmy  01:52 Phase one was the bond's thing, you know, the building bond. Sue  01:58 What's phase three? Jimmy  01:59 Phase three is; I'll just have a look! Phase three will expand Owners Corporation reporting to include further building compliance information, like the annual fire safety documents, being uploaded onto the web. Sue  02:19 Wow, this is pretty immense. Jimmy  02:21 Oh, there's phase four, in which we'll see the strata hub continuing to evolve, branching out to include information and community precinc...

Is it a series of cover-ups or just another run of cock-ups? Either way NSW Health is making a mess of its covid alerts when it comes to apartment blocks. Whether it's deciding not to let us all know that there are major outbreaks in public housing schemes – and asking residents not to tell anyone about it – or not alerting neighbours in privately owned strata blocks that there are cases in their buildings, the response has been ham-fisted. An editorial in the Sydney Morning Herald from the Owners Corporation network has outlined just how dangerously incompetent the NSW government's approach to covid infections in apartment blocks has been. And the worst thing is the confusion it has created, with some buildings over-reacting to a potential threat, others fail to take it seriously at all, and a huge chunk of the strata community misses out altogether. LISTEN HERE Meanwhile we look at a story from the forum which reveals an issue that comes up much more often that you might expect: an owner taking over common property for their own benefit, increasing the size of their apartment and expecting not to have to pay for it. Then we look at how introducing some greenery into your strata life can lower your stress and make you a nicer person to be around in the last of our locked-down days (we hope). And finally, Jimmy has his annual pre-summer rant about balcony barbecues and discovers that a lot of the suggestions he made ages ago about limiting the smoke and smell intruding on other apartments – which were howled down by outraged neighbours and dismissed contemptuously by his block's committee –  have quietly found their way into a code of conduct. That's all in this week's Flat Chat Wrap. TRANSCRIPT IN FULL Jimmy  00:00 We had two picnics, this weekend. Sue  00:01 Yes, we did! It was hard work, wasn't it? Jimmy  00:04 It was very hard work, because there was a lot of people, down there in the park. Sue  00:08 It was like Christmas Day, really. I think there was a real celebratory mood though, which was really lovely. Jimmy  00:12 Yes, it was. There were people walking around; they'd take their masks off to eat and forget to put them back on again. Sue  00:20 It kind of felt like we were out of a pandemic, when really, we've still got a bit to go, I guess. Jimmy  00:25 And there was police wandering around, not bothering anybody. It was pretty good. I'm not a big fan of picnics, as you know. That's my two picnics for this year; possibly this decade. Sue  00:37 And that's why it was such hard work, because Jimmy doesn't like sitting on the ground. We ended up having to cart five chairs, a table; and then we had knives and forks and plates and stuff, whereas most normal people would be happy with the little bag of sandwiches and on a rug for the ground... Jimmy  00:53 But our friends said it was the best picnic they'd ever had, or maybe the fanciest picnic they'd ever had. It's not sitting on the ground that bothers me, it's getting up. That's the issue. Today, we're going to talk about the ongoing issues with notifications of infections of the COVID virus in apartment blocks. You've got a nice uplifting story about greenery and I'm going to dig into the forum, because there's a story that's come up there, that's really quite interesting and it's one that comes around quite a lot. I'm Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review. Sue  01:36 I'm Sue Williams and I write about property for Domain. Jimmy  01:39 And this is the Flat Chat Wrap. [MUSIC] Jimmy The Owners Corporation Network; the spokesperson on COVID, Jane Hearn, got an op-ed in the Sydney Morning Herald, this morning. It's basically saying the government has really dropped the ball, in terms of notifying residents of infections in their buildings and they're also being incredibly selective about which buildings they choos...

With more of us trading backyards for balconies and courtyards; apartment and townhouse living has become the norm for more Australians. At the same time, budget constraints mean that many investors buy apartments rather than houses. And since there is no doubt that apartment living is going to become more prevalent moving forward, you really need to understand your rights and responsibilities when owning an apartment. Where does your apartment end and where does the common property start? Who is responsible when things go wrong in the common areas? And what six things do you need to know before buying into a strata building? That's what I'm going to discuss in today's show with strata law specialist Amanda Farmer. The inspiration for this chat came from an article I recently read about a Melbourne schoolteacher who thought she done all her homework when buying her first property. She looked around her chosen area in Melbourne is northwest, found an apartment building she liked, and commissioned to building inspection report before she bought the property. But now two and a half years on, she's facing financial ruin. Her block's owners are taking its builders to court over allegations of severe defects in its construction, and she's having to pay for both repairs and her share of spiralling legal fees. Sure, she had a pre-purchase report done by an expert – but he only examined her apartment, and nothing of the building in which it sits, or its communal areas, which all owners are responsible for. She didn't realize, either, that she should also have ordered a strata report that would have revealed, through the minutes of the Owners Corporation, the ongoing battle with the builders. This is a tragic story – a 32-year-old financially ruined through owning the wrong apartment.  But it's a story I've heard before, so I hope you're going to get a new insight into what you need to do before buying into a strata property in my chat with Amanda Farmer today. What you need to know when buying a strata property If you're considering buying or already own an apartment, townhouse, or villa unit, whether as a Let's begin with the obvious – what is a Strata unit? Effectively it means: you own your unit or apartment as well as sharing ownership and responsibility for common property if you own your unit, you are automatically a member of the owner's corporation which has responsibility for common property and makes key decisions affecting the strata scheme you contribute to the cost of running the building through paying quarterly levies you also have to pay money into a capital works fund, for future long-term expenses such as painting the building or replacing guttering there will be lifestyle restrictions in a strata scheme. 6 THINGS YOU ABSOLUTELY MUST KNOW ABOUT WHEN OWNING A STRATA PROPERTY:  1) By-laws  Includes pets, air conditioning units, noise, renovation works, hard flooring, washing, landscaping, use of swimming pool/gym, short-term letting, rules around moving in or out  2) Levies  Quarterly levies can range anywhere from $200 per quarter for a small, self-managed building (ie: with no strata manager's fees) to in excess of $5,000 per quarter for a city penthouse in a luxury harbourfront building with concierge service and numerous facilities.  3) Lot property vs. Common property  When you purchase a unit in a strata building, you are essentially purchasing air space. That air space is known as your “lot”. Anything outside of your lot is either someone else's lot or “common property”.  4) Meetings  Important decisions are decided in meetings: eg - whether to add to, alter or erect a new structure on the common property for the purpose of improving or enhancing the common property.  5) Strata manager  The duties of the strata manager include receiving and distributing correspondence, issuing levy notices, arranging tradespeople, keeping the owners' corporation's books and records in good order, including financial records.  6) Committee A decision of the committee is taken to be a decision of the Owners Corporation, though a committee cannot decide on anything that can only be decided by the owners in general meeting.  Links and Resources: Michael Yardney Amanda Farmer- Director Your Strata Property Get access to my exclusive Special reports library – a bonus for listening to my podcast As our markets move forward why not get the team at Metropole to build you a personalised Strategic Property Plan – this will help both beginning and experienced investors. Join us at Wealth Retreat 2021 – click here to find out more Shownotes plus more here: 6 tips for investors when buying a strata property with Amanda Farmer Some of our favourite quotes from the show: “I'm actually proud that Australia was the country that was the beginning of strata law.” – Michael Yardney “I know that if I buy a house, I've got to do a building and pest inspection because it's my responsibility – if there's termites or if there's rising damp, I've got to pay for it. What if I buy an apartment?” – Michael Yardney “Jim Rohn taught me that neglect is like an infection.” – Michael Yardney PLEASE LEAVE US A REVIEW Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

With property prices soaring but houses outstripping apartments, as detailed in this story, we try to make sense of it all. Why is the gap between the cost of houses and apartments growing, even though apartment prices are coming back up to pre-pandemic levels. And will the current apartment glut in Melbourne – with consequential 11 per cent drops in rents – flip to a shortage, soaring sales prices and runaway rents as soon as our borders reopen and short-term rentals are re-listed? Who knows?  But we try to make sense of it all. LISTEN HERE Then we visit the vexed question, raised on the Flat Chat Forum, of whether or not it’s legal for your owners corporation or strata committee to make donations to political campaigns or fighting funds – even those related to strata issues. If not, is there any way owners can support campaigns and movements they agree with, but not all of their neighbours do? And then there’s another old chestnut form the forum – does your owners corporation have a duty of care to enforce by-laws? We say yes and explain why. That’s all in this week’s Flat Chat Wrap. TRANSCRIPT IN FULL Jimmy  00:00 House prices seem to have gone nuts all of a sudden. Sue  00:03 They certainly have and unit prices are going up as well, but not by as much. Jimmy  00:07 And in some places, are actually going down, I believe. Sue  00:10 Yes. In some places they are going down; in areas where there's an oversupply. Jimmy  00:14 Okay, well, we're going to be talking about that; we're going to be talking about something that's come up on the Flat Chat forum, about whether or not your Owners Corporation can make donations to campaigns. Sue  00:26 That's interesting. Jimmy  00:27 And we'll be talking about an old chestnut, about whether Owners Corporations have a duty to act on their bylaws. I'm Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review. Sue  00:41 And I'm Sue Williams and I write about property for Domain Jimmy  00:43 And this is the Flat Chat Wrap. MUSIC Jimmy Okay, Sue, you've been keeping an eye on house prices. Part of your many duties, writing for Domain. Sue  01:06 Yes, that's right. It's been kind of quite hard to keep your eye on them all the time, because they're moving so quickly. Jimmy  01:11 It's kind of surprising, isn't it? That we're, you know, we've just come out of there so we haven't even properly come out of the pandemic. Sue  01:20 But we just seem to be valuing our home so much more now. I mean, most most of us are now working from home a lot more. Time in lockdown has allowed us to look at our houses, and homes and apartments and think, what do we need? We need more space? Are we thinking of relocating? Actually spending a period, thinking about what we want out of life. Jimmy  01:40 And what effect is this having on apartments? Sue  01:43 It's interesting, because house prices, as you so rightly say, have gone up enormously. Apartment prices have generally gone up as well, but by nowhere near as much. So, it does mean with a growing gap between prices;  between houses and apartments, more and more people are having to look at buying apartments, when maybe once they would have wanted to go and buy houses. So, there's gonna be a lot more new people moving into apartments, because, you know, it makes financial sense as well. We kind of all really adore the apartment lifestyle. Some of these people have never lived in apartments before, so they're not really in a position to be able to appreciate that. But, they're looking in terms of finances and when you look at the Sydney median house price now, it's hit a new record,  $1.31 million, which is incredible. The unit median is now $754,000. So, last year, houses cost, on average 55% more than apartments. This year in Sydney, they cost 74% more than apartments. Jimmy  02:02 Wow!

