When is it time to get rid of a strata?
While investing in strata can prove to be both beneficial and lucrative for some property investors, many tend to avoid exposing themselves to it. In some cases, investors usually find themselves fighting for their investments despite the high level of risk involved as well as the amount of stress that could be accumulated — but when is it actually time to say "This is not worth my time anymore"?
As in all other investment ventures, seeking professional guidance is one safe way to navigate through strata according to Smart Property Investment's Phil Tarrant, who is a self-confessed "pro-advice" investor.
Ian McKnight of ClarkeKann Lawyers told investors to be wary of emotions and always approach a concern in an objective, professional manner. Before giving up and selling an investment property, one must learn to understand the circumstance in a holistic manner—from a personal point of view and from the perspective of every other party involved.
"Why would somebody want to vote against what you want? Understand their position. It may well be... the pot's on the left-hand side. It may well be that the door doesn't open properly, by the pot being on the left-hand side. Indeed, if you put it on the right-hand side, everyone may be thrilled to the back teeth," he said.
"It's a case of, at the end of the day, do you want to die on the ditch over this issue? Is it worth that? It may well be that it just simply isn't and you're right, they may just have to make a very commercial decision and say, 'Well, look, everyone in this scheme is mad. I'm the only sane one here. I need to move to a building where all the other people are sane, unlike this one. It's a case of strategising a little bit."
If a group of people can't bring themselves to a unified conclusion through a general meeting and some reasonable debate, they can try to bring in some field expert or professional for sound advice and guidance.
Aside from providing mentorship and assistance to individual investors, a good financial team can also look at potential disputes and the possible implications of particular decisions in a strata or other co-investing ventures.
"There may well be things on the agenda of a meeting that call for somebody to come in. You can say to the committee, 'I've got this proposal about putting on an extra floor of the building, so we can sell it off and get a little bit more money, to help maintain the building. I've got this quantity surveyor who's able to come along. I've got an architect and I've got an engineer and he will give some advice. Each of these people can speak for 10 minutes,'" Ian said.
He concluded: "The committees tend to rely fairly heavily on their expertise. They don't try and answer the question themselves. They try to identify who the respective people are to come in and answer that."
Tune in to Ian McKnight and James Nickless' episode in The Smart Property Investment Show to know more about the rules behind strata, the politics involved with the owners' corporation, as well as their tips and tricks to ensuring buyers receive the right advice at the right time.
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