The Elephant in the Room Property Podcast | Australian real estate
The Elephant In The Room Property Podcast with Veronica Morgan & Chris Bates

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Episode 82 | Pros, cons & limitations of a strata reno | Justine Bennett, Property Mentor

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Critical things to look into when buying a strata property to renovate

Reno expert, Justine Bennett explains how you go about renovating a strata property. 

Where to start, do you need council/strata approval & what are the restrictions? We discuss logistics like getting materials in & out, restricted working hours & dealing with tenants & neighbours. 

Plus, we uncover a whole bunch of pitfalls including:

  • Knowing that buying a renovated apartment comes risks.

  • What reno is a value add & what is overcapitalising?

  • Unexpected ways to unlock untapped potential.

  • Why the location of plumbing matters big time.

  • Concrete cancer & water issues that wreak havoc in apartments.

  • How to buy ownership of common space to increase your property value.

If you are thinking of buying a property & having a go at a renovation you must listen to this episode first!

WEBSITE LINKS:
Ep 52: Jennie Tonner

GUEST WEBSITE:
https://www.jusbennett.com/

Work with Veronica? info@gooddeeds.com.au
Work with Chris? hello@wealthful.com.au

 EPISODE TRANSCRIPT:

Veronica: You're listening to the Elephant in the Room Property Podcast where the big things that never get talked about actually get talked about. I'm Veronica Morgan, real estate agent buyer's agent and cohost at Foxtels Location, Location, Location Australia.

Chris: And I'm Chris Bates, financial planner, mortgage broker and wealth coach and together we're going to uncover who's really making the decisions. When you buy a property, please stick around for this week's elephant rider bootcamp and we have a cracking dumbo of the week coming up!

Chris: Before we get started. Everything we talk about on this podcast is general in nature and should never be considered to be personal financial advice. If you're looking to get advice, please seek the help of a licensed financial advisor or buyers agent. They will tailor and document their advice to your personal circumstances. Now let's get cracking.

Veronica: Have you ever thought about renovating an apartment? It can be too difficult, right? Or just some fresh paint, carpet, new kitchen, bathroom, or two. Where do you start? Do you need to get council approval or strata approval or both? How did he get material in and out? Other restricted working hours. Will you be still friendly with your neighbors afterwards? It doesn't take long before what seemed like a very simple upgrade turns into a mammoth logistical problem. And so how do you go about as strata innovation? Well, today we're going to find out and we're going to also uncover a whole bunch of pitfalls. In this episode we pick the brains of renovation expert, Justin Bennett. Justine has had many years experience as a project manager and spacial specialists creating workplace solutions across government and private corporations and on the residential side as a mentor, empowering individuals to unlock untapped potential, particularly within strata properties.

Veronica: Thank you for joining us Justine.

Justine: Thanks for having me.

Chris: Thank you Justine. Um, I'm actually really excited for this episode because, um, you know, as listeners would probably know, Veronica and I are lovers of oldest style boutique art deco apartments.

Veronica: I'll even go the 1960s. Redbrick is yes, exactly. Great. That's solid, simple.

Chris: Um, but those, those apartments obviously, you know, they're all bought and I built, you know, 40, 60 years ago. And um, you know, that you can add a lot of value to them and um, a lot of people just don't understand the process to do it. So what are some of the elements that you have to go through before you can sit up renovating a strata property?

Justine: Well, any strata property, you know, it's, it really comes down to whether it's a property that you've newly purchased or you're going to purchase. Obviously the due diligence on everything from, you know, your normal due diligence process with location. But it's also from a strata point of view, it's, it's really looking at the holistic, the whole block as well too. Before you've even looked at engaging at, you know, doing a strata plan check. Um, it's really just looking at physically looking at the block and a lot of people don't even, they just walk in, I go straight to the apartment and they go, right, what could we do without actually walking around looking in the common spaces? What's the, what are the maintenance issues? What's being done, what's not. Clearly, it's a, it's a pretty easy indicator to go to go to a block that's in a fairly poor state of repair, to think there's possibly no money in the, in the capital funds fund. Um, or it's just, it could be poorly managed or the strata fees are so low that, you know, they've just never built up enough.

Justine: Um, so I suppose it's really, it's the due diligence process. Even, even if you already own in the block or, you know, I do a lot of work we have done for investors as well as owner occupiers. They've got a bit of a different feel as to what they want to do with the block, you know, whether it's for a rental return or whether it's your home. So, but regardless, it all comes down to planning. So it's planning everything from the access, you know, how you get your materials in and out. You know, there's limitations with lifts, with um, uh, stairwells, you know, you know, it just simple things like, you know, people just think even when they're moving in, you know, they're moving with three meter long lounges now and they can't get them in, you know, um, and.

Veronica: So where do the the bricks get delivered?

Justine: That's right, its taking deliveries. It's the storing of things. You know, you're lucky if you've got a garage on site. Um, some don't. Um, some don't have parking, you know, common property often they won't allow you to dump from, you know, skip bins. So you've either got to move the rubble in and out daily if you're doing a full job, you know, sometimes a cosmetic quick makeover, like a paint job or you know, replacing carpet, that can be fairly straightforward. Yeah. But obviously it's, when you're doing the full strip out rebirthing the whole place, um, you know, that's when obviously , your planning's crucial and communication.

Veronica: Let's break it down a little bit. So planning and recarpeting for instance, you wouldn't need to get strata approval for that, would you?

Justine: Generally not. Um, sometimes if you're taking the carpet up to then do a floating floor, which is obviously what most people want to do now, um, some stratas have still got bylaws in that won't allow it. Um, but it's quite funny. I've worked in buildings where we've pulled the carpet up and the original flooring was beautiful parquetry that they covered over. And so strata was saying, no, no, no, you can't put floating over that. And we said what the original is timber. So the more that's more of a noise issue.

Chris: That's actually quite common in these Art Deco ones.

Justine: The Deco ones had had the cypress pine boards, which were rare, which were never meant to be seen really. They were always carpeted and the cypress pine termites don't like so, and it was a cheap timber and it was prolific and they could grow it quickly and, and it was right through a lot of homes as well. Yeah. Um, you know, a lot of those sort of post war forties homes as well all at the site, you know, everyone then turned around and pulled the carpet up, you know polished the floorboards away eco. Um, but in, in a lot of the, um, the, a lot of the deco blocks too, there's no, there's not a lot of installation between the floors. So the carpet was possibly, you know, on the last barrier between timber, the, once you do open that up, you know, the noise transfer, particularly in that deco sort of 30's style building.

Chris: And that's why the bylaw exists because of, you know, that they don't want their neighbors to be kind of ripping carpet up.

Justine: look, it's just, it's, and not, not everyone, it's just, I mean, there's a general bylaw, you obviously in the, in the bylaws about noise transfer, but then some blocks have gone down that road of actually putting in special bylaws of no hard floor surfaces. But a lot of the time if people really want to push it, it gets through, you know, tribunals often times overturn that if you want to go down that road. And, but um, I've found, I haven't really come up against that in, in a while probably installed.

Veronica: Obviously, you know, you can put battens in and insulation between the floating floor and the original floor. Yeah.