One of the advantages of investing in property is that you can make improvements to enhance its value and consequently your personal wealth. A disadvantage is that dwellings require ongoing maintenance, and this expense reduces an investment property’s cash flow.Minimising or avoiding maintenance costs is often a false economy. Maintenance cannot be avoided, only deferred. Problems either remain unresolved or they get worse. Either way, you will have to complete the maintenance at some stage or accept a lower (eventual) sale price, as most potential purchasers will factor in these costs.How much should you spend on maintenance and improvements?As a general rule-of-thumb, it is a reasonable expectation to spend circa 0.40% to 0.75% p.a. of a property’s value on ongoing maintenance. You may not need to spend that each year, but over a 10-year period, that would not be an unrealistic expectation. Houses tend to require more maintenance than apartments.Items that increase rental incomeIt is important to ensure that your property is in good tenantable order so that its comparable to other properties in the surrounding area. Also, it is wise to look for items that will enhance or maximise its rental income. Such items tend to include:§ Air conditioning, particularly in apartments, is highly desirable and can often increase your weekly rental income by up to $20. That is a pretty good return on investment considering a split system cost around $3k to $4k to install.§ New carpets.§ Re-grouting tiles in kitchens and bathrooms. Not only is this good preventative maintenance, but it can have a positive impact on a property’s appeal.§ Sprucing up bathrooms and kitchens. It is advisable to maintain both the kitchen and bathroom to the same standard, otherwise it looks a bit odd. These projects can be completed cost-effectively by replacing the flooring (e.g. new vinyl), painting cupboard doors and replacing handles, replacing benchtops, appliances, tapware and so on. Avoid full kitchen refits where possible.The standard of any maintenance and improvements must be in-keeping with the area and in line with tenant expectations.Items that increase the value of a propertyCompleting maintenance typically preserves a property’s relative value. However, completing improvements often increases a property’s value, although its typically a once-only improvement.Some examples of improvements include renovating kitchens and bathrooms, improving natural light (e.g. through painting, installing skylights, etc.), adding a bedroom (for houses). These enhancements can improve a property’s value by more than their cost.Non-cosmetic expenses such as rewiring, reroofing, plumbing and so on tend to have little to no impact on value, but sometimes they are unavoidable.Don’t go overboardYou cannot expect a tenant to take good care of your property if you don’t. Therefore, it is important to maintain your property to a good standard, commensurate with tenant and potential purchaser expectations, so that you attract quality tenants.However, improving a property is a financial decision, not an emotional one. You don’t need to put in marble kitchen benchtops and European appliances. It must be durable and attractive whilst also being cost-effective and good value for money.Apartments: common areas and facadeIf you own an apartment, you will know that the Owners’ Corporation is responsible for maintaining common areas and the building.It is important that these are adequately maintained to improve street-appeal, security and structural integrity. Also, where possible, an Owners’ Corporation should seek to improve amenities so that they are comparable to contemporary apartments e.g. installing video intercoms for additional security, renovating stairwells to make them more inviting, resurfacing driveways and so on.Tax treatment of maintenanceThe cost of repairs and maintenance are generally tax-deductible in the year they were incurred. However, some expenses are of a capital nature and must be depreciated over their useful life (see table 3 beginning on page 39 in this ATO guide) including:§ Replacement of an entire structure or unit of property such as rebuilding a fence, replacing a stove; and/or§ Improving an item beyond its original condition, renovations, extensions and alterations; and/or§ Initial repairs after acquiring the property.Your registered tax agent can advise on these matters.It’s an investment, not an expenseUndertaking such improvements are often positive from a cash flow perspective.For example, if installing a split system air conditioner costs $4,000 and improves your rental income by $10 per week, I estimate you will be better off by $324 p.a. after tax:Additional income after tax$276 ($10 p/week less 47% for tax)Plus tax saving (from depreciation deduction)$188 ($4,000 over 10 years @ 47%)Less interest costs$140 ($4,000 @ 3.5% p.a.)Net benefit after tax$324This isn’t going to change your life, but at least it’s not impairing your cash flow and its likely enhanced the value of your property. Overall, it’s an astute investment, not an expense.How to fund maintenance costsWhere possible, it is always advantageous to fund all major maintenance and renovation projects via additional borrowings. Even if you have sufficient cash savings, you are better off to increase your borrowings and retain your cash savings in a linked offset. This doesn’t cost you more interest, but the benefit is that you maximise your future tax deductible loan.The simplest way to provide for any future known and unknown expenses is to include buffers into loans. For example, when a client purchases an investment property, we always add a buffer of $20k to $50k into the loan, which they can draw on whenever required.How do you arrange it?Your property manager can arrange competitive quotes to undertake minor repairs and improvements such as installing a split system.However, for larger projects such as kitchen and bathroom renovations, it is best to outsource these to businesses that specialise in completing these projects as they maintain relationships with various trusted tradies.When to minimise maintenance costsIf you have a house that is very rundown, it is likely that any potential purchaser will bulldoze the dwelling and rebuild. In this circumstance, given your property is predominantly land value, it would be wasteful to spend a lot of money on maintenance and improvements. As such, the best approach is to spend as little as possible whilst doing enough to keep it in a tenantable condition.You’ve got to give to receiveLooking after your property and looking for ways to enhance its value and appeal will serve you well in the long run. It will help minimise vacancy, maximise rental income and enhance its capital growth prospects. Property maintenance and improvements are an important ingredient to successfully build wealth through property investing.Acknowledgment: Thanks to Jordan Telfer from Wakelin Property Advisory for his input into this blog.

In this week’s podcast we catch up with what’s happening at Mascot Towers as owners in the ill-starred building prepare for their day in court. Specifically, they will be pursuing legal action against the developers of the apartment block next door, construction of which, they claim, undermined the foundations of their block. Meanwhile they are facing tens of millions of dollars in defect rectification bills to the point where the repairs may cost more than the block is worth. And the people next door say they have pictures of cracks in the Mascot building before they'd so much as turned a sod. Then we talk to Scott Aggett a vastly experience real estate agent and ace negotiator with his company Hello Haus on some of the highly developed tactics that have seen him buy and sell 27 properties just for himself. Scott is a hired gun for people who think they can get the property they want for less, but aren’t sure how to do it. His biggest success?  Saving a buyer $800,000 off the purchase of an apartment in London. It’s a fascinating interview which includes an insight into the classic error single women make when they are negotiating property sales or purchasers Listen Here As usual these days, our podcast is available as a transcript, interpreted by a computer, then made sense of by a human. Transcript in full Jimmy 00:00 I was talking to a lawyer the other day, about a building with a large rooftop. The Owners Corporation claim that there's efflorescence (that’s salt coming up from underneath the tiles), ruining the tiles on the rooftop and he said they'd spent something in the region of $260,000 on various experts, and lawyers’ fees to take this case against the developer. He said then the developer turned up with their expert witnesses and said that the efflorescence was coming from cheaply-made planter boxes on the rooftop. So, the developer said, “okay, my bad. I'll give you $9,000 for new planter boxes.” Sue  00:48 Oh, my god. Did the developer put those planter boxes up there, then? Jimmy  00:52 Yes, they put them up there. Presumably, they're saying “okay, yeah, we shouldn't have put such cheap planter boxes, so yeah, we'll replace them. Off you go.” Sue  01:01 Oh, my god. Is the damage still there? Jimmy  01:04 The efflorescence… You can scrub it off the surface, but those salts (if you don't cure the problem), keep coming up through the tiles. So, if there is no problem underneath the tiles, then it's going be okay. Sue  01:20 Why didn’t they say that before? Why didn't the other side's expert witness ever even look at that? Jimmy  01:25 You wonder. We're going be talking about defects and court cases, because you've been following up on the Mascot Towers’ story. And we're going to meet somebody who makes a living from negotiating property prices down. I'm Jimmy Thomson. Sue 01:42 And I'm Sue Williams. Jimmy 1:43 And this is the Flat Chat Wrap. [MUSIC] Jimmy Mascot Towers, Sue; you've done a story for the Sydney Morning Herald, Domain? Sue  02:04 That’s right. I think we were all wondering what happened to Mascot Towers, because it's been 18 months now, since all those owners were evacuated from the tower and you kind of wonder what's happening. I hadn't heard anything for a while, so I put in a few calls. It turns out that they're having their day in court, next week, on the 11th of December. The case is finally getting to the Supreme Court, after all this time. It's the owners of Mascot Tower versus the developers of Peak Towers, which is the building next door. You’d probably remember; they were evacuated because the building was starting to sink, and they said it was because the developers of the building (which is just adjacent to it), had been tunneling down for this… Jimmy 2:50 Digging down for a carpark. Sue 2:51 That's right, for a basement carpark and had tapped into the underground water table...

