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  1. #1

    Post Unique apartment with weather tightness issue

    Hi guys, been lurking on the forums for a while now and finally decided to sign up. I would like some discussion over an apartment I am looking into investing however it has weather tightness issues. Usually, when I hear these issues associated with a body corp I will be miles away. This situation is a bit unique.

    My real estate agent who sold apartments in this building has advised me to take a look at the potential. This is a 61sqm 1 bed concrete apartment built in the 1990s. Now, the weather tightness issues are on the balconies. Re tiling and re waterproofing the balconies are what's needed to resolve the issue. The budget is set for each owner to pay 15k-20k. Good news is the complex has 1 and 2 beddy apartments, the 2 beddy apartments with double the size balconies have already been completed and CCC has been issued. My real estate agent has sold 2 of these. I would like to hear about the risks associated with investing in this apartment complex. Now, from my understanding I believe they will complete the work and CCC will be issued, however we just don't know when or how much. Since it's a balcony issue primarily, tenants will still be able to reside. If I can secure a loan for the property I don't see there being too much risk. Rent appraisal for this 1 beddy is 500/week which I can easily rent out and get positive gearing returns until its fixed.

    Any comments negative or positive will be greatly appreciated.

    Cheers!

  2. #2
    Join Date
    Oct 2013
    Posts
    1,620

    Default

    The building will always carry a stigma of weather tightness. You'll have more trouble selling it; or will need to drop your price.

    In saying that, if you get a good price, weathertightness apartments with established expected costs can be excellent investments. Just get your numbers right.
    AAT Accounting Services - Property Specialist Accounting - AATAccounting.co.nz
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  3. #3
    Join Date
    Sep 2008
    Posts
    7,575

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    from what you say

    it sounds ok

    but are you really sure you have been told everything fully + accurately?

    auckland council have a weathertightness section and it is possible to speak to their engineers directly if it's in auckland

    also you probably should try and talk to the building manager and someone on the BC

    a bit worrying if your only source of knowledge is the agent...
    have you defeated them?
    your demons

  4. #4

    Default

    Quote Originally Posted by eri View Post
    from what you say

    it sounds ok

    but are you really sure you have been told everything fully + accurately?

    auckland council have a weathertightness section and it is possible to speak to their engineers directly if it's in auckland

    also you probably should try and talk to the building manager and someone on the BC

    a bit worrying if your only source of knowledge is the agent...

    Get the disclosure statement from the BC and all the minutes of their meetings If they are sophisticated committee that does not get dominated by 'knee jerk pannicers' then the issues are manageable, It augers well that they seem to have weathered one stage first?

    The problems come when the wrong experts are involved and lawyers sniff income stream but 1990;s already out of time. But of course the recent repairs are able to be proceedings so the cycle continues. Talk to committee and get a sense of haw sensible they are. If they say no problems they are liars if they say we manage the issues in the unit holders interests then you are onto a winner.

    You cant go wrong if you buy at the right price
    Last edited by John the builder; 23-02-2018 at 06:22 PM.

  5. #5
    Join Date
    Oct 2008
    Location
    Auckland/Melbourne/ whereever the money is
    Posts
    1,380

    Default

    15 - 20k doesn't sound enough to me, sounds more like the initial budget to complete investigations and design. could be another 20k to do the work.
    Are you sure the tenants can stay in place, builders push hard to evacuate the building so they have free rein. they don't like having to work around tenants.

    re stigma- will be very dependant on the complex and type of repairs done.
    I had some leakies 8 years ago. they required complete external wall relining. the whole complex had to be vacated for 6 months. They cost me around 70k each, and that was after we got a settlement from council. Probably 180k full repair cost. at the time it didn't make sense to spend another 180k on a 280k unit.
    At the end of it we ended up with a better building and that reflected pretty quickly in the price and they have continued to appreciate well in recent years.

    If the repairs are seen as patchups, then there is still the perception of the inherent problem not being properly fixed, and hence values stay depressed.

  6. #6
    Join Date
    Mar 2015
    Location
    Brisbane Wellington Auckland
    Posts
    807

    Default

    I agree $15k to $20k seems like the paperwork
    I suspect the repair costs to be $100k to $180k range

  7. #7
    Join Date
    Jan 2010
    Location
    Hibiscus Coast
    Posts
    1,800

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    2 apartment blocks we managed in Albany were repaired about 2-3 years ago. 51m2 with at least 2 ranch sliders opening onto decks. Tilt slab built in the 1990's they leaked around the balconies (3 storied blocks but single level apartments) It cost each unit owner $60k and the tenants had to vacate. Repairs took just under 12 months. Also in one apartment block we discovered that none of the 90 showers had been installed properly and leaked, requiring new showers to be fitted. Didn't get done as the contractor had a deadline to meet.


 

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