Justine: And you use the thickest acoustic underlay you can possibly get. So that makes a world of difference.

Veronica: It's funny though, because when you see your property advertised and you'll see it, you know, original floorboards is actually a feature, you know, because a lot more character than a floating floor.

Justine: Totally. Um, there are some great floating floors around now and you know, some of them, you know, this, we've got so much choice. We're pretty lucky in that respect.

Chris: That's a good point because materials are always changing, right? And renovations. So sometimes this is kind of dilemma of do I renovate today or do I renovate in five years' time? Because things could be better if you find that that's kind of, have you noticed that materials have changed dramatically over the years?

Justine: I think. Oh definitely. But I think in, in most cases it depends on the value of the property and what it's used for. You know, you may put in, if it's your home and you know, in the $2 million apartment with a view you know, Double Bay or somewhere like that, you're possibly going to want to put real timber down. Um, but you know, it, if it is a brain tool and it's going to be turnover, you know, a lot of, a lot of um, rentals, they'll put carpet back down over timber because it's, sometimes it's easier wear and tear on, on than on the timber. So, and also noise and things like that for neighbors.

Veronica: So all costs, it's cheaper. Yeah. Often and quicker to put back in.

Speaker 3: So if the bathroom was the carpet and the painting doesn't need kind of strata approval, what are some of the things where, you know, strata, are you going to get a bit upset?

Justine: Well, generally, I mean, you know, and obviously I'm not, I'm not a lawyer, but generally you only when you own a strata apartment, you only own the space. You know, a lot of people and pretty much only the paint in, and that's what I get. I've always got a lot of that. You know, but I can do anything. I own it. It's like, no you don't. But we've done a lot of the old sixties vermiculite ceilings, which some have asbestos fibers in them and some don't. So you know, they, so if you can paint them, I soak up a lot of paint and masses and masses of paint. Um, and they're pretty ugly. But they were done because they were hiding scenes of variations in concrete and also a bit of an aesthetic thing. And they just said, look, that'll do. It'll be a decorative feature sometimes, sometimes as well by writing and no, and noise and relations. Yeah. But they're ugly. So a lot of people just walk in and go, great, I'll just drop a ceiling below it and that's fine. But strata and have an issue with that because you're actually attaching to the ceiling. Yeah.

Veronica: Which is So it is common property.

Justine: It's just common property, not yours. So then they think he's damaging that. Um, some people you can, you can effectively in some places do plaster skimming on vermiculite. You need a really good plaster to do it to get a smooth surface. Um, but it's, you know, the easiest and the most cost effective is to, you know, drop a ceiling and put a ceiling. But again, so it, that's why I think we've come full circle in property. For me in the last sort of 10 or 12, 10 years at least, I've really noticed that a lot of people did probably get away with a lot more of just going in, renovating, doing stuff, maybe even longer than that. But then a lot of buildings caught up and went, hang on because building, because the, the um, the apartments were on sold and then the problems started, the new people were buying a newly renovated place and then the bathroom starts leaking and then they go to strata and go, you've got to fix it.

Justine: The new owners and the, the owner, the body corporate say, well, it's not original. It's not out. It's not our problem, but you're the owner. So they used to, there was a few argie bargies of people trying to take to strata to make sure that they did the repairs. And, and not knowing. And I think that's a big part of that is too, people don't know the, strata laws themselves.

Veronica: And Look, you know, I've always wondered to in a building, so you know, quite often I might look at it in an apartment or I think, oh look, you know, this is huge big laundry in potentially it's right next to a bedroom for instance. You, you know, could punch a hole in the wall, maybe turn it into an suite, maybe put a washing machine in the kitchen. You know, it starts sort of thinking about how you can repurpose these spaces and um, you know, and in particular with plumbing, because of course you've got somebody under you and there's gotta be falls for the drainage and the waters and the sewer all that sort of stuff. I always wonder about. And Yeah, you do see apartments that are reconfigured with kitchens or put in living rooms. And I think you've got one on your website where the kitchen was moved.

Justine: I was living telling Chris about. Yeah.

Veronica: And suddenly you create two bedrooms. And I often see opportunity like that. And certainly with art deco apartments quite often. You'll see. Yeah. Where they've got the living room really should be a bedroom. And you know, like in terms of just working, reworking the size, reorganizing the spaces. It's like what do you do with plumbing? How do you weight that out? Cause you can't necessarily stick on the outside of the building. Can you?

Justine: Well in that case, the one on my website we did but we were literally, it was a building that had a common wall that we could hide the plumbing so nobody could see it. You know, it was sort of on a, on almost a a boundary wall and the strata were fine with it. So yeah. The um, when we moved we moved to their kitchen along a wall. Um, so we literally only had to move the hot and cold pipes and the gas or the gas actually stayed in, in the location cause it was already on that side of the building. So we were lucky that the location was just next to the original kitchen and the kitchen was enormous. So it became a second bedroom and we then created a sort of a, uh, you know, galley style, kitchen living space. Um, and so we were lucky that we were able to do that. But yeah, the, the thing is that, you know, regardless of whether or not there was a water leak in the and the dishwasher burst, it would have burst over the bedroom of the place downstairs anyway. You know what I mean?

Veronica: So I think more bathrooms, you know, like, so for instance, you want to create a, an ensuite out of the laundry. Like I was just sort of giving that example and you got to get a toilet in there and toilet waste and, and you know, how do you do that? Do you build a platform? But then you got headspace and...

Justine: Well it depends on where, where the plumbing is and where the stack is or the, you know, the, the waste pipe yet that runs through generally runs through the building depending on the size of the building. There's obviously a few, if it's a big building, but accessing that, you know, is obviously that's paramount. And that's what I come across a lot is people just saying, oh, I'm just going to whack an ensuite in there or I'm going to move that to there. And it's like, well A you can't do it well physically and it'll overcapitalize apart from anything else. But it's also strata won't approve it. Because then yeah, it is that fact of you could then have, is it a flushing toilet over the top of someone's bedroom? Because obviously not all floor plans are identical, you know, above and below.

Chris: Yeah. So moving walls, I mean I've had lots of clients of uh, move walls and created, third bedrooms. Um, I've had ones that have knocked out walls that, you know, they've created really big one bedroom apartments that they could always put the wall back if they have a baby.

Veronica: Opening up kitchens is a big one. Particularly those 1960s blocks where they've got these little tiny serveries and quite often people open up the walls and it can be a good and bad thing cause all of a sudden you've got to know where to hang your own cupboards.

New Speaker: Oh that's right. You lose a lot of storage. But also there was been a big trend, and I've done this a lot with investors when I was working with some buyers agents and we were always putting a dish washing machine into the kitchen, into the new kitchen next to the dishwasher washing machine because instead of having to go down just, you know, 10 flights of stairs to a common laundry or something like that. And so it was an uplift and that's what the renters wanted. Um, so in that case, if you and I used to have this back and forth, sometimes with the builder because it's like if we, if we open it right up, it's one big room and you're trying to watch a Netflix special and you've got your washing machine on the spin cycle, you can't hear. So it actually, it becomes the builder says it doesn't matter. This is what we do and we'll just do it. And that's okay. But from a practical point of view, it's not practical.