There are two major strands to this week’s podcast. The first stems from a question raised in the Flat Chat Forum, about an apartment owner who wants to install a stairlift – one of those seats that trundles up a staircase – in a narrow common property stairwell. It's for his elderly mother, so you have some sympathy, as you'd have for the other owners who had to squeeze past the rail every day. Listen Here Now the plusses and (many) minuses of this proposal are thrashed out in the Forum but here in the podcast, we have come up with a cunning plan. Depending on the structure of the block, owners might be able to install a small passenger lift on the outside of the building for between $100k and $150k.  Ouch, I hear you say. $150k? But get this, the value of EACH apartment that benefitted from the lift might easily go up by about the same amount. So say you had six apartments (excluding the ground floor units) who each contributed $25k – about the cost of a bathroom renovation – you could raise the value of every upstairs flat by about four times that or more ... and make your lives a lot easier. Of course it would depend on the layout of the block –  the stairwell would need to have one external wall – and by-laws and what not.  But the point is, it’s do-able and the owner in the Forum story would be able to get him Mum up and down the stairs without any trouble at all. The other major part of the podcast is a chat with Karen Stiles, the Executive Officer of the Owners Corporation network. She is working with NSW Minister Victor Dominello to create a register of every strata scheme in NSW, including their major points of contact, whether it be the secretary, chair or strata manager. It's one of those ideas that's both radical and logical - probably the two main reasons why it hasn't been done before. There’s all that and more in this week’s Flat Chat Wrap. The transcript, in full Jimmy  00:00 This is a momentous occasion. Sue  00:02 Really? Jimmy 00:03 Believe it or not. This is the 100th podcast. Sue: 00.07 Wow. Jimmy 00:08 We have done 100 of these things. Sue  00:10 That's incredible. Congratulations, Jimmy. Jimmy  00:13 It means we've been doing it for almost two years. Sue 00:15 Wow. It's gone quickly, hasn't it? Jimmy 00:18 It has, and, and the numbers of people listening are slowly growing. Sue  00:23 Fantastic. Thank you very much listeners. Jimmy  00:25 Yes, thank you and to help us celebrate her 100th, pass it on to your friends. Get more people listening; that would be very cool. If you enjoy it, your friends will probably enjoy it too. This week, we have an intriguing story about somebody who wants to install a stair lift, where we suspect no stair lift should be installed. And we'll be talking to Karen Stiles, the executive officer of the Owners Corporation Network. I'm Jimmy Thomson. Sue 00:56 And I'm Sue Williams. Jimmy 00:57 And this is the 100th Flat Chat Wrap. [MUSIC] So here's the scenario that was posed on the forum. Older building, narrow stairs; an apartment on the third floor. The owner, he’s put up a bylaw to give him permission to install a chairlift; a stair lift. They call it stair lift, not a chairlift. That's what you use in ski resorts. It's not quite as elaborate as that. Sue  01:37 So that's up the fire escape, up the fire stairs? Jimmy  01:39 No, no, no, no, it's in the commonly used general staircase thing. I don't think there are fire stairs. Sue  01:47 Oh, okay. Well, there wouldn't be I suppose, would there. There’s just one, one staircase. There’s only fire stairs if you've got a lift. Jimmy  01:53 So he's got a situation where there's 16 apartments, or 18, 12 in one block, and six in his block, but it's all the same strata plan. And he's worried that the 12 people in the other block won't really care about what's happening in his part...

It’s renovations all the way in this week’s Flat Chat Wrap as we chat about a Forum post asking what can be done about a disastrous and unauthorised renovation, now that the owner is planning to sell, bodgy renos included. That’s one end of the spectrum where a major and mostly illegal renovation has been allowed to continue without so much as a “by your leave” let alone a by-law. At the other end of the reno rainbow, an old chum has called up to ask about the work she wants to do in her flat where the committee has had the plans for weeks but have only now decided they need to have a general meeting to approve them. Not only that but they want another 17 days to give notice to owners while she has tradies all set with their Makitas revved up and ready to go. Do they really need a general meeting (she doesn’t need any by-laws)? And if so, how could it have been avoided? Listen here And finally we talk to our own project manager for our bathroom renos, Chris Triantis of CBT Projects, and ask him all the truly searching questions like: What's the price range for an average bathroom reno?How long does an average bathroom reno take?What are the biggest challenges for the home owner (especially in apartments)?What is the deal with waterproofing and why is it so hard to get it right?Tiles, paint, plaster or glass - what's the best wall covering?Is light better than dark for wall colours?What's the appeal of Venetian plaster?Do you tell people if you think they're making a design error?When it comes to fixtures and fittings, do you get what you pay for or are you just paying for the brand name?With wall-hung WCs, why can't you just replace an old WC with a new model from the same company?Niche or no-niche?Underfloor heating?Have you ever had to go in and fix someone else's bad reno? All that and more in the Flat Chat Wrap. Transcription in full. The following transcription is a bit patchy. Our various accents almost defeated our transcription service, hence the delay ... anyway, here's a picture of them at work ... enjoy. Jimmy  00:00 I got a call this afternoon from a blast from the past. Remember Louise who used to do Urban Cinefile. Sue  00:08 Oh , I certainly do. Jimmy  00:09 So guess what? She's doing a renovation. Sue  00:12 Oh, good luck to her. Jimmy  00:16 And we're going to be talking about renovations this this week. But I thought it was ironic. She's in a situation where she put through all her plans weeks ago. But then there's been a change of membership and the committee and there's been a new strata manager come in. And they've just told her I think that work is supposed to start this week. And I've just told her now we need to have 17 days notice for a general meeting to approve, Sue  Oh, no. And Strictly speaking, they don't need a general meeting, but they're going by the absolute letter of the law because their strata scheme, their Owners Corporation has never done the thing that most owners corporations do at their AGM, which is to say, the committee can take decisions on behalf of the general meeting. Sue  Wow. Jimmy They can't do bylaws or special resolutions or anything else. They say most buildings like ours and 95% of the buildings in NSW. They say the committee can make decisions on behalf of a general meeting. They’ve never done that formally. And so they're saying they have to have a general meeting even though the law doesn't require by-laws Sue  01:27 Well,   because that that little thing is on most AGM notices I’ve seen, you kind of think I never really take any notice of it. But it shows how crucial it is. Jimmy  01:38 Well, it can be if somebody gets a bit nitpicky anyway, later on, we'll be talking to somebody whose business it is to do renovations in apartments and in houses. That's ChrisTtiantis. I'm Jimmy Thomson. Sue  And I'm Sue Williams. Jimmy

People who don't care about pets in apartments shouldn't switch off just yet, regardless of how bored you are with the whole issue. It has implications for everyone in apartments, whether you have pets or not, as you may discover when your upstairs neighbour starts stomping around on their new, cheap timber floor. Letting ourselves off the leash this week, we also explore why Sydney's rents are going down a lot in some areas but up even more in others. Listen Here And we look at the fuel of the future and ask why we aren't pumping money itnto its development right now. But first we ask strata lawyer David Sachs of Sachs Gerace Lawyers, what are the far-reaching consequences of the Appeals Court decision last week in the case between Jo Cooper and the Owners Corporation of the Horizon building in Sydney - that have nothing to do with pets. Basically speaking, the NSW Court of Appeal ruled that Owners Corporations can't pass by-laws about what an owner does or has in their apartment if it doesn't impact on other owners' right to peaceful enjoyment of their lot. More to the point, there are remedies in strata law to pull owners into line if they get it wrong so pre-emptive by-laws that assume the worst are considered "harsh, discriminatory and unconscionable" and therefore invalid. What does that mean for other by-laws? We ask David the following questions in our podcast chat this week: Does the Court of Appeal ruling mean all no-pet bylaws are now defunct?Can buildings still impose restrictions on the type and size of pets?Can they ban pets from common property?Can they require owners to carry pets across common property?What implications does the ruling have for other by-laws?Will we expect more issues to be taken to NCAT e.g. when pets turn out to be a nuisance?Is NCAT up to handling an increased load of (predictably) emotional and contentious cases.Will the definition of "nuisance" need to be redefined in the current review of strata law. David's answers are authoritative and enlightening and he also takes time to support the people we routinely lambast in these pages - the NCAT Members who sit in judgement on our trails and tribulations. After that, Sue gives us a roundup of the areas of Sydney that are winning and losing on the rental roller-coaster ... and why. And Jimmy is talking trains that produce steam but run on an altogether cleaner fuel than coal. The Podcast transcribed Jimmy and Sue's dulcet tones transcribed for those who can't or prefer not to listen. They are joined by strata lawyer David Sachs. Be warned: This was transcribed by a soul-less American computer and edited by a grumpy Scot. But it still makes more sense than a Donald Trump diatribe. Jimmy  00:00 Got a post on the Flat Chat Forum this week from Jo Cooper ... name ring a bell? Sue  00:09 The owner of Angus, the now-legal dog in the Horizon building, and it's a Schnauzer. Jimmy  00:14 Yep, and basically, she was writing to tell me that I'm wrong. Because I said that there should be apartment blocks that people can go to. Even though I'm pro-pet, I believe that there should be apartment blocks that people can go and live in, who really don't want to live in the same building as pets. She said you can't have that. Because buildings have to allow support animals like guide dogs. And the law says you can't forbid them. So all it takes is one person to bring in a support animal and that whole argument about people's health and allergies and things goes out the window. Anyway, so it's been pets, pets, pets all week ever since that ruling at the Appeals Court. So this week, we have a special guest, David Sachs from Sachs Gerace Lawyers, who has a pretty interesting take on what that appeal court decision means not just about pets, but about by-laws in general. I'm Jimmy Thomson. Sue And I'm Sue Williams … Jimmy And this is the Flat Chat Wrap.

