FAQ

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The key areas to consider: 

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• Location Location Location: The location is everything. Your building will be in either a low/medium/high-density area. This will determine the height, floor space ratio, bulk and scale. 

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• Ownership: In strata, you own a percentage of the whole building, which entitles you to the exclusive use of your apartment. The walls, floor and ceiling are common property and you only own the kitchen and bathroom fixtures and paint. Therefore, you need the majority (>75%) of the owners to agree to sell any common property.

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• Funding: The common method of funding the building repairs and maintenance is by quarterly or a special levy. However, raising the funds by selling off the common property to existing owners (or a third party) can be the best financial pre-taxed funding option and an unsecured strata loan (6-8% per year) has become a popular option.

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• Communication: The key to a successful strata development is to engage a non-financial project manager that works on behalf of the strata, instead of an individual owner. This will help streamline the communication as there are more hoops to jump through than a traditional development as there are multiple stakeholders. To better facilitate communication, we hold online zoom calls that can be recorded for any owners who missed the meeting. A super-effective, easy project management system with all documents stored in the cloud is accessible to the owners 24/7. At Next Level, we help the owner's project manage every task, as we are with you every step of the way.

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• Legal: Your strata manager is only allowed to invoice owners per their unit entitlement. Therefore, any sale of a common area requires a written deed and bylaw to be approved.

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• Valuation: A NSW registered valuer is required to value the space, as Stamp Duties are to be paid to the ATO when adding the space to your title.

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• Profit: The sale of the common area is paid into the sinking fund. The owners can determine if these funds are used for capital works or paid out to owners as profit.

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• Project costs vs Profit: On average: 70% of the profit is gained during the planning stage with minimal project cost (>15%). In this stage, the owners have to agree to sell the space and the council approves the design. The next 30% is gained in the building stage, which is the most expensive stage (.>85%).

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• Project split:  Last 75 strata subdivision projects, only 25 have activated their development application (selling the dream).