Thursday, September 10, 2009

Buying a high rise apartment

Just some observations about buying into a high rise apartment. These are my personal thoughts so be wary. I am not god. I only think I am.

Why do you want to live in a high rise apartment. Ask yourself this question many times. If you are moving from a house, will you miss the garden, the privacy (perhaps overated), space in your back yard for barbecues? In your house, you control exactly what is done and when and where money is spent. In a large high rise apartment, you have very little control of what is spent outside your four interior walls. Yes, you can get onto the Owner's Corporation Committee or lobby the OC manager, but the decision is not yours alone. Although I did not really want to move from our house to a highrise and my partner did, I adjusted more quickly. All very well to miss the garden, but I was the one who did all the work in the garden. I would suggest to make sure you have some nice parks nearby. Ok, it is not your private garden and you have to share, but hey, everyone else is paying for it.

If you are buying a brand new high rise apartment, you are probably buying off the plan, supposedly giving you some stamp duty savings. Because it is new, you will be paying a premium price for the property. The stamp duty saving is only to make you feel good. Forget about it and just look at comparative total prices, as you would when buying a motor car. Do not delude yourself that because you saved $15,000 stamp duty, that you have done well. For mine, an existing building with residents already there is preferable.

Condo or apartment? Surprisingly they are different and in Melbourne at least defined by ceiling height. Ours is an apartment with high ceilings and bulkheads and some lower areas for services to run around. Condos have low ceilings with a decent space above the ceiling for services over the whole apartment. The definition seems to have become irrelevant but the point about higher ceilings has not. They are very desirable and yes, you will pay more for an apartment with higher ceilings, but it is money well spent. You will feel much less boxed in. They can be too high though, as in some expensive apartments I have seen. They give a barn like feeling and are not so practical.

You arrive at the building to check out an apartment with a view to buy. Stand back. Look at the block from the outside with a critical eye, especially the balconies. Start knocking dollars off the price if you see clothing hung on lines or clothes airers on balconies. Ditto bicycles, exercise equipment or god forbid, old couches. Cardboard boxes and other junk are no nos. Dead or dying plants look bad as do plants in white poly styrene boxes. If this is how balconies look now, it can only go downhill, along with the money you have invested in your property.

Does the exterior look well maintained? Is the public lighting in good condition and working? Is the entrance clean? Is the intercom in good condition and functioning? Glass and or mirrors clean? Later check the mail room. It should be clean and without junk mail lying around and a bin nearby for advertising brochures that invariably sneak through. You can change your apartment all you like, but the public area is what your visitors will see first. The lifts should be clean and all lighting working.

Once you step out of the lift to the lobby on your floor, how does it feel? If it feels like you have entered a rabbit warren, you have. But given I am judging from our decade old place that has particularly large floor lobbies, possibly most are a bit space tight on the floor lobbies. It is just something to take in and think about. There should be clear markings of directions to individual apartments.

I won't say much about fire systems. They are well policed in high rise apartments in Melbourne and probably the rest of Australia. Sometimes things slip through cracks, but they are of minor nature. Short of a terrible catastrophe such as a plane flying into your building, you will not end your days in a towering inferno. There is a lot of protection, much of it unseen by residents and it is assiduously maintained. Should you buy a high rise apartment, be terrified of knocking or setting off an interior sprinkler. It is gonna cost you if you do.

Once inside the apartment, it is much as buying any property to live in. In this case, you will probably be looking at views too. I don't understand why you want to live in a high rise apartment without good views, but many people do. Perhaps it is the convenient location and ease of living. If views are your thing about living in a high rise, be careful. Look around carefully and see where your views could be lost by another high rise being erected next door. Look for older low rise buildings especially but even newer building can be extended upwards. You may have a right to amenity before the authorities, but you have no right to a view. I can't stress this enough and take nothing for granted that you may be told by a real estate agent. In Sydney recently there was a court case where the the agent (better be careful here) allegedly truthfully told that the low building next door was owned by the developer of the apartment building. It was alleged that less truthfully, the agent said that the developer would never build there and block out the views. Take the utmost care here. A lost view can devalue your place by tens of thousands of dollars.

And I think lastly, the Owners Corporation, previously known as Body Corporate. The OC is all the apartment owners. The building is probably managed by an outside company. Get on the net and find out all you possibly can about the managing company. The OC elects a committee to manage the building, that is to set policy, ensure things are repaired in a timely manner (that is a joke) and generally make sure the building is well maintained. A contribution to a sinking fund for long term expensive maintenance is compulsory in Victoria. I expect there is a minimum, but if you are in a large highrise building, you are talking about balance figures of hundreds of thousands of dollars.

Now I think it is par for the course that you will get minutes from the Owners Corporation last AGM, but these won't tell you much. I am not sure if you are entitled or not, but try to get hold of the last couple of OC Committee meetings including financial statements. Once you recover from the shock of seeing how much tradespeople charge the OC for minor work, check how the sums balance out over the year. The OC fees you pay should be pretty close to being spent each year. The sinking fund will show separately. Check this out too. Money should be coming out of the fund each year on improvements, not being held back and saved for spending in ten years time when you may no longer be there. Look for disputes and how votes fall on a decision. Votes should generally be the same, indicating that there are not strong factions and the matter has been properly discussed beforehand and there is not ill will. An hour or so perusing OC paper work is time well spent.

Truly lastly now, if you have taken all care and it seems ok, how do you feel? Excited at the prospect? Relieved at having a smart clean place where you don't have a lot of work to do? Time to let your heart rule.

5 comments:

  1. Anonymous1:14 am

    Who in their right mind would live in a high rise hen factory?

    Give me my castle on a 1/4 acre block and I don't mean a MacMansion either. I need a yard and garden to potter around in.

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  2. That's great advice. I wish we were out looking for an apartment in a big city. I've done tiny apartment in Manhattan and big house in Fort Worth Texas. After experiencing both, I feel I'd rather have the apartment.

    We never owned an apartment. We just rented. Our criteria was more along the lines of no blood stains or dead-body smells. You can't be too picky in NYC. Although you could probably be much more picky if buying.

    The one thing I hated about NYC apartment living was all the tipping and bribing. But you probably don't have that in Australia. You guys have much less of a tipping culture.

    Our lobby was fairly nice and clean. I think? I didn't take much notice of it. At the very least, it wasn't disgusting.

    We looked at one apartment which had a very good price. But it smelled HORRIBLE....

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  3. Great points there Andrew. We have friends who lived in a lovely building in the outer burbs of Sydney. I loved going to visit there. The feel of the place was great. From the foyer, to the lift, to their floor lobby and once you got through their apartment door you felt relaxed and at home. They had a little balcony and their view was not too bad either..it overlooked a nice little pub and you could just see the city too.
    Their car park was also secure and well lit, that was also important..well, I thought so anyway.

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  4. If I was high-rise shopping Andrew, I'd consider your post the "guide" to use. Very thorough!

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  5. Clearly I don't agree Anon. It is not like a hen factory. Real people in real homes.

    Thanks Dina. Wow, Manhattan! The only bribe I have heard of was when a past building manager used to clean someone's apartment for a fee and do other odd jobs for people. The manager gets a $200 at christmas as a bonus, the cleaners half that.

    Cazzie, carparking is perhaps something I left out. Secure is important. Car parking disputes are inevitable but a well run building should not have many.

    Thanks Daisy. I expect the post will be visited many times in the future by people searching the net.

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