BE SURE TO SEE THE SHOWNOTES AND LISTEN TO THIS EPISODE HERE. Eve Picker: [00:00:06] Hi there, thanks so much for joining me today for the latest episode of Impact Real Estate Investing.   Eve: [00:00:12] My guest today is Kris Daff, a fellow Australian. Kris is a developer with two companies. The first, Make Ventures, is a more traditional development company focused on urban infill. It's the second, Assemble, that Kris is wildly passionate about, and that passion is wildly contagious. With Assemble Kris is building uniquely personal, affordable housing products and solving the very many problems that low to moderate income earners are confronted with when looking for a stable, permanent housing solution in Australia. And Kris plans to do that at scale.   Eve: [00:00:54] Be sure to go to evepicker.com to find out more about Kris on the show notes page for this episode. And be sure to sign up for my newsletter so you can access information about impact real estate investing and get the latest news about the exciting projects on my crowdfunding platform, Small change.   Eve: [00:01:21] Hello, Kris, thanks so much for joining me today.   Kris: [00:01:24] Hi Eve, thanks so much for having me. Looking forward to having a chat.   Eve: [00:01:27] Nice to hear a similar accent. Anyway, so you're a real estate developer and you have two companies Make Ventures and Assemble, which are both great names, by the way, and I'm wondering why you have those two companies and what each is focused on.   [00:01:46] Sure. So, I'll start with Make, and Make's a very traditional real estate development and investment company. I established Make about five or six years ago to focus on the acquisition of real estate for large scale urban renewal projects in Melbourne. And we were successful in that pursuit of those projects and they've sort of been the longer-term planning processes. And one of the things that came out of all of that was we ended up with a sort of forward pipeline of a lot of housing for that business, you know, sort of several thousand apartments across multiple locations.   Kris: [00:02:24] And one of the things that I'd sort of worked out for myself, personally, is I've become very disenfranchised with the traditional delivery mechanism of housing in this country, which is, housing which is delivered via an off-the-plan sales approach. So, and, so the typical approach is, you would go and set up a display suite, sales suite, appoint a real estate agent to come and do a whole bunch of marketing and spend a whole bunch of money on all of that and you'd get investors and essentially some owner occupiers and, sort of, whoever would turn up and pay a 10 percent down-payment and then sign a contract, would sort of have a, get a right to buy an apartment off you at the point at which the building was finished.   Kris: [00:03:11] And it was a very impersonal relationship between a developer and their clients, which then not the residents, because typically you would have all the investors, typically you'd have a real estate agent managing that transaction for you. And I could sort see, you know, that that sort of writing was on the wall a bit with that model. And I think that model will still be an important model moving forward in this country but it was obvious to me that with the emergence of our superannuation investment industry, so the fourth largest pension fund market in the world, so, a huge volume of capital available from those sources, that institutionally owned housing as we would typically see it in mainland Europe, North America and some other geographies internationally, would emerge as a very important asset class in Australia where it hadn't really existed previously. And I think there's a few reasons for that, is, one that, sort of, hadn't needed to exist because whilst off-the-plan hadn't been perfect as a delivery mechanism, it had done a reasonable job of keeping up the supply of housing this country needed.   Kris: [00:04:20] So what I then embarked on was a, sort of, international sort of approach, research thesis on saying how does housing get delivered internationally, and housing that's of large scale but owned in one line then offered for, sort of, long term secure rental for residents for whom ownership may be difficult, what does that look like internationally? And I think the sort of lessons for me is, from North America I took commercial models and taxation settings and some other things that I think that market is super sophisticated in, and from Europe I took, and particularly locations in mainland Europe and particularly places like Netherlands and others, I took an approach to the development of long tenure housing, the development of community in that setting and, you know, the sort of housing co-operative type approach and the sort of self-curation of community by residents. There's been, a sort, big lesson from that geography. So, all that got me to a point at which I understood the sort of secret sauce, if you like, to what is the approach to the management of large scale institutional housing projects, was really the key to their success and providing an infrastructure within a project in a future neighborhood to let your residents have a very good, productive, sort of wholesome life there.   Kris: [00:05:47] So, we basically acquired Assemble which was an existing development business that was doing a very good job of community occupant-centric type projects and transitioned that business and its approach to the development of contemporary and engaged neighborhoods to be our multi-family housing platform so, or will-to-rent platform, as we call it here. And now, you know, Assemble's really the face of everything that we're sort of doing and Assemble will be, sort of, partner, the housing partner for all our clients and future residents moving forward. So, it's really exciting.   [00:06:27] So, we only do very low, low, and middle-income housing. So, we don't do what I, sort of, call juiced-up multi-family, like I've, sort of, seen in New York. So, we don’t  have a pools and gyms and indoor driving ranges and saunas, and we don't have someone that will do the dry cleaning for you and put it back in the closet upstairs and all that sort of embellished life. I don't believe in any of that, which is I guess, more that reference back to the, sort of, a more sort of simple life. The people get a much deeper level of support in one of our buildings than they will in a traditional Owners Corporation type arrangements.   Eve: [00:07:02] You know, what I've learned about Australia is that it's really a for-sale market and most developers build housing products for sale, and yet they're so expensive. I don't know how someone gets into that market when they're a civil servant or they can't afford, as you said, that sort of embellished lifestyle.   Kris: [00:07:24] Yeah, they can't. And I guess the systemic problem that comes with that. There are some better value options around but traditionally that's been found in the far reaches of outer suburban Melbourne, which is a sort of systemic problem with our housing market where you've got the people that can least afford to be located 40 kilometres from the CBD or place of work, at a hospital or whatever else, all the people that make our city run get dislocated to these areas and they need to have two motor cars and, you know, they've got to have access to public transport and don't get to see their families as often. So,   [00:07:59] That's a very American problem, too. Definitely.   [00:08:02] Yeah, yeah. So, we sort of researched again, so, home ownership, given how expensive housing is in Australia for some people it's just going to be very difficult, if not impossible. What we started researching then is saying: well, if you can provide ten-year certainty, so long-tenure housing, across the spectrum of incomes, how would that make people feel about their housing future? Because one of the things that we identified is the thing that people really crave in Australia is, and need is, sort of longer-tenure housing options.   [00:08:40] And the issue that a lot of Australians are facing who are likely to be long-term renters is that they are stuck in a year-to-year leasing cycle and the fact that they're only getting twelve months lease at any one time doesn't allow them to put down roots in a location in the same way that you would if you were in a position to be able to purchase a property. And that lack of, sort of, tenure certainty results in significant levels of housing anxiety. So, people are just nervous about what their housing future looks like. And the extension of that is just, well, if you're stuck in a year-to-year leasing situation and the landlord's got the potential to just sell the property or kick you out so they can move their kids in or whatever, who are at university age, for example, might be a good example. So, how does that make you, sort of, feel about your housing future? What's your propensity to really engage in that neighborhood, in that community? Are you as likely to volunteer or join the local gardening group or, you know, do you get nervous about this warming relationship with your neighbours and other people in the community for the fear that your landlord might kick you out at the end of the year and you've got to move three suburbs over? So, what's the point? So, how do you get your children into school and make sure they don't have to move schools halfway through their primary school education, for example? All those things together create a lot of nervousness in our housing market for people that are struggling to access ownership place.   Kris: [00:10:10] What we've done is, Assemble's delivering multiple options to the lower/middle income Australians one of which is we give people a five-year lease and then the option to purchase their property at the conclusion of that lease. They're not obliged to do so. And we provide them with a supportive program of financial coaching and cost-of-living savings initiatives. So, we do a lot of bulk-buying, for example, of sort of household cycles in the like and try and bring down their cost of living to put them in a better position to save for a down-payment on the property at the end of the lease and to just get people sort of more familiar with the concept of ownership. And that's been the very popular program. So, we've got 10 or 12,000 people registered their interest in being in one of our buildings now, And then, so, we've got about a thousand apartments in the pipeline for that part of the business in Melbourne.   Kris: [00:11:05] And then separate to that, we've got about 2800 apartments which will be delivered as wholly owned communities in a sort of multi-family approach. So, they'll stock properties that are only available for rental, and never an opportunity to buy your individual apartment. But that's catering to a different part of the market. And in those projects, we'll be able to deliver about 20 percent of the housing to very low-income Australians. So that's social housing type rentals who would qualify for Commonwealth assistance and the like for their rent.   Eve: [00:11:38] So does the government provide you with any assistance in building these out, or do you just, do the only provide assistance to the renters?   Kris: [00:11:47] In our circumstance we're not getting any direct financial assistance from government. Quite interesting, actually, so I've spent a lot of time with our different layers of government. The, sort of, State Government and parts of the Federal Government and I've always premised all our commercial models and investment models on not requiring significant taxation change, and the like, to affect our project outcomes. So, I'll go and have a discussion with, say, a State treasurer about what we're doing and say: "You know we're building this, and we don't really need your help financially" and they're always trying to find an angle in. They'd say: "this is really fantastic. This is the sort of housing that we want. Are you sure we can't be involved?" So, I think that's important for us. And to be honest government's got some very important roles to play and for us, mainly, it's about planning consent, and the like, that we would sort of seek to lean on them to maybe get that happening a bit quicker than it might traditionally. But I think getting deep financial support from governments to deliver our projects is something that we've always tried to avoid because having government in there is a sort of as a counterparty can add complexity to the, unnecessary complexity to the transactions. So, we've focused on our sort of partners that we have - our community housing sector partners, for example, who do some extremely good work in very low-income housing. And then partnerships with our biggest superannuation investors to provide the capital required to build and own these assets long term.   Eve: [00:13:21] So, you said something that you glossed over, but I thought was really interesting, in that you help these tenants who might eventually own, you kind of teach them how to become homeowners. I'd love you to elaborate on that.   Kris: [00:13:34] With the option where people have got their half-a-decade lease and then the option to purchase a property at the conclusion of the lease. So, we allow those future residents to enter into those agreements in advance of construction starting. So, typically it would take us about two years to build one of our buildings from the point at which we start on site. So, they've got two years of construction plus a five year lease, so seven years in total, to be able to get themselves organized into a sort of regular savings pattern, to be able to be in a position to purchase their property at the conclusion of the five year lease. And the reason that seven-year period is being selected is, we did a lot of work with a couple of our large retail banks here on saying, assuming someone's sort of started from scratch, how long would it take them to save a deposit to be able to purchase a property, based on different income bands, and the like? And about seven years is about the period that we arrived at. But what we did realize is, it's very hard to change behavior without support. So, we employed an in-house financial coaching team to work with the residents from the day they sign up with us, so in advance of construction starting. So, we've got a multi-stage program that they can participate in adopting. So, some people are very comfortable with numbers and they understand savings and they know how to do a household budget and all those things. And some people just find that a bit more challenging. But at the moment, we've got about and 80 percent participation rate from households from our, sort of, future residents in the program. And it's not, sort of, financial planning. We're not doing, recommending investment options for them and those type of things, it's more about how do you form a household budget? Tips and tricks about setting up a separate account to direct deposit some money into each month so that you can't, sort of, access via a debit card or something that's just sort of savings account. How to get better value on energy, data, these types of things.   Eve: [00:15:33] This is spectacular, ‘cause all that stuff is pretty overwhelming if you're tackling it for the first time.   Kris: [00:15:39] I sit through all the sessions and I've learned a lot myself. So, I've got some better habits.   Eve: [00:15:47] I get bombarded by energy, data, and it's like, oh no, how am I going to figure this out?   Kris: [00:15:52] And we'll offer that too, so, through our buildings where people aren't even on that homeownership pathway model, for people that are just long-term tenants of ours then they'll have access to that program as well. So, it's not just about supporting people ultimately, sort of, buying the property from us at the end of the five-year lease. But with other buildings that we're doing, which are just long-term rental, we'll also give them access to that team because we think the sort of lessons and, sort of, financial skills and things that Sarah and her team can give to people, just applicable whether you're working towards ownership or whether you just sort of want to save for your grand holiday that you've been wanting to do for your whole life and you haven't been in a position to save enough money to do, so.   Eve: [00:16:40] What's the ultimate big, hairy, audacious goal for Assemble then?   Kris: [00:16:45] I think where we're positioning ourselves, in terms of the businesses, what the team's working towards is to be the pre-eminent affordable housing developer in this country. And we've got a very large pipeline of projects, as I said, now. And it's not about, sort of, being a megalomaniac, it's about saying this country needs solutions at scale. So, for me to sort of be mucking around and sort of doing 20 apartments here and thirty apartments there was never really consequential enough for me. So, we're doing large neighborhoods of significant scale - you know most of our projects are between 100 and 1000 apartments in a single location. We don't do towers and things but we've got some large sites that have the neighborhood of maybe a dozen buildings of eighty apartments each, for example - is to be able to demonstrate to government and other stakeholders that more affordable housing solutions are possible in this country and that we can deliver returns to institutional investors that are efficient, to sort of get them off the bench in housing. And we think that's really important work.   Kris: [00:17:54] But, ultimately for me, I like the fact that we're aligned with our future residents. So, when someone can sort of hand the keys back and say "oh thanks, Kris, you know you sort of told me this was going to be a super place to live and it was going to be, you know, warm in winter and cool in summer but, you know, it's sort of not performing as well as I'd hoped it would." It's a sort of different type of alignment with your future community compared to a traditional development approach. So, you know, the things that I'm finding really enjoyable about the organization here is, we get a lot of people who want to work with us and be part of the team who wouldn't otherwise be interested in participating in a development company. So that's sort of purposely.   Eve: [00:18:40] You said you've got a thousand apartments in the pipeline, and one of the goals is to make sure these assembled living spaces are close to jobs. How do you select sites and are your tenants able to manage without a car? Because, of course, that makes housing more affordable, etc.   Kris: [00:19:01] Yeah, we select sites on a bunch of sort of different metrics so, typically access to heavy rail connections, strong public transport connections, putting them in locations where there's an existing high level of sort of community and urban infrastructure in place, you know, retail, supermarkets, parks, community based infrastructure, sort of, health care services, employment services, those types of things.   Kris: [00:19:27] In terms of personal transport, we have a significant over provision of bicycle storage in our buildings, for example. We do have car parking available, but at a very much reduced rate to what you would traditionally see in a project in Melbourne. And we provide that to people on a needs-basis. So, you've got mobility issues, or you've got a dedicated work vehicle, or you've got young children, all those types of things then you would qualify for a car park in one of our buildings. If you're otherwise sort of fit and well and just can't be bothered walking 400 metres to get your groceries, then you wouldn't get a spot. You wouldn't get allocated a bay. Because we're not strata titling most of our projects, we design those spaces to be - 'cause we get that car use will change over time and it already has, and the way that people get around will change - is we design those spaces to be able to be retrofitted to perhaps, if the buildings has got 50 car bays, for example, and in 10 years’ time the community is only using 30 of them, turn 10 into a music room that we can install into the basement or another workshop space, for example, for the residents to do little projects. So we design in to the inherent flexibility and the re-use of that space because there's a lot of big buildings in Melbourne built 10, 20 years ago in the Southbank area, for example, where the recent City of Melbourne carpark survey says only about .4 of the bays that exist in those buildings are actually getting used, and it's all being broken up into little chunks of building in strata titling and things and it's really impossible to do anything meaningful with that space long term.   Eve: [00:21:11] So, like, what are your occupancy rates like compared to other buildings like this, or are there no other buildings like this?   Kris: [00:21:18] So we've got our first project under construction. So, we don't have occupants yet, but it's been fully allocated to future residents. So, we're fully committed for the next project we're doing, which is in Kensington, in Melbourne, in Thompson Street. There's two buildings of 100 apartments each there and I think we've had 7800 people register their interest in that building. So, we've got, you know, a lot of demand, so but, that's sort of saying you're really interested in this. What that translates into, people that actually formally want to commit and sort of, you know, it might be sort of 10 or 20 percent of that number, but still a significant over subscriptions. There's a lot of demand, I think, for housing and I don't think it's so much, obviously the access to the housing model is there and more affordable and everything else is, is something that people are very interested in and focused on in Australia where they feel like perhaps the housing market is not with within front of mind. But what's more important, I think, is our approach to the development of the neighborhood within our buildings is just as important, if not more important to most people that interested in being in an Assemble building in the future.   Eve: [00:22:41] So what is the approach to the development in the neighborhood?   Kris: [00:22:44] Pretty organic. So we'll have full-time on site staff at each location, but they'll be,  so, in our hospitality space downstairs in each building, for example, like the cafeteria, the cafe space and grocer, is all the front-of-house staff there will be trained in our system so, you know, they'll be able to log a maintenance request or let you know when the next yoga class is going to be happening in the communal spaces, but, is an approach to say, well we've got a much more personal interface with our staff. So, the stuff that I've seen in other locations internationally is very much like hotel type concierge services. So, there's a few issues with that for me. Personally, I think that embellished lifestyle's just not a particularly sort of Melbourne style of living.   Kris: [00:23:30] Then the second thing is that that's an expensive way to sort of resource a building. That would put pressure on our ability to deliver affordable rents and prices. We have staff that provide a sort of infrastructure and an approach to living somewhere with organized walking groups, yoga classes, gardening groups. But the idea is that we're more in the sort of European housing co-op style of living, trying to transition the residents to be more self-managers of their little neighborhood, their little communities. The idea, from my perspective is, I'd much rather give half a dozen residents 40 bucks a week off their rent each and they look after all our gardens, than paying some contract gardener to come and, Jim's Gardening or whatever, to come and do the weeding and, you know, pick the vegies or whatever for me.   Kris: [00:24:22] So that approach is going to take a while to sort of transition into. And I think what we'll find, in our neighborhoods of, say we've got a hundred homes, is there'll be 20 homes of that are hyper-engaged in the building community and sort of wanting to sort of do everything with your neighbors and everything else. And then there'll be 60 homes that are sort of in the middle somewhere who are happy to do it but they want to be doing the gardening every single Saturday morning with their neighbors, for example. And thern there'll be 20 people, 20 homes that have residents that, you know, just want to sort of come home and sit on the couch and watch The Voice or something and aren't that engaged. And that's, each one of those groups is fine. That's just society cross-section, right?   Eve: [00:25:05] Yeah, that is typical, yeah.   Kris: [00:25:07] So you don't have to be a green thumb or be an expert in fixing bicycles or whatever else to sort of be in one of the buildings. So, we're not trying to engineer a social outcome. You know, it's a random ballot to get a spot and one of our buildings.   Eve: [00:25:20] Interesting. So, what's your background and what path led you to all of this?   Kris: [00:25:26] So by trading I'm an engineer, a civil structural engineer and I've got a geology degree also. So, engineering and science background but moved out of that sort of consulting engineering space very early in my career into sort of project management and then into more traditional development businesses. So, delivering developments where, you know, section one of the report each month on how the project was performing was always about, sort of, how's the profit looking? So, it was always about the shareholder return, our investor return, and never so much about the sort of long-term outcomes that we're generating with our projects. So, working in a few businesses, and did some projects I'm still very proud of, in that part of my professional life but found myself, as I said earlier, checking out of that delivery mechanism for housing, you know, sort of four, five years because it bought up such a large portfolio of projects, started investigating other ways of deal with the housing that was more aligned with our residents.   Eve: [00:26:29] Interesting.   Kris: [00:26:31] Yeah, so look, I learned a lot of good skills and things over the journey that are definitely applicable to this space, but plenty I'm finding it a lot easier to sort of get out of bed and go to work in the morning.   Eve: [00:26:45] Well, that's good. That's important. So, are there any current trends in real estate development that interest you or you think are really important?   Kris: [00:26:54] In Australia, in housing, I think the biggest emerging trend is going to be in social affordable rental housing. And that's institutionally owned whole residential real assets. So that's buildings and of scale, buildings in between 100 or 200 and 300 apartments, of which a large proportion's very low-income housing. So, social rental, and that's analogous to the United States market of the low-income housing tax-credit type component within a mixed tenure, mixed socio-economic buildings. And I've seen some very good examples in L.A. and in New York of the sort of mixed tenure outcomes that you can generate. And there is a limit to the amount of ultra-low-income housing you can sort of integrate comfortably with a, within a sort of market scheme.   Kris: [00:27:41] But I think in Australia, that asset class, particularly focused at the affordable end is going to be a sort of huge focus for investors and developers by the lot. But we're positioning ourselves, I guess, to be a bit of a leader in that space. And I think that's…   Eve: [00:27:57] That's exciting.   Kris: [00:27:58] …really important work because they're the people that are finding housing the most difficult. We're doing a project in Coburg where we're going to do 50 homes for older women fleeing domestic crisis, for example, and it's the fastest emerging group of homelessness. So, you know, there's some pretty bad sort of societal issues and housing is at the front of a lot of that. And no one's shying away from it. Everyone knows it's a big issue and everyone knows we need industrial-scale solutions to housing, and we think we can't do all that, but we think we've got a role to play in guiding industry on models that can deliver moderate returns for investors. And the upshot is they're going to get on and deliver at scale some housing solutions for the people who are finding housing the most difficult.   Eve: [00:28:46] What is a moderate return for an investor in Australia? What are you shooting for there?   Kris: [00:28:50] So, for our long-term rental housing we're in the sort of mid-single figures for an equity return. That's a levered return. You know, up to maybe the sort of high single figures depending on the mix. And then for our homeownership part-way products, more sort of in the high single figures. In equity returns, you know, I'm very familiar with what sort of returns pension fund investors get in North America, sort of similar asset classes. And we think we outstrip any large industry sort of transitioning relatively rapidly to international return level expectations. But it's very difficult for a Superannuation Fund investor who's there to represent the interests of their members. So, we've got millions of working-class Australians who have charged them with the responsibility of managing their retirement savings. So, to move first in a new asset class that's not established yet, and things, has a whole bunch of inherent riskiness. But I've been very proud of some of our Superannuation Fund partners in how brave they are being in capitalizing us, to allow us to deliver housing solutions that have not necessarily been included before in this country. Yeah, and that's generally because they believe it's important work. And, in a lot of cases to be fair, Industry funds, so union-based pension funds, is where it's particularly applicable to their members who may be in that sort of lower middle income. Probably got good jobs, good stable employment, but just don't earn lots of money.   Eve: [00:30:27] Right. So, what is the next five years look like for you?   Kris: [00:30:31] We've sort of been going for five years now and the next five years for us is really transitioning, starting from the first half of next year into a pretty flat-out delivery phase. So, next year, we'll look to sites, so start construction of about fifteen hundred homes across around six locations. And, so the last sort of four or five years is been spent getting capital support, getting planning consents, piloting, doing a small project in Kensington, which is 73 apartments, which is under construction and due for completion in May next year, to a phase where we can start to move into that industrial sort of scale delivery phase where we're delivering extremely large neighborhoods across multiple models and getting to the solutions that are at scale and projects that are at scale for our superannuation fund investors because they need this sort of certain level in scale to make a project investable for them.   Eve: [00:31:32] Right. Maybe thirty thousand units in the next five years? Fifty thousand units?   Kris: [00:31:38] Wow, I don't know. I think we're looking at a stabilized portfolio, at the end of five years, around five to six thousand units. I think it would be a sensible objective, to the extent it, sort of, grows beyond that then I'm not sure. My nervousness is, you know  scales useful for the provision of housing solutions, at scales extremely useful for Australians, but who are sort of seeking that tenure-certain housing at affordable rents but how do you hold onto the DNA of our offer and how do we make sure that our neighborhoods, you know if we've got forty of 50 of them, are being managed in a way that are sort of true to where we started? And that's a good challenge, I guess, if you sort of get to that point and we become a very desirable housing partner for Australians. And then I'm sure I'll be able to sort of find solutions to be able to keep the offer what we want it to be.   Eve: [00:32:36] It's totally impressive and I can't wait to see the outcome next year and the next time I'm in Melbourne I really love a tour, if you'll give me one. You yourself have really impressive goal.   Kris: [00:32:48] Thanks, no worries. It's been good. Doing new things is always challenging, particularly new things that are expensive, so like building buildings. But I've got a really great team here, we've got about 30 office staff now, we've had six new starters during the shutdown.   Eve: [00:33:06] Wow.   Kris: [00:33:06] Which has been challenging, but I've been extremely proud of the whole team. It's interesting, actually, it's a fascinating sort of study on ways of working and probably the majority, actually, of the team, I think, have sort of upped production for the same worked hours compared to what they’re doing in the office. So, not having the sort of distraction of the sort of coffee machine or overhearing conversations and whatever else. In the office environment, for some people that sort of focused work time's really useful. So that's been quite interesting. But on the other hand, the whole team are desperate to get back to the office because they're sort of craving human connection.   Eve: [00:33:43] Yeah, we all are. You've had an easier time of it in Australia than we have over here. Thank you very much, Chris. And I really can't wait to see what comes of all of this.   Kris: [00:33:55] Thanks Eve.   Eve: [00:33:56] Thanks for your time. Bye.   Kris: [00:33:57] Good on you, bye.   Eve: [00:34:11] That was Kris Daff. Wow. Chris is tackling an enormous housing problem in Australia head on, and he wants to do it at scale. His company Assemble is gearing up to build affordable neighborhoods that solve many of the problems low to moderate income earners have in Australia. But first and foremost, Assemble offers a long term and secure housing solution for those who need it most. You can secure a home in an incredibly expensive housing market by buying a unit after five years if you want to and Assemble will offer you all the support you need along the way.   Eve: [00:34:53] You can find out more about impact real estate investing and access the show notes for today's episode at my website evepicker.com. While you're there, sign up for my newsletter to find out more about how to make money in real estate while building better cities.   Eve: [00:35:10] Thank you so much for spending your time with me today. And thank you, Kris, for sharing your thoughts. We'll talk again soon but for now, this is Eve Picker signing off to go make some change.