Chris: Um, I suppose it's Netflix and you can always put it on pause.

Justine: Oh, that's right. Until the spin done it's a bit inconvenient, but a lot of, and some and some cultures actually don't like the kitchen being open to learning space. That's not cool. Smelles transfers or you could be cooking, you don't want to be cooking fist for the week ahead or in someone else's trying to watch them or work in, in the living room or whatever it might be. Oh, there is a bit of a, I think the school's out a bit. It can obviously look amazing and it opens up the space and you get more light reflected. But I don't know this day and age, the block I currently live in at the moment, I mean, the amount of Uber, Uber eats deliveries is phenomenal. I don't even know if half the people are cooking anymore. So all the restaurants bankrupt.

New Speaker: According to a rediculous article in the Herald this weel.

Chris: Yeah. I mean, I guess I've just recently a client was going to buy this apartment in Drummoyne and um, you know, they said Chris, what can we do? You know, there's got these great ideas. We want to move the, um, the kitchen near the view, you know, which makes sense when you're cooking. And it was in an awkward place at the back and all, and I was like a great idea, but I'm like, I'm not sure if that's possible, you know, because.

Veronica: that's Minecraft. Yeah, exactly.

Chris: The house is that, you know, like a house you can kind of get underneath and you can do everything you want, but you know, to move the kitchen as a big problem and then what are you, and then, so it was quite a, it made a lot of sense and they were very excited about it. And then I think when they start looking at the strata, they just realized it's just, it just wasn't possible.

Chris: Um, and you know, if it was possible, I think a lot of these apartments would be amazing for that because then people would just renovate them wouldn't, they.

Veronica: Its the inconvenience of services and drainage.

Justine: The deco ones, they're possibly have been the ones with the best scope because you know, they've got the high ceilings, you know, they've got the versatility, the double and they were well built. Like a lot of them sort of right through to the 60s seventies and eighties they've been well-built. And solid.

Veronica: tend to have the plumbing on the outside walls too.

Justine: That's right. Yeah. And then the deco ones particularly, it was all on the outside and it was all either through the cavity, the side that the brick cavities or you had the ability to pull up some of the floorboards, but then then you sort of move into that sixties range where there's solid concrete slabs.

Justine: So that's when you've got a few more restrictions. So that's why the Deco ones have been easier to manipulate some of the services I suppose.

Chris: Well like old cars right if you work on an old engine, it's pretty easy. It's all pretty simple. You go to a new car now it's all electronic and it's tiny. Oh, what's done wrong?

Veronica: But the buildings, you know, you are not a mechanical engineer, you have to be a computer engineer.

Justine: They did. And I'm saying that to Chris earlier that the um, there a lot, the Deco ones, a lot of them didn't even have power points in the bathrooms because in the 30's there weren't shavers, hairdryers, iPhone chargers and anything else in bathroom. So you know, I've done that a lot. We've had to add a lot of that.

Veronica: Yeah, it wasn't, I can't believe I haven't noticed that. There you go. Interesting.

Chris: A property we've got in Melbourne the lights, which isn't working in the property manager sent us an invoice yesterday for like $700. Do you want to replace it to like light switches and things like that? And I'm like, oh, I don't think we need heritage light switches. But um, you know, these older apartments, how, you know, you've got to have every Heritage to keep the value.

Chris: What are some of the, um, I guess the quirks that, you know, going into a roof space. Um, and we, not one of my clients is, you know, I guess trying to take ownership of the common courtyard. I'm with a bit of a trade going on in the building. You know, what are some of these things that you've seen, these type of older apartments where you can get real uplift.

Justine: Oh, a lot of people that have done it and a lot of people that are doing it and then there's a lot of buildings that have got so much scope to do it, um, that it's just done really untapped potential because, um, and it's win, win you know the person who's applying for the common property and it's usually, uh, depends on the block whether they do at exclusive use or they actually purchase it.

Veronica: I think if you're going to build into it, that's right you'd want to purchase it.

Justine: Most, most lawyers would say you need it on title, but that then changes the unit entitlements for everyone else. And it's a bigger process and it's a costly process, a lot more, you know, a lot more professionals involved to change titles and all that sort of thing.

Chris: it's a good point though because on title and common and exclusive access, they're all different things, right?

Justine: You know? Yeah it is. And it's a different thing because it's, it's how you, and I'll use the block that I am currently living in that we've got, you know, this, the four top units have got access to roof space. We can all now, the only way to in through the roof space is through each of the bathrooms of those four apartments, so nobody else in the block can ever get into that roof space. So that then changes the valuation point of view as to well nobody can else access it in the building. But we've also, we're going through the same process where one of the owners, is looking to purchase section of courtyard on the ground floor, but it's also where the common clothes lines are. And it means that all 12 lots in the block can actually use that space. So it's then well that is it detracting from the common space in our, in our respect it's a great thing because it's a great injection then of money into our, into our capital fund because we need to do some, some other other works and it means then we don't have to raise a special levy so everyone's happy as long as we get the valuation and the process right.

Veronica: That's a hard one because you know, most people got no idea about value and you know, I've got a good idea about value. I'm a property specialist. However even me looking at a building like that thinking so many variables in terms of considering the valuation. Yeah, they'd have to get a very good valuer to do that.

Chris: And a lot of that listeners will understand that, you know, if you are going to buy an apartment, that, you know, we do, you know, agree that, you know, a lot of the older style apartments are better, but are they without their problems? Like what are some of the problems that these older apartments have?

Justine: You know, things like concrete cancer and other things that look into it depends on location as obviously, you know, we've got a lot of apartments the whole way around the Australian coast, so they do, you know, they do take on salt and exposure and salt and wind and all that sort of thing. Um, so you know, with everything it's, it's the normal building life cycle, whether it's a home or a strata apartment that, you know, they all go through phases of maintenance. Um, and waterproofing depending on who did the build and when the build was done was, was sometimes non-existent. Um, so sometimes you know,.

New Speaker: If it is non-existent ?

Justine: Or it was just a little patch of a waterproof type membrane under the shower and that was about it. Um, but then over time those membranes, they will wear down, you know, um, tiles, you know, the water goes through, people flood bathrooms do all sorts of things over the life cycle of a property, particularly in bathrooms there's obviously the waterproofing issue. And then obviously down through pipes wearing out in the copper, you know, disintegrating and joins and things that go then into the wall cavities and then build, you know, bedroom wardrobes start getting moldy and things like that. And then it gets into the floorboards because nobody knows it's been leaking through the wall and through the skirting and that sort of thing. So we to cover a lot of that. Usually when you, generally, when you start renovating and you, you know, you, you're pulling out the bathroom and then you start thinking, you see the damage then in the adjoining room or the joining floor or whatever it may be, or often it can also arise from the water going through into apartments below. And that's when it's first notice because people start noticing, you know, the ceiling in the bathroom below is starting to stain...

Chris: But a lot of the times the strata report doesn't always show these problems. Right. You know, like a lot of these occupy read the strata report and I get that checked. I looked at the sinking fine, if that's all like, Hey, I can buy it. Is that, would you do that or would you get your own building & pest?

