A number of people who are on the hunt for their first condo home have asked many questions on online forums and via face-to-face conversations. Leasehold or Freehold? Facilities, residential profiles, monthly maintenance fee, etc. Within that monthly maintenance fee lies two components; the managing fund (MF) and the sinking fund (SF).
In other words, the SF takes care of the big items in the near future, while MF runs a monthly expense to keep the condo operational. Therefore it is crucial to find out what are the SF reserves an existing condo have. And whether it is financially stable to fund future works. If not, an extraordinary AGM may be called for all owners to cough up a lump sum. (see Case study: Killer lifts?)
One advice for first time condo buyers: ask the seller for the recent AGM booklet. Reading it will give you an excellent idea of how well the place is managed. And whether the existing sinking funds are sufficient to cover outstanding and future liabilities.
Take the case of Viz Holland and Citylights. Both are 99 year leasehold condos; built in 2008 and 2007. On first look the key difference is that Viz Holland has 165 units, while Citylights have 600 units.
In the span of 12 years, Citylights would have collected $8,396 from a unit owner. Viz Holland would have collected $9,240 from a unit owner since its beginnings. Yet, a chunk of Citylights sinking fund has already been spent and only 37% of total collections remain. What does it mean? Bear in mind things like lift overhauls, pipes and pumps replacement, roof works can easily cost $100k- $1 million, especially over the 10 year mark.
Whereas for Viz Holland, 70% of the sinking fund remains to be deployed. The numbers do look much better and prudently managed. The question to ask then is whether Viz have done their 10 year replacement items? If not, when is it due? And what is the financial impact?
Again the details can be sourced from the Seller and verified with an on-site visit. If all things are equal, then clearly one is far better than the other. Go see for yourself. Caveat emptor.
A french start-up is using an app to help owners manage their residential buildings, akin to strata titled condos in Singapore. Seems like a great solution for Condo owners who prefer to stay out of sight but in-the-loop.
“Matera has built a web-based platform to view information, communicate with other co-owners and make sure everything is up-to-date. Everybody has their own account and can access the platform. Co-owners meet regularly to handle outstanding issues. Matera centralizes all topics, helps you write a report and checks that it complies with legal requirements.
Today, Pemex is the world’s most indebted oil company with $176 billion of debts and liabilities. The Mexican government announced a $5 billion bailout for the company this year. However analysts say it needs to invest at least $10-$13 billion a year.
How did that happened over less than 15 years? Well, in short, years of disregard and non-maintenance. This is similar to managing a condo. Take for example the following chain of events:
This is a blog to share and possibly discuss the issues faced by residents, owners, council members and managing agents in the running of a condo or Management Corporation Strata Title (MCST).
I have been an owner and a council member for many years. First as member, then as Chairman. Having worked with various stakeholders, I have encountered many difficulties and hope to share the experiences. The lessons continue to prove useful as some of the issues continue to resonate today.
Why do this?
In recent years, I observed numerous poorly managed MCSTs
Owners are divided into ‘short-term camps’ & ‘long-term camps’
Idealistic maintenance is feeding an oversized cat
Sustainability & Asset enhancement can be better practised
There are various approaches to solving a problem. I do not believe my suggestions are prime. Circumstances differ for each individual and MCST. I am trying to provide insights so that others can build a better managed condo.