Broken Buildings Expert, Dimitri Livas explores news that has just come out that the Evacuated Mascot Towers are going to cost at $20 million to remedy and so the residents have had the shock of a lifetime when they received this Agenda for the Owners Corporation meeting. You might remember that in June, the owners voted in favour of a $1 million special levy to make urgent repairs to the building and investigate cracks in structural support beams after the residents were evacuated just a week earlier. Now two months later, as the building remains empty, owners are gonna be asked to commit to forking out a further $10-$20 million-dollar special levy to begin substantial repairs. Well let’s see what happens, stay tuned for more updates on Mascot and other broken building issues as they come to light Bio: Construction Specialist, Dimitri Livas earned a Bachelor of Commerce as well as an Advanced Diploma in Construction Management. He has over 20 years of real world construction expertise, as the founder and CEO of Savil Group which he established in 1998 and has grown to become a successful commercial construction company, building multi-million dollar projects for some of Australia's biggest brands. ​With Dimitri at the Helm, Savil and the team now focus their extensive expertise and experience on Fixing Broken Buildings and Creating Healthy Buildings. Specialties: Fixing Broken Buildings, Creating Healthy Buildings, Entrepreneurship, Commercial Construction, Speaker. Savil Group - Construction Remediation Company Website: https://www.savilgroup.com.au Dimitri Livas - Speaker and Media Website: https://www.dimitrilivas.com