Justine: Look there's there's an element of, um, you know, with anything, with anything you buying, it's always buyer beware. Um, but this, you know, and depending on the age of the building, um, obviously we won't talk about the current new builds cause that's a whole other problem. But, but the, the old ones were fairly solidly built. Um, but again, they're not, they're not, they don't, they also have, have come with their problems over the years. But generally, you know, if they were a pretty much a brick and concrete structure or the old deco ones, which were brick and tile and, and timber, they were pretty good. But it's just obviously over time there's just a wearing down of, of, um, of and water. It, it just travels. It's the biggest, it's the biggest issue. Um, and roof, you know, roof problems there was a lot of, you know, change in probably the 80s where a lot of roof lines and new development or developments at that time. They did the flat roads and in the waterproofing, you know, of on flat roofs is a whole other, you know, problem as well that's, that's, that's, you know, so there's a lot of, I suppose, rectification works that are coming down the pipeline for a lot of buildings and that they're only as good as managed I suppose is how, how good the strata fund's managed and how good the owners are. And that's what I find in, in a lot of good blocks. It's because the owners are really invested in it and you know, it's a big asset.

Veronica: So big difference. And also having a high proportion of owner occupies in there versus investors. So yeah, you know, in different investors have different levels involvement in their buildings and, and also different investors are different, you know, caliber of landlords. So if you got a crappy landlord and you're a crappy tenant and there's a leak, you know, the amount of times I've seen properties where the tenants have been bothered telling the property manager or they have told them and nothing's been done. And so therefore other stuff just happens. And then they finally move out the place covered in mold than it. They didn't care. And it's like they've faced with all these damage but outside their apartment, often elsewhere in the building, they had no idea that there were problems. That's right. You know, so, so it is a, it's an interesting thing with this whole strata report because a lot of it could be completely, you know, or the, the, a lot of the owners could be oblivious to some of the problems are in some of them.

Justine: Yeah or they're actually dealt with through the property manager. If it is, if it is a tenant, yeah. If it's a constant lake until something dramatically, you know, is raised to actually, that strata has to step in and either rectify, particularly if it's an original bathroom that's still strata's obligation. So that's where it's minuted.

Chris: Yeah. Around the kind of owner occupied versus the investor. And you know, a lot of people think, oh, it's, you know, it's quite hard to figure that out. What isn't really is it? You can, if there's eight in the block, you could pretty much easily figure out whether, you know 60% are owner occupiers or you know, six or seven of them are, you know, you can just literally jump online, run, search the addresses, and use RP data to basically see, have they been up for rent when, when they bought?

Justine: Yeah. You know, and absolutely.

Veronica: You take can read the minutes of all the AGMs and the EGMs, and quite often they'll be referenced to tenants or, or whatnot. And also you'll see the people that actually attend the AGM. The AGM is typically are owner occupiers, not always, but often our owner occupies and you'll see the same names, you know? And so there's certain clues that you can, you can track down. Yeah.

Justine: I find the best way often is if I'm looking at a building or working on a building for someone, is to actually speak to other people in the block. That too. And that's a great way because you really do, because everyone wants to tell their story. So they're always happy to say, Oh yes, we're proud and it's 10 out of 20 owners. And, and you can usually tell too, there's always someone, you know, if it is a block that's that's maybe got some longterm owner occupies, you know, they're usually fairly garden proud and often, you know, fairly proud of the asset.

Justine: It can be bad too, you know, that's right in the cad I can be, that can be difficult to deal with when renovating because they want obviously not to happen or the noise is an issue. And that's possibly my other biggest thing is is you know, you're planning obviously when, when you're in your planning phase pre renovation. But communications equally as important too because also too you find out so much more about the building and where services are because not everything standardly place, you know, in and over the years things change.

Justine: There's often no, well there's, you know, all that varies from, from the plan. And I've just experienced that with the NBN install in the block that I live in and own in. And they were coming on site and that was only just because I walked out one morning and saw them and said, what are you doing? You know? And they said, oh, we're here to do the NBN and they were planning just to run cables through the common stairwell on the outside literally and just conduit them. And I said, well actually now that I've spoken to you, we need to discuss this a little further.

Justine: So we've come to it. But it took, it took three months of that process and quite a bit of time. But we've got a better result. And unfortunately, you know, I think sadly a lot, of NBN is being installed has been obviously to Government roll out and everything else. But there's been a lot of, poor drilling through concrete slabs and things that have now been exposed.

Veronica: People have just walked out in, found the NBN big white box out the front of the building is just installed. And they are like hang on a minute. Yeah.

Justine: So you know, and, and you hope there hasn't been building damage, but, um, and you know, you gotta be sure.

Chris: Those dictator types that you mentioned there where they are a bit controlling in the building, I feel like the one time they were actually kind of good type see though, are they, someone needs to be that kind of person always watching things a little bit, you know, I guess.

Justine: Depends on the complexity of the building and the size of the building. You know, obviously, you know you apartment blocks are fairly well easily run, you know.

Veronica: But if there is one problem and you've only got four owners, that person has a 25% impact on impact.

Justine: Yeah, absolutely. But generally, I mean, and still a lot of those, it's still self-managed as well. Um, you know, self managed strata funds, you know, because it's been easy to do. Um, which that can be problematic as well depending on how well it's run. Um, but I did a couple of years ago, a renovation in a Surry Hills tower block and it's, you know, I think it was 58 apartments. So pretty heavy duty lifts, security cameras, pool, you name it. There was dramas and it was an onsite building manager who was literally, so every move you made he would appear. So he was my best friend because he locked several tradies out because he, it was all through swipe access and things like that. He cut lifts off, you know, but so we had to toe the line and do a lot of extra things probably on that one that, that we haven't done on others, but mean we had to pay. Um, you know, um, the fee in case we damaged common property, you know, we had to pay a bond. I think it was about three or $5,000, which was the owner had to do, which was fine.

New Speaker: Like for the counsel as a footpath levy yeah, the footpath levy is equivalent.

New Speaker: But that was, you know, that sort of thing. So those buildings can be way more complex. Um, you know, and and just logistics, you know, using lifts, you know, the amount of people moving in a block of 58 at all times and moving in and out. There's always someone renovating and always omeone moving.

Veronica: So those blocks, they do tend to have procedures. So it's actually really clear, isn't it? They say, well, this is what you do if you want top renovate which is a lot easier because then they'll tell you, well, when you need to get their approval with strata, when you need to get council, when you need to however you get your bylaw done and all those sorts of things as opposed to other buildings where they have no procedures, no strata manager and may not be very organized and individual buyers don't know what order to do things or should say, don't know what order to do things in that list. For instance, like getting a bylaw, you have to get that voted in at an AGM. Is that correct?

Justine: I'm not sure. I'm not specifically sure if it has to be an AGM or if it's a special meeting of like an executive committee, which is a, you know, um, but even then calling a meeting, there's a cost associated with that and it's time, you know.

