Top 4 things to do before buying a Unit

Before Making an Offer: Due Diligence Basics

It is amazing how laissez-faire some people are about property purchases, even though it is likely to be the most significant transactions they ever enter into.

Make sure that this cannot be said of you by doing your level best to identify any issues that may come back to haunt you later on. You can do this by taking the following ?due diligence? steps:

Ask the right questions

Having a discussion about the property with an agent, or the seller, can yield some valuable insights upon which you can then base your final decision.

Here are some of the questions that you should ask:

  • What is the history of the development and the specific unit?
  • Were any significant structural changes made to the unit and, if so, were the proper permissions obtained?
  • How long have the seller(s) lived in/owned the unit and why it is being sold?

Make sure that the property is properly inspected

The inspection of a property that you are interested in should ideally be a two-stage process. The first part of this would be for you to do a preliminary inspection yourself. This can be used to ?flag up? any defects or problems that may require professional scrutiny. You can then proceed to commission professional building and pest inspections. Doing this will obviously cost you a bit of money, but nowhere near as much as what letting a major fault slip through unnoticed will cost you!

Obtain a strata report

You are not only buying a specific unit, you are also buying into a development managed, controlled and maintained by an owner’s corporation (body corporate). You should therefore make sure that the development is in good financial health and that it is properly and competently managed and maintained.

The best way of doing this is by obtaining a strata report. This report will contain information on the following:

  • the strata plan
  • the levies payable to the owners corporation (the report will also include a list of ‘special levies? levied by the corporation in the past)
  • the by-laws that residents are expected to comply with
  • insurance policies taken out by the owners corporation
  • any legal proceedings involving the owners corporation
  • a list of expenses for which the owners corporation is responsible
  • past and proposed expenditures, including any outstanding repair work
  • a list of major repairs undertaken in the past
  • a list of complaints made by owners
  • a description of past disputes between owners

It should be clear that having the above information available will put you in a much better position to make an informed decision on whether you are comfortable with the way in which the property is managed.

Ready to take the plunge?

The process of buying a strata unit is more or less the same as that for a house although there may perhaps be a few extra legal hoops to jump through. It can also be slightly more difficult to obtain finance for smaller units. Your solicitor and mortgage broker will be able to give you proper advice on how to actually go about arranging finance and finalising the legal aspects of the purchase.

Buying a unit can be a significant positive investment, both in terms of future capital growth and your lifestyle. We hope that this guide did its bit in helping you to bring your own, slightly modified, version of the ?Australian Dream? a little closer to reality.

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