One of the big questions around the recent Mascot Tower problems was why didn't the building insurance kick in, rather than the state government having to bail the owners corporation out with emergency funding. The simple answer is that it looked very much like a building defect and that's not covered by ordinary strata insurance. So what is strata insurance -  the compulsory one that covers the building and the common property, and is paid for by the Owners Corporation - and what does it cover? There are a lot of questions and more than a few surprising answers around strata insurance. Did you know that strata insurance also covers the fixtures and fitings in your apartment? Do you know what those fixtures and fittings are? Did you know that you can apply for a payout from strata insurance yourself, even if your strata committee or strata manager refuses to pass on the claim? Do you know what landlord insurance is, and what it covers? Why is it that if you go directly to the strata insurer (rather than a strata manager or broker) you don't get a discount equivalent to their commission? Does changing a garage into a habitable room change the building insurance? Can you get Airbnb insurance for your flat? What would you need to do to have your insurance invalidated? (Clue: it would have to be something really bad or dishonest). All these questions and more are answered by our guest in this week's podcast, Steve Tchepak from our sponsors CHU Insurance. Enjoy. https://episodes.castos.com/flatchatpod/Flat-Chat-30-Insurance.mp3 And the podcast is also available on Youtube: https://www.youtube.com/watch?v=hYuceKMkp8Y

