Invest in strata happiness – demand outstrips supply


In the early days of Flat Chat, I used to bang on about the “double investors” – the owner occupiers who not only pay their levies, but who actually live in the apartment blocks and contribute more than money, just by their presence.

They are the fabric of the community and have to deal directly with the consequences of decisions made by the majority of owners, including investors who don’t even turn up at AGMs.

There was a flaw in this logic, of course.  Investor owners were rarely involved in decision making, unless you count deciding not to go to the AGM (again) or giving the chair a truckload of proxies to maintain the status quo.

As for owner investors, do they get any more recognition for their efforts these days? Ha! Tenants who sub-let to holiday makers get greater consideration from our politicians than permanent residents.

Meanwhile, the rows of empty seats at your average apartment block AGM will tell you everything you need to know about the level of engagement most investors have in the properties where they have parked their money.

And money is the name of the game; the effect that their decisions, or lack of them, have on their tenants is irrelevant to many investors.

Provided levies don’t go up and rents don’t come down, too many are happy just to take the monthly payments from their agents and prefer not to know how things are going in their building.

The agents oblige by not telling them anything, on the principle of “least said, soonest mended.” This conspiracy of silence works perfectly for everyone, except the residents –  both tenants and their owner neighbours.

On average, half the residents of apartments are renters, which means half the properties are owned by investors.  That’s a huge potential voting bloc which could make a major difference. Ironically, however, they often literally don’t want to know.

It’s frustrating.  Investors could be shaking things up, demanding improvements and asking, for instance, why their levies are low when prices and service charges are going up.

Stories are legion of property investors who don’t set foot in apartments between the day they buy them and the moment they eventually sell.  I can’t think of any other kind of investment where the owner just ignores it and hopes everything is okay.

Do you know any share owners who don’t obsessively check on the health or otherwise of their stocks?

However, there are many things an apartment landlord could do to be more engaged with an investment that not only brings in money, but has a direct bearing on other people’s lives.

  • Go to your next AGM and ask questions.
  • Meet your tenant for a coffee and ask them how things are going in the block
  • Have a look around at least every six months to see if anything in the building needs work or could be improved
  • Attend at least one strata committee meeting to see how they make decisions
  • Meet the chair and secretary of the strata committee for a chat while you’re there
  • Read the agendas and minutes of all the meetings
  • Try to meet other investors and ask them what their hopes and concerns are.

A happy, well-run strata block will attract higher rents and sales prices. So take some time to find out how your block could be a better place for tenants and owners to live.

Invest in happiness – it’s a commodity where demand always outstrips supply.

This column first appeared in the Australian Financial Review.




2 Replies to “Invest in strata happiness – demand outstrips supply”

  1. Why have investors been able to reap the returns from their properties for so long whilst remaining disengaged from the planning and decision making so essential to a functioning strata building ?

    In a nutshell …they have been freeloading off the efforts of a few committed owners who volunteer their time and energies to make their buildings attractive places to live and in so doing valuable investment propositions for others.

    Don’t expect that we can go forward for ever relying upon the efforts of volunteers to man our Committees. The bush fire crisis reminds us we cannot expect our bush fire brigade volunteers to give up hours, days & weeks of their time without some reward. Perhaps we also need to be reminded that there is a small band of strata owners out there serving on Committees and doing the heavy lifting for all those passive investors and owner occupiers who year after year fail to put their hands up to serve.

    The volunteer strata committee model is broken. Our strata buildings now demand greater technical understanding, the acumen of a business operator and a time commitment that few could come up with. As long as a few engaged owners are expected to work unpaid for the benefit of everyone else, any pool of talent a building has will go largely untapped.

    If a building is fortunate enough to have talented people amongst its owners, then it should be paying them, not through the vagaries of a golden handshake the year after next, but properly for the value they add.

    It’s hard to say if any investors would step up for Committee duties, but at least they would be contributing to the costs of safeguarding their investment.

    Strata Answers
    Practical Solutions for Strata Living

  2. Jimmy-T says:

    This is now being discussed in the Flat Chat Forum

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