Veronica: You have to wait cause you can't start your renovatiol and you gotta line up your builder, you gotta Line up with your trades. So it's actually very, you know, so like what sort of time period would you think is reasonable to expect? So if someone's looking at buying an apartment, for instance, thinking, well, I'm going to renovate this, what, what do they have to be thinking in terms of time, in terms of how can they finally get it done? Or is it going to take before they can start?

Justine: Exactly. And it depends on, I suppose multiple things as you just covered with how proactive the strata manager is and the strata committee and the size of the block and all those sorts of things. And how much other renovation has gone on before. Yep. And also too, it does, it does depend on the mix of owners and versus tenants as well in the block because often the tenants will just say, well whatever. And they'll go with the flow often, you know, but it'll be the owner occupiers obviously that will, we'll have more say and want more restrictions and that sort of thing, which is fair enough.

Justine: But look, it's, it's, it's all in the preplanning so you know, if you can get as much of, you know, done in your before you settlement. If you say if it's a new purchase, obviously they won't be able to approve works because you're not on title, but you can go a fair way to be able to, you know, if you are looking at doing things like structural changes, if it's vacant or even if there are tenants or the previous owner vendors living there, they might still allow you access to be able to get reports done and get trades in so you can get some really good quotes so that you can provide. And I often find, I provide the strata manager and the, in the body corporate with as much detail as possible, plans and photos and anything that we can do to make sure it's a smooth process because I just want to know at the end of the day, the going to be done according to, you know, to plan to building code, waterproofing, all of those things. Um, that you know, is, is then, so the actual, the renovation time on an apartment can, you know, can be as quick as three to four weeks. You know what I mean? If it all goes according to plan and it's all scheduled well and managed well and there's no dramas and no problems start with anything. If the planning of it is will save time in the actual execution.

New Speaker: So with them, you know, let's say that, you know, first impressions count with a lot of these buildings, right? Like if you're trying to resell it, sure one day, you know, you really want to hit that owner occupy market. Not so much on the investor side, but there's still, I believe, you know, they're going to walk in and they go, Oh, I love the gardens, I love the feel of this building, et cetera. If you, for example, one or we encourage your building to kind of get this facelift right, you know, and do you want to get some other apartment owners on board? If you've only got 10 apartments, how many of those apartments do you need to a agree for it to actually, go ahead. You know, do you need it?

Justine: Well, you've got to have the money in, you know, like you can't do capital works unless there's money in, in the capital works fund. So you know, major improvements as opposed to sort of the normal admin and paying for, you know, common power and things like that.

Chris: But it sounds like if you don't have the money you need to raise a special levy cause it's, you know, it's, it's rendering or it's new gardens or

Justine: yeah, you can borrow, but it's obviously it's gotta be, it's gotta be, I think it's at minimum, sort of 75%, you know. Um, and it's really a matter of, you know, what's the return on investment? Yes. You know what I mean? Is it going to provide greater amenity? Um, you know, is it, you know, I'm looking at the moment in a block, whether or not, you know, we've got, um, uh, the bins and, are sitting in a visitor's car spot in a beach side suburb. So it's just, it's ridiculous, you know, so it's, it's, we're looking at, we need to move them, but we've got to rehouse them and then sort of build something that we can, obviously, because the bins, when the building was built in the late sixties, the bins were, you know, half a meter high. Things there, you know, we've got 12 bins of all different colors, so it's all those sorts of things.

Justine: So you know, and that's an improvement, but it's also a value add for the building because it means that there's an extra visitors spot. It was originally a visitors spot there, but it's just, it was, you know, repurposed. But it's a matter of, of actually or, um, and, or in some cases, um, the opportunity for someone else to buy that space in the block and then that puts money back into the capital fund to be able to do these works. You know, there's, there's, we've got a lot of things in for the block I'm in at the moment that, you know, we want to do solar panels, all sorts of things. But that's contingent on ideally billing, some of the common property.

Veronica: You're obviously in a very progressive block where people are looking at value adds and maybe that's the location that you're in, you know, beachside eastern suburbs, right?

Veronica: There are plenty of buildings where there's opportunity, but there aren't necessarily owners that recognize that or even have that sort of mindset where they will look for opportunity.

Justine: I think. Yeah, I think no to, you're totally right because I think it's just in, it's maybe it's just a lack of awareness of possibly they could do.

Veronica: or seeing it as an asset. It they don't necessarily see the entire building and the fact that they're a shareholder, just, you know, it's not absolutely terminology, but they own it all. Own it. A piece of that. Yeah.

Justine: And look, I think, you know, generally, you know, in more cases, you know, in, in your average sized block you're going to have maybe a 50/50 split or maybe even more of, you know, might be more tenants. Whereas, so you know, your investor, if they're not invested in living in that asset, they're possibly less likely to, you know, think, oh, we could utilize or repurpose some space or whatever it may be. Unless it's raised to be able to then put money in the kitty to do extra improvements there.

Veronica: unfortunately there aren't. I mean, strata managers aren't really paid enough to come up with these ideas of time and they're not, they're not really engaged to come up with these ideas. There's actually nobody really professionally, from what I can understand that's involved in the management of these buildings, that that is their remit, you know? And so therefore it is up to the individual owners to start looking at their building and say, well, do we have an asset either we can improve upon or add value for all of us because there are investors that are investors, right? So I totally, and I encourage every owner occupier of consider their home as an investment because as you know, there's lots of reasons for that. But, um, but even as an investor, as an absentee owner, you know, to, to sort of just think, I want to keep my costs down is, not, that's what the investor's mindset at all. An investors mindset is really how, how can we increase the capital?

Justine: But when you also, you look at your investors are varying age ranges as well. And you know, and the, there are some, you know, in, in other blocks I've worked with that they've been owner occupies that they're on a pension now, but they don't have any, they may not have the extra cash and they say, well, why would I put more money into this building? Um, and so that's where I, I'm trying to encourage people, I'm obviously working with to really scope out their buildings to see well what, what could be utilized instead of it coming out of individuals pockets and special levies and all those sorts of things.

Veronica: You have to a case don't you?

New Speaker: And it's also totally, and it's timing and it costs because you've got to do a valuation but it's really worth it, you know, to be able to do a valuation and in some cases you might have to get a survey done or whatever else. Um, and it can cost then, you know, roaring up bylaws and things like that. But it's worth the outlay, you know, obviously you can't, you're going to do the due diligence on the, on the return on investment if it, if it's worth it. But there is so much maintenance coming down the pipeline on a lot of these buildings. So they would have to fund it some way. Yeah. You know, I know someone in a block that you know, bought in, didn't do a check, um, on the strata anyway, but um, and got it brought in $30,000 levy.

Veronica: Just mind boggling that painful. But it happens.

Justine: It does happen a fair bit. Yeah. Big Block. They're replacing all of the doors and windows and it's it, you know, it's a capital works over a long period of time. It's taking them about a year to do it.

Chris: What's the best way do you believe to do the check? There's obviously many ways you can do it yourself and there's other options. What do you think is the best way possible to really get to the guts of what's going on in that building?

Justine: I think honestly a really good look around the building is, is really the first point of call to, you can see, you know, you can, we've, we've also gone to blocks where the individual unit is renovated beautifully, but then you know, the stairwells horrible or it's not maintained or it's true, you know, windows are broken. And you know, i.