Confronted by images of residents of Mascot Tower evacuating the building, the NSW government has moved relatively swiftlly to plug the accommodation gap with a loan to the Owners Corporation to cover the cost of emergency billets for the owners and renters. As JimmyT and Sue Williams discuss in this week's podcast, the state government's loan may never have to be paid back, because they think they know what (and who) caused the structural damage and it's eminently possible it wasn't building defects. And even if it does turn out to be defects - and the block is well out of warranties - the loan may never have to be paid back "at the government's discretion." Meanwhile we ask, if you can find money to rehouse evacuees (quite rightly), what about all the people facing massive bills to remediate flammable cladding which is only on buildings, risking life and limb, because of the slack attitudes of a procession of governments in this state. You're happy to take our stamp duty - how about offering us some protections?  That's all in this week's podcast ... and more.

This episode of This Must Be The Place is a bit different – normally I talk to people, but in this episode I (meaning Liz Taylor, Monash University) actually just read out an essay I wrote recently about my experience of living in a building with combustible cladding. Also about reading Kafka (and Graeber) and…well that’s the basic premise. I’ve called it Trial by Cladding. “I recently finished reading Franz Kafka’s 1925 novel “The Trial”: the unsettling, absurd story of a young middle-class man suddenly caught up in a farce of bureaucracy. The protagonist Joseph K spends a year fighting charges which are never named, but of which he is presumed guilty. He is increasingly consumed by obscure court proceedings which, officious lawyers assure him, are very serious, but that he need not dare try to understand. Disbelief ebbs into resignation. Weekends disappear with worry, and inconvenient appointments see him start to slip up at his job at the bank. The fact he doesn’t know what he is accused of, or whether or not he did something wrong, becomes irrelevant even to himself. “My innocence doesn’t make the matter any simpler”, K reflects: “I have to fight against countless subtleties in which the Court is likely to lose itself. And in the end, out of nothing at all, an enormous fabric of guilt will be conjured up”. I started reading “The Trial” after my apartment building’s last Owners Corporation meeting, because I wanted to directly understand the adjective ‘Kafkaesque’, and its applicability to our situation with combustible cladding. Like most people I knew Kafka was shorthand for absurd situations - famously “Metamorphosis” begins with the character waking up as a giant insect. From its popular usage I understood ‘Kafkaesque’ to mean a comically complicated process – which the situation with combustible cladding certainly already was. But I think “The Trial” had also once been mentioned to me in passing by a Croatian colleague who described her suspicion of cheerful government descriptions of policies. To her, having grown up in communist Yugoslavia, these inevitably signalled something cruelly incompetent going on in the background. Like in “The Trial”, she said. In the confusing boredom of an Owners Corporation meeting concerned with the strange details of the urgent need for us to remove chunks of our building, I was drawn to finally reading “The Trial”. At the least, I thought it might provide a lighter perspective on our situation. Like tens of thousands of others in Victoria, I own and live in an apartment in a building containing combustible cladding - similar materials to what fuelled the 2017 fire at London’s Grenfell Towers, in which 72 people died. In the wake of the Grenfell fire and of a 2014 fire at the LaCrosse Building in Melbourne’s Docklands, Victoria’s Cladding Taskforce determined that the presence of combustible cladding, including aluminium composite panels, on high rise buildings is unsafe and non-compliant. Perhaps surprisingly, the onus for rectifying non-compliant cladding in Victoria has been placed with apartment owners. Not with the builders, developers and other professionals who specified and used the materials and sold the apartments; not with the insurance agencies fond of advertising how awful it would be if a random problem were to happen to your house and ‘won’t you be glad you had insurance’ when it does; nor the local and state government regulators (and private building surveyors who replaced council building inspectors from the 1990s) who signed off on the buildings. Instead, owners who bought purportedly compliant apartments are compelled to fix an urgent problem created by government and industry, and facing bills of typically $40,000 to $60,000 per apartment to do so. In most cases they are poorly equipped to navigate the financial and broader costs. But as Joseph K reflects, “innocence doesn’t make the matter any simpler”…[more in episode]

This episode of This Must Be The Place is a bit different – normally I talk to people, but in this episode I (meaning Liz Taylor, Monash University) actually just read out an essay I wrote recently about my experience of living in a building with combustible cladding. Also about reading Kafka (and Graeber) and…well that's the basic premise. I've called it Trial by Cladding. “I recently finished reading Franz Kafka's 1925 novel “The Trial”: the unsettling, absurd story of a young middle-class man suddenly caught up in a farce of bureaucracy. The protagonist Joseph K spends a year fighting charges which are never named, but of which he is presumed guilty. He is increasingly consumed by obscure court proceedings which, officious lawyers assure him, are very serious, but that he need not dare try to understand. Disbelief ebbs into resignation. Weekends disappear with worry, and inconvenient appointments see him start to slip up at his job at the bank. The fact he doesn't know what he is accused of, or whether or not he did something wrong, becomes irrelevant even to himself. “My innocence doesn't make the matter any simpler”, K reflects: “I have to fight against countless subtleties in which the Court is likely to lose itself. And in the end, out of nothing at all, an enormous fabric of guilt will be conjured up”. I started reading “The Trial” after my apartment building's last Owners Corporation meeting, because I wanted to directly understand the adjective ‘Kafkaesque', and its applicability to our situation with combustible cladding. Like most people I knew Kafka was shorthand for absurd situations - famously “Metamorphosis” begins with the character waking up as a giant insect. From its popular usage I understood ‘Kafkaesque' to mean a comically complicated process – which the situation with combustible cladding certainly already was. But I think “The Trial” had also once been mentioned to me in passing by a Croatian colleague who described her suspicion of cheerful government descriptions of policies. To her, having grown up in communist Yugoslavia, these inevitably signalled something cruelly incompetent going on in the background. Like in “The Trial”, she said. In the confusing boredom of an Owners Corporation meeting concerned with the strange details of the urgent need for us to remove chunks of our building, I was drawn to finally reading “The Trial”. At the least, I thought it might provide a lighter perspective on our situation. Like tens of thousands of others in Victoria, I own and live in an apartment in a building containing combustible cladding - similar materials to what fuelled the 2017 fire at London's Grenfell Towers, in which 72 people died. In the wake of the Grenfell fire and of a 2014 fire at the LaCrosse Building in Melbourne's Docklands, Victoria's Cladding Taskforce determined that the presence of combustible cladding, including aluminium composite panels, on high rise buildings is unsafe and non-compliant. Perhaps surprisingly, the onus for rectifying non-compliant cladding in Victoria has been placed with apartment owners. Not with the builders, developers and other professionals who specified and used the materials and sold the apartments; not with the insurance agencies fond of advertising how awful it would be if a random problem were to happen to your house and ‘won't you be glad you had insurance' when it does; nor the local and state government regulators (and private building surveyors who replaced council building inspectors from the 1990s) who signed off on the buildings. Instead, owners who bought purportedly compliant apartments are compelled to fix an urgent problem created by government and industry, and facing bills of typically $40,000 to $60,000 per apartment to do so. In most cases they are poorly equipped to navigate the financial and broader costs. But as Joseph K reflects, “innocence doesn't make the matter any simpler”…[more in episode]

This week, Reena seeks my guidance on a particularly troubled building that wants the Tribunal to sack its current strata manager and appoint a new strata manager with all the powers of the Owners Corporation and committee. We also revisit the popular topic of insurance commissions: should an 'outgoing' strata manager retain the commission on a policy renewal? Also, listen closely... The post 145. How to replace an underperforming strata manager with an administrator appeared first on Your Strata Property.

