Ensuring The Property You Plan To Buy Is Well Managed
Good management of a housing or condo project is key to its long term survival and to ensure that the value of the properties within it are preserved.
So when choosing a property one of the things to do is to carefully check that the project managementhas been functioning well and will continue to do so in the future.
The management will normally be tasked with taking care of security, which in a housing project may mean entrance guards at the front gate and security patrols on a 24 hour basis guarding the grounds. In a condo it may also mean the management of card key systems in the lifts and front doors as well as CCTV on all floors by way of an in house camera and monitor system. A team of guards should also be on patrol and should be manning a front gate.
Other tasks that the management team will be required to undertake include the upkeep of the swimming pool if there is one, and the maintenance of the grounds that form the project, whether it be a condo development or a housing estate. In a condo the maintenance and scheduled repairs to lifts, water tanks and electrical installations etc. will also need to be attended to.
You can tell a lot about a property by looking at the state of a swimming pool, or the state of gardens. The painting and upkeep of common areas is also a requirement of the management team so shabbiness here will be a giveaway that management are not acting well.
Since these are all ongoing expenses, the management must be adept at collecting management fees from unit owners. If a condo building or housing project is not well occupied then there could be a short fall in fees collected and this is where problems can start. Even in a fully occupied project, the
management team must show a good track record of collecting and carefully investing management fees.
You should be able to look at the accounts of a management team, as these should be freely available. By calculating the amount per unit to be received and by multiplying this by the number of units in a project you should be able to easily discern if there is a significant shortfall due to non payments. For a condo purchase it is a requirement of the previous owner to not have any outstanding management fees to pay so at least you can be sure that you will not have any incumbencies on your part when moving in.
A management team that is in control of a healthy ongoing fund will be in a good position to ensure the upkeep of the building is maintained.
For a condo the outside of the building should be painted every seven to ten years. This requires a large sum of money that will be built up by savings from management fees, and also by way of the management of a sinking fund, which is created from initial lump sum payments from owners at the time of buying the units. Thus be sure to look at the sinking fund when reviewing the accounts, as it is critical to the maintenance of a property. The lack of a sinking fund should raise alarm as it is not easily replaced once gone, but will be crucial for any large scale repairs that may be required going forward such as the replacement of lifts after expiry etc. For a new building where there will be very little history in place, check whether the developer will take over the management or whether they will pass this on to another company. Then it will be a case of checking the history of the company who eventually ends up managing the property so as to be sure that they will do a good job. This is a key thing to be aware of since you may find the developer does a great job of managing the building for a short while and yet they may only do this for a few years before passing the task over to another company.
You can usually check the history of a management company or developer by checking other properties that they have already developed a few years ago. Although good management of other projects is not a guarantee that your project will be managed well, it is certainly a comforting sign.
You will find that condo developers and to some extent management companies build up a brand name that can be well regarded in the market and for this there is usually a premium to pay. A new developer with no history may well provide you with a lower buying price, but you would need to be careful of how management will take care of the property in the future.
When scrutinizing the management team you can easily ask for a list of tasks that have been successfully completed in the last year or two. Indeed some management teams will post details of all recently completed works in the lobby or club house, along with a summary of accounts. You can alsoask when new scheduled works are expected to take place such as exterior painting or landscaping.
If the accounts look healthy and the money is being used well then you should be able to go ahead with the property purchase safe in the knowledge that your interests will be well catered for in the immediateand long term future.