Veronica: O you want to hear a story about when I was a sales agent like years ago and I had this Saturday morning appraisal I had to go to and it was his red brick, horrible looking little block in Leichhardt and I pulled up at the front, it just looked like a drug dealers haven. Like honestly I pulled up at the front and I actually know that looks like I rang my, my then partner and I said if I don't call you back within basically half an hour, you need to come and get me. And this is where I am. This is back before you got tracked on your iPhone and everything. And I was that worried about going in there and I was on my own on Saturday morning, so I was half an hour like, oh, you're on notice, come and get me, come and find me. Anyway, I go in there, these little apartment that I ended up selling this, this apartment. He'd done the most amazing renovation and it was so bizarre. It was just like, like a pearl in an oyster, you know, it was just did this gorgeous renovation. He had these risen floors and the works going crazy. Um, you know, it was a challenge to sell. Absolutely. Because everyone had the same hurdle to get over that I had, you know, we had to really use the photos to draw people in. Yeah. That's what it was like. All right. Blindfold them. I was worried. I'm like, don't get out. Only open at night. Yeah. You do. You do that sort of create the red carpet with the curtains on the side, but then they'll look at and even, yeah,

Justine: I've been into a few blocks recently and the um, with uh, with someone that was looking to buy and they presented reasonably well and they were a lot of red bricks and they were neat and you know, and we all maintained everything, you know, very neat. And you know, and they weren't overly stylish as you know, like some of the deco entrances are and things like that. But a couple of the stratas that we then did look at and it was good, some of the agents were just actually providing a report which was refreshing as well.

Veronica: but you know, there's reports also bias for sure in some cases, maybe even without the bias. The problem is that, you know, they will go for it. Obviously, you know, they said economies of scale and doing it that way. But you know, there are, there are reports and there are reports and I have to say we're done episodes talking about strata reports.

Speaker 2: And I've actually got a little video talking about strata reports. I didn't put that in the show notes. You know, it's what's not in them. That's important.The problem is people think they got one and so that's enough. They don't realize that, that that's only just the tip of the iceberg.

Justine: Totally. Totally.

Chris: got the check the building though. You get the download the strata report. Yep. And then what do you do then? You know, I guess, cause know a lot of buyers will be thinking, I've checked the strata and the building, it looks all like, Hey, what are I've been doing?

Justine: Before I even do stata report or recommend anyone does. Um, if, you know, depending on how serious they are with why and where and what their purpose is as well is always to make sure that just look online. We've got so many resources for that block what other apartments have sold, what they've done to them. We've been so lucky with all the photos. So you do floor plans and floor plans and it's great because quite often you can go, oh they did that, you know, one floor down. Maybe we can do the same. And so once the precedent set it also isn't a good indication normally cause there's bylaws that they've had to submit.

Justine: So sometimes some stratas don't, haven't, you know, if the Renos had been done prior, there was no other extra bylaws done inside the cases.

Veronica: Done done prior to what?

Justine: Oh, you know, just something, some buildings didn't always require a specific renovation bylaw. Yeah, yeah, yeah, yeah, yeah. I mean a lot more prevalent now.

Chris: Well yeah, cause it's got to cover themselves for all the damage that, yeah, because there was a few, there was a few blocks that in that I've dealt with it they got burned because of, you know, the two or three sales in, that's when problems started and it was like, well who's, who's to blame? Who's, you know, and it was at the owners, it was the owner's cost then you own as costs even though they hadn't done the renovation.

Veronica: Um, and that gets passed on anyway. Even a bylaw. Totally. Typically the bylaw does quite, it does dip out who's responsible for leaks. And it basically takes responsibility from the owners corporation puts it on the renovator. Yeah. They of course as a buyer you have to realize that if you're buying a renovated property, you're then taking that responsibility.

Justine: And a lot of people don't understand that, you know, because I think they just think there is a lot of that, that all I can buy it and I'll just do anything. And apart from the restrictions of services as one physical restrictions, physical restrictions in the building. It's also well, yes. What, what else is allowable and acceptable? Um, you know, I was working on a building that, um, one of the 10, it was only that one of the other owners that live there did to me in passing are the people upstairs, the sun's a and artists and he wants to put a kiln, the garage. I said, you've said no. And she said, Oh, well, I don't know what it means. And I said, well, tell your strata, managing no know. Obviously that's, that's a whole other can of worms - it's an oven.

Chris: Um, I guess I'm the a client who was, um, buying well can, you know, painters. Wow. That was a long night too. Well, I got it. Um, you know, I guess a client was going to buy this, uh, place in Woollahra and uh, you know, he wants to buy it, you know, he's very well trained up, knows what's a good property and um, hey, I'm trying to do and it's got a few properties and he's pretty good. He will say, whenever he sends me properties, he's like, you know, what do you think of this one? And they're usually really bang on anyway. So he was very close to going for this one in Woollahra. And uh, you know, there was this kind of amazing outdoor space on top of the garages that the real estate agent was selling and saying, look, you've got exclusive access to this. It's on title. You know, here's the diagram, which is kind of the selling brochure. It's drawn on there. Um, and he was a bit switched on. He realized that it wasn't actually his, you know, how common is that and you know, how, how do you actually really protect yourself around whether it's on title, have you got exclusive access,

Justine: You conveyancer lawyer when you're reviewing your contract, should be able to pick that up pretty quickly in the contract. But again, yeah, it's a bit, again, it's, it's that thing of knowing that, you know, most people just believe the brochure is the shiny brochure.

Veronica: I've got an absolute example. So in one of the episodes of the show location, location, location or as helping farmer Dave, I may have mentioned this in a previous episode, I'm not sure, sorry for listeners if you've heard this one before. Um, so I was helping farmer Dave buy a villa or a townhouse up in Byron Bay and we filmed this particular one. And on the brochure there's got this uh, courtyard with a deck and a garden and outdoor shower and everything and a wall and a fence. And that's on the brochure. On the floor plan, it states existing use rights of this courtyard and I get the contract cause we were going to go for it. And I turned to the easements and the bylaws and all the rest of it. And I see that, yes indeed, there is a bylaw giving exclusive use rights to this and they typically have a sort of a closet. You can only, you can only, it can only be reversed if there's a hundred percent vote. And obviously you're never ever going to vote to reverse your exclusive use rights. So that's sort of the protection. That's quite often what you see. Something along those lines in there. Um, so anyway, in this particular case, yes indeed it was there, there was a diagram, et Cetera, et cetera. The only problem, the diagram was of the deck, not of the garden and the outdoor shower and the fence and the gate. Um, and so I brought that to the attention of the lawyer and now the lawyer of course has gone, oh, so you've got an outdoor space? Yeah. Oh yeah. Oh here it is. You know, the lawyer hadn't said, oh, can I see the floor plan? What are they advertising? He hadn't sort of put two and two together anyway. Oh, well thanks for bringing that to my attention. Turned out the previous owner. So the person selling it had also bought it under those circumstances and no one had actually it had flown under the radar because it's like, oh, you got an outdoor space. Did you see that? Yes. Okay. They didn't go well, what is the actual dimensions of that? Exactly. What is your expectation of where that is? You know what I mean? There was none of those additional questioning. So yeah, that was, and that was like news to everybody. The agent had no idea. I mean the agent should've because the agent should've looked at the contract. Um,.