This week, Reena seeks my guidance on a particularly troubled building that wants the Tribunal to sack its current strata manager and appoint a new strata manager with all the powers of the Owners Corporation and committee. We also revisit the popular topic of insurance commissions: should an 'outgoing' strata manager retain the commission on a policy renewal? Also, listen closely... The post 145. How to replace an underperforming strata manager with an administrator appeared first on Your Strata Property.

Last week, I highlighted some evidence that indicates investment-grade apartments in Melbourne are perhaps intrinsically undervalued. The topic of this week’s blog is all about whether a house or apartment makes a better investment, specially:1. If your investment budget is $1.3 million or more, should you invest in one house or two apartments?2. If your investment budget is in the range of $700k and 800k, should you invest in an investment-grade apartment in a blue-chip suburb or a house further away from the CDB (or in a regional town)?Of course, my commentary and suggestions below are general in nature and may not apply to your financial situation. Therefore, it is important to obtain independent financial advice. Here are a few considerations that you must take into account:Apartments are susceptible to the impact of future developmentThe number of houses in a blue-chip suburb are somewhat fixed. That is, typically, there is no more than one house per block (excluding the odd townhouse development which is rarer in high land value, blue-chip locations). However, the number of apartments in a geographical location can change significantly over several years. All you need is one or two large developments and that can dramatically impact the supply of apartments. Whilst new-build apartments are vastly inferior assets from an investment perspective, their existence can retard capital growth.The advantage of investing in a house is that supply is relatively fixed. This ensures that the imbalance between supply and demand (in an investment-grade location) remains in the investors favour. That is, if supply is fixed and demand is increasing, you will typically benefit from price appreciation.If you have multiple assets, you have more flexibilityThe advantage of investing in two apartments as opposed to one house is that you have greater flexibility in the future, particularly as you get closer to retirement. For example, if you invest in two apartments at age 45 (which might be 15 years prior to your planned retirement) then you will be able to sell one apartment after you have retired and use the cash proceeds to repay the debt on the other apartment. This may result in you retaining one apartment with no (or very little) debt thereby generating a good income stream to supplement your super.Spread your eggs across many basketsAnother advantage of owning two apartments as opposed to one house is that you can diversify geographically. Different geographical locations and micro-markets will perform differently at different times. Tying a lot of your wealth up in one asset creates a lot of concentration risk which might not be a prudent thing to do.One of the greatest advantages of direct property is controlOne downside to investing in an apartment is that you have less control over the asset. That is, common areas are managed by an Owners Corporation. The Owners Corporation makes important decisions by vote at an annual general meeting. Some motions require a unanimous resolution meaning all owners must agree – which can be difficult to obtain. Some examples of challenges that investors have endured include not being able to maximise the value/use of the land (surplus car parking could have been sold but agreement could not be reached), updating the title type to improve the property’s marketability and value but agreement could not be reached, etc.The best way to mitigate this risk is to undertake good due-diligence prior to investing and ensure the Owners Corporation is functioning effectively and the property is in an optimal state (i.e. nothing needs to be changed).Different levels of incomeHousing will generally have a lower rental yield than apartments. In Melbourne, houses will attract a yield of between 2% and 3% of the property’s value – depending on condition. Apartments however will generally attract a yield of 3% and 4%. Therefore, you could maximise your investment income by investing in two apartments as opposed to one house. The difference could amount to approximately $300 to $400 per week (e.g. a house might rent for $600-700 p/week versus two apartments for $400-500 p/week each).Capital growth differentialCompounding capital growth is a very powerful investment attribute and is the simplest and easiest way to build wealth. Therefore, investing in assets that provide the highest amount of long-term capital growth will help you build substantial wealth.When we prepare financial plans, we assume that investment-grade property will appreciate at an average long-term rate of 7.5% p.a. (assuming the inflation rate is 2.5% p.a. – so the growth rate excluding inflation is 5% p.a.). However, the observed growth rate over the past 30-40 years is often a lot higher than that (we’re being conservative).I picked a few houses that have sold recently at random. I compared an investment-grade house in a great street of Prahran (Melbourne) with a couple of houses in a well-established part of Geelong (Newtown is arguably the most “investable” suburb in Geelong – I know the area well as I grew up there – Go Cats!). Essentially, I wanted to see if there was evidence that a regional city provided lower growth than a capital city.Donald St, PrahranBased on sales data, the property at 59 Donald St, Prahran has appreciated in value by 10.4% p.a. over the last 37 years. Over this time, we have seen many changes including interest rates, governments, tax rules (CGT, GST, negative gearing), population, housing supply and so on. Given the population growth rate, the demand for this location will be higher in the coming 40 years than it has in the past 40 years – so, arguably, growth should repeat itself.Buckingham Rd & Cairns Ave, NewtownAgain, based on sales data, 69 Buckingham Rd has appreciated at a rate of 7.8% p.a. over a period of 13 years and 37 Cairns Ave (superior location) has appreciated at a rate of 8.8% p.a. over a period of 30 years. Both houses are older-style (so mostly land value) properties located in quiet streets.ConclusionAnecdotally, it makes sense that a house in prime, blue-chip suburbs of Melbourne will appreciate at a higher rate than a house in a regional city – mainly due to higher sustained levels of demand. From my basic observation above (acknowledging that the sample size is statistically unreliable), it appears the growth gap is in the range of 1.5% and 2.5% per annum. Based on my experience and observation over the past 15 years, this is what I expected to see.Apartments may perform like regional houses but…It would be reasonable to assume that investment-grade apartments will not generate the same level of capital growth as houses (although you are partially compensated with a higher rental income as discussed above). The reason for this is that houses tend to have a greater land value proportion.Intuitively, I think it is reasonable to assume that capital growth cap between investment-grade houses and apartments to be in the range of 1.0% and 2.5% per annum depending on the quality of the apartment. Of course, there are exceptions and some apartments demonstrate similar growth rates.Ostensibly, an investment-grade apartment in Melbourne and a well-located house in an excellent street in Geelong for example might have similar investment return attributes (i.e. similar rental yields and growth rates) in the long run. The main difference is that an apartment in Melbourne is a much less risky investment because demand is more robust and sustainable. Melbourne’s population is close to 5 million compared to circa 200k in Geelong. Why take the risk when investing several hundred of thousand of dollars?What other investments do you have?How much do you have in super? What other investment assets do you have? If you already have accumulated wealth across various asset classes, then investing in a house might be acceptable (because you will still have reasonable diversification). However, if you have little investment assets then investing in a house might result in too much concentration risk (all your eggs in one basket) and you might be better off spreading your investment dollars across a few assets.Investing in adjoining suburbsPeople ask me whether it’s worth moving further out to get a house. For example, a $800k budget won’t buy an investment-grade house in Melbourne (but will be enough for an apartment). However, if you consider non-investment-grade suburbs that are 20-30kms out from the CBD, it might allow you to buy a house.In this situation, at best – if your execution is perfect, you may achieve similar investment returns as an investment-grade apartment, but it is unreasonable to assume that you could achieve the same growth as an investment-grade house. Therefore, taking this approach might achieve the same results but you are taking a higher risk (again, demand in outer suburbs is less then inner suburbs – similar to the Geelong example).In short, moving further out just to get a house is a higher risk strategy. It's not to say that it can't work (or hasn't worked in the past) but we cannot fool ourselves into thinking the investment is of equal quality. And quality will determine your investment returns.Sorry. There’s no simple answerAs you can appreciate from the above discussion, there is no ‘one-size-fits-all” answer. It really depends on your personal financial situation, risk profile, goals, budget and overall financial plan. However, hopefully the above has highlighted some of the issues you need to consider.If you need advice, make sure you seek it from a financial advisor that is completely independent and has the requisite knowledge and experience in property investment (and all investment asset classes for that matter).

This week, Reena and I discuss the reasons why email correspondence must form part of the books and records of the Owners Corporation and the potential risks to strata managers if it is left out of a strata search or handover of files. I explain why I disagree with NSW Fair Trading on by-laws controlling short term lets, and an insurer comes to the... The post 074. In Conversation: why managers must keep emails and Fair Trading on AirBnB by-laws appeared first on Your Strata Property.

This week, Reena and I discuss the reasons why email correspondence must form part of the books and records of the Owners Corporation and the potential risks to strata managers if it is left out of a strata search or handover of files. I explain why I disagree with NSW Fair Trading on by-laws controlling short term lets, and an insurer comes to the... The post 074. In Conversation: why managers must keep emails and Fair Trading on AirBnB by-laws appeared first on Your Strata Property.