Chris: But my understanding of the council stuff that hasn't been approved is if you buy it and someone's disclosed that to you that it hasn't been approved, that's actually okay. You.

Veronica: 've then just got to disclose it when you sell it. Is that true? It is to a degree, yeah. Yeah. There's all these sort of disclosure stuff and if you don't disclose and you shouldn't disclose and there's recourse and all that sort of stuff, but if this is more in the case of everyone this assumption that Oh, there's an outdoor space and no one ever thought to actually check exactly the quantum of that outdoor space. Um, and then of course they could have been recourse if somebody decided, I don't like you having your fence there, farmer Dave. Oh he didn't buy it anyway, but, but you know, and it was just that thing that solicitors, it seen the contract. Yeah. Because they don't know the property they're going on, what they're going off what they've been given. And this is why it's really important, you know, and I know the difference when a solicitor who does a lot of property and go back to episode 53 we, Jennie Tonner she's a conveyance. So you know, what's it 30 years experience or whatever. I mean she has loads of experience and somebody who's been doing just property, whether it be a conveyancer or a property specialist, accredited property specialist, lawyer, they will ask those questions cause they will know that that sort of thing can happen. But if it's just your generalists down the road or your solicitor thinks that they do a bit of everything, they won't necessarily realize how easy it is to get tripped up by something like that.

Chris: A client just recently bought an apartment on the weekend, um, and it's a very nice art deco, Art Deco, Art Deco. Um, but the parking, um, you know, you mentioned something about scramble. Well, yeah. So, um, you know, I'd, you know, a lot of people are busy, right? You're, you've going around, so six or seven opens on a Saturday and yeah, you got live until 11-11:15. Are there any 15 minute opens, which is.

Veronica: rentals are 15 minutes, 15 minutes sounds a half an hour. Okay. Used to be 45 minutes. The old days.

Chris: Yeah. Right. So, yeah, let's say it's half an hour. Right. Um, but yeah, but then you've got to drive to the other one open at 11 o'clock too. Yeah. And you're in traffic. Yeah. So you've only got like five, 10 minutes because you'll go, I've got say one 11am one 11:30 I've got, so that's what I was thinking. So yeah, you've got to be in and out and you're probably, and even if it's the right one, you know, you, y'all, I love this, but I've got to go to the other one. So sometimes just, I know they would get a bit lazy and go, Oh, I've got parking downstairs.

Justine: We don't really need to say how, how parking parking or the agent points out the window and says it's at the end. That's it. Yeah. Go and have a look on your way out. And they go, oh yeah, there's parking here. And they walk away.

Chris: But obviously that's a pretty crazy thing to do, but people would do it right because they're busy and they've got, they want to buy it on the Saturday and you know, if it's hot property, they've got to get off the market and just assume it's right. But you should really check the parking.

Veronica: I mean this client, you know, I do like, so there's this building in Balmain and I looked at this apartment, East, actually I took a photo on Facebook as a number of years ago now it's hilarious. Oh, because exactly that. Where is the podcast base? I want to go and see it. So I go and see these car space and the ramp coming down into the car park overlapped the car space, the very end car space well not even, not a mini with a bonnet, put it that way. And so they had, the tenant had like a small car but didn't completely fit in the spot and they had a massive big wad of like foam that they taped to the edge of this concrete basically underneath the ramp, they basically nudge their car in too far and they will be scraping their bonnet without a doubt. But they couldn't get even as like a little hatch fully in the space. Yet on the title and on the floor plan would've showed that it's 15 square meters. Exactly right. I wouldn't have shown the overhang. It didn't, it didn't say that. You can't actually get anything bigger than a smart car in there.

Chris: Like, yeah, the client did test it. Right. And so I was chatting to yesterday about it and she said, look, you know, um, the, the buyer's agent has a big, you know, Audi sort of thing he's trying to get in. But, uh, he couldn't get his car and he said, oh, get in it. And it gets up out there and tries to reverse and then get stuck and you know, it was a bit quite funny. And then he's kind of apparently had to cut a come out with his tail between his legs instead of, well I couldn't get in and out in standard size, but then she has a small car and so she tries and she couldn't get it. Oh Wow. And so, um, you know, and at least she knew that she ended up buying the place anyway, right. Because you know, of the, the apartment and where it is and the uniqueness of the building, etc.

Chris: But really she, she bought it knowing that it's not really a car space and you know, like, you know, yeah, that's a good question.

Justine: Fair bit of value differences.

Chris: But she's factored that in and she had that decision, but let's say she didn't. Yes. Yeah. And she went and actually settle on the property. Six weeks later who's driving in? You gotta unpack her car and she can't park. And so it's just probably a mistake that, you know very easily. She could've missed that, but it would have made a huge difference. Cause once you sign the contract, obviously it's done.

Justine: That's happening a lot in not only in in purchases but in rentals too. Then you know, the old garages of the blocks the 60s and that sort of thing, they were for a sedan, small, smallish car, nothing, you know, none of the four wheel drives or anything that are high enough or they can't get in the, you know, the tilter door doesn't open or that, that's a lot of it. And people don't look at that when they're renting either. And where I am, I know that's happened in a couple of peoples blocks in the area and they say well we've got a garage but we have to park on the street.

Veronica: Well I was, yeah I was looking at a, an apartment for a client, investor client actually in Potts Point some years back and, and beautiful apartment really loved it and I knew he'd love it and think I look at the parking was actually, it was a stacker.Now, I don't only not like stackers, but this was hilarious cause these stacker was such that you basically could get maybe an MX5 in it, like a basically a tiny, very squat car, not even a hatch. It was so short, like, so it was basically you got a, I don't even know how you'd get out of it. And I'm like, you know, it was just a nightmare.

Justine: How did that get approved? Yeah, exactly.

Veronica: How can you count that as a stacker? You know, like the toy car, three cars in it instead of two. And I was like, that is just going to limit your tenants. It's going to, you know, there's sort of [inaudible] point parking, you know, um, you know, you're paying for it. And so we didn't buy it on the basis of ridiculous stacker.

Chris: Have you seen the, uh, the stuck is in New York though. There's a, so you kind of know these latest new high rise Kinda know ultra kind of wealthy apartment, right? Yeah. Did you drive your Ferrari? Oh yeah. Whatever in and then it lifts your car up to your level. So you can have it in your lounge room. Excellent. Let's call it like a sky garage.

Chris: Oh, show who off your car on level 66.

Veronica: Look at my new Bently. Like that's pathetic. If you can afford that sort of car to actually have to show it off is really, really sad.

Justine: Yeah.

Chris: Every week we hear incredible stories of the dumb things, property buyers do, dumb things that end up costing a whole lot of money and, or a whole lot of stress mistakes that can be avoided. Please. Justine, can you give us an example of a property dumbo? We can all learn what not to do from these stories.

Justine: Look, it's probably a few, um, but without obviously naming anyone. Um, probably one of the people that would know. Yeah. Um, oh no, not particularly. No. But they would know if they listened to this, um, the, um, well they should clearly yes. Um, probably one that's, you know, it's all ones and it's covers many things. Is that wasn't someone that I, um, I came across them after they'd purchased. Hmm. And in, in all, you know, um, I suppose ticked it all the boxes for good investment. You know what I mean? It was a good solid unit. Good build, ugly the mustardy colored brick. Yes. But still good buy. Yes. Good location. Yeah. But, um, and she had bought, um, it was a bit of an impulse and she'd done a bit of renovating of homes and her own home and a holiday home and then decided the market was starting to heat up. So it was about, it was probably maybe, maybe sort of three ish, years ago, three, four. And she just said, right, I'm going to do an apartment because I know I can do it.

Veronica: Overconfidence bias. This is it. It covers all of your whys, all of the biases.

Justine: And she came, so she bought it at auction, so there was no cooling off. Um, she, there had been other renovations in the block, so she had sort of done a quick due diligence, literally like the day before had seen it. The agent sort of agreed and said, yes, other people have renovated in the block. That's right because they were just, it was the thruth. Um, so once she gets to that point of, you know, she's in her process of then planning the renovation, but what she wanted to do, she wasn't keeping it as an investment because it was rock solid for an investment, ticked all the boxes, location, infrastructure, you name it. She wanted to flip it. And she, she was determined that that's what she was going to do with all the on costs and everything else she said. But what she needed to do was put a second toilet in and she'd also thought I can rejig the floor plan and make it into a three better. Anyways, she came across my attention because we're someone that we had in common said to ring me for some advice to see if I thought it was possible. She was, well she bought it. This is, she's in, she's not under settlement. She's, she hasn't settled cause she hasn't got any outgoing costs yet. Um, anyway, so we went through obviously, and she just said, well, I just thought I could do that and I could, you know, I could do another toilet there, which we said, no, you can't do that because it's in a completely different spot.

Veronica: And if it was a house, the plumbing, totally different issues.

Justine: So she'd done all the figures. Yeah, trust me, she sent me brochures. I got it all and saniflow or some system you know, you can imagine the strata agreeing to that. They just don't know. Even even we'd done some preliminary, as I'd known the strata company from a couple of other blocks. So we did try to get a gauge from them as to before we put a plan in our play that you'd be, you know, what do you think? And if, you know, funnily enough, 100% know. Um, but um, but the other one was, so she'd done all the numbers on basically flipping it quickly, turning it into a three bedder, which it wasn't a big enough living space thing. It was just too unbalanced. And it was, and it wasn't a deco block. You could get away with that sometimes anyway, so the long and the short of it, she would obviously, when she had, she went through with the sale, um, and she did a very good, she couldn't do the third bedroom because it also meant it was cutting across one of the windows. So she'd said, oh well I'll just change the window and [Strata said] no you won't because it's it and you can see that windows.

Veronica: She made all these assumptions what it was.

Justine: And it was just, if it had of been a quick call before that, we would have been able to save herself.

Veronica: Did she flip it?

Justine: She did. It was probably, it wasn't a loss, but it was only because I introduced it to a couple of buyers agents who bought it for an investor after she' so she didn't have to pay the selling costs.

Veronica: So she didn't pay selling costs so she did lose money because there's opportunity costs. There's also the time, you know, and the stress of it all and everything else. And lucky day to cover her costs.

Justine: It was a, it was an expensive learning curve. And funnily enough, she said, I think I'll stick with health after that.

Chris: I think probably a saving grace as it's probably sounds like she bought at a reasonable time in the cycle.

Justine: She was lucky because she knew and she knew she was in, in look, it just kept, he did keep going and going. If she probably held it for a year, he possibly could have made some serious money.

Veronica: But if she bought at the end of 2016 with all the same assumption, she would have lost money.

Chris: The block makes it seem so simple, but yeah, really it's, the block shouldn't be on every year. The block should only be every, you know. Pick a market that's actually growing. Right. It was.

Veronica: There were one season where they all passed in. Remember that was, and then the following year, all the reserves suddenly plummeted. So it's like, of course it's going to sell because the reserves joke. But yeah, they all tested in block that it was in Melbourne or was that the, was that the Richmond?

Justine: No, the one that where they were across the road from the Coles complex,.

Chris: Great spot opposide Coles.

Justine: A lot of people didn't know that. And then when they went there and you know, and that had thousands of people at the opens and everything, I have friends who lived down there, you know, there's just a constant snaking of traffic going in and out of that car park. Like the whole weekend. It's like, okay, good to know. That's awesome.

Chris: Wow. Shouldn't say things like this, but I mean quiet who was probably on the producer side, well kind of knows what's going on at the block. Um, you know, probably a lot of the stuff just gets redone. You know, a lot of the internally it's the.

Justine: Television renovations aren't all like that ?

Chris: You know, there's actually builders on site redoing work and stuff like that because a lot of the stuff is, it's get it done, but then this is not going to be out of sell or it's not done right or the material's not done and it's not approved, you know, 20 or 30 trades all stepping over each other and timeframes and everything else. You know, you're bound to have lots of issues shal we say, fantasy and reality.

Veronica: They're a bit different ratings, ratings in reality. Yes. Well listen, that's been a very informative chat Justine. We've covered, you know,.

Justine: We could still go on ....

Veronica: well clearly like we, so many because we have people that come that have got expertise and you clearly have, you know, I've got loads of expertise in this area. I think it's a really good thing for people to understand the complexities and I think we just scratched the surface today. So obviously we'll, we'll put links in the show notes and how people can contact you if they're thinking about doing something like this. Um, and yeah, I appreciate your time.

Justine: Thank you.

Chris: Thank you.

Chris: We want to make you a better elephant rider and this week's elephant rider training is..

Veronica: Further to a lot of the conversation we just had with Justine around, you know, what do you need to look into when you're buying into a strata building, particularly when you're looking to renovate? Um, one of the things that, that I often talk to with my clients is that sometimes you get these older buildings and they are a bit run down. I mean they either have been predominantly in history owned by more investors than owner occupies or a lot of the owners are really old and you know, on the pension they don't have a lot of money to spend maintaining and upgrading foyers and gardens and all that sort of thing. But depending on where they're located, fundamentally the, the ends up being a shift, a shift in ownership, you know, as properties become more expensive, investors are less likely to, you know, buy into them for instance. Or it might be that as these older people, you know, move on. Shall we say that the properties get sold and younger, you know, first home buyers, etc, buying to them.

Veronica: So there is a bit of research you can do and sometimes there is a good upside when you're looking at a building that may be a bit shabby now, but actually has had recently some change of ownerships, some newer people getting into the building. Those people, um, you know, may be likely to be more active on the strata, on the committee, for instance. And you might find that there's a new wave of interest and activity in the building and in, in upgrading that building. So that is something to look for, you know, don't just completely discount a buildin if it's looking a bit shabby, they can be tired. Um, for lots of reasons. It's not always because it's a bad building to buy into. So I would encourage you just to consider whether there's an upside in some cases, depending on location. Of course.

Veronica Morgan