Buying property in an estate? What you need to know.
Category Buying
One thing is for sure; whether it's due to the pandemic or a natural change in people's lifestyles, there is a considerable increase in demand for gated and lifestyle estates. There's no doubt that security, community, and ease of living play a significant role in the decision-making process of potential new homeowners.
But as more and more people experience the benefits of living in a lifestyle estate for the first time, understanding rules, regulations, and community schemes is vital to ensuring one gets the best out of their lifestyle estate experience. We look closely at four critical factors you should consider before purchasing your first lifestyle estate property.
Get familiar with the HOA budget
The Body Corporate or Homeowners Association comprises trustees, homeowners and shareholders with a stake in the property. Each HOA has its community budget, which includes various property management records such as year-to-year financial reports, levy indexes, assessment collection records, etc.
Budgets must be updated, and a fair allocation of who pays for what should be recorded. Some estates may have a small percentage of homeowners who don't contribute. If that percentage is too high, then their collections policy is not up to scratch. This may be the first block in a chain of a disaster. Ineffective levy collection may lead to poor maintenance plans for communal property and security. This may inevitably affect your home's value, so ensure the HOA budget is up to date.
Is there an owner/tenant split involved?
Another tip is to consider the split of rentals vs homeowners in the community. Most banks may become guarded against accepting loan requests from estates with too many renters. The reason is that homeowners are expected to look after their properties and communal areas more so than tenants.
This is an essential tip because the property's market value may be directly tied to the availability of proper financing. If banks are willing to grant loans for certain estates, then the value of all property within may fall.
Asses the reverse funding
Another crucial tip which indicates a healthy lifestyle community is how much reserve funding they may have available. Reserve funding is essential to ensure that any emergency repairs or renovations can be carried out in a timeous manner, ensuring the upkeep and beauty of the property and that disrepair does not linger.
Reserve funding needs to be accounted for in levy collections from homeowners. A well-run and properly maintained estate should have at least 75% of the reserves required banked and ready to access. A lack of reserve funding is a red flag in any community real estate. Any delay caused by funding for repairs can quickly bring down the value of your property.
Keep track of all HOA meeting minutes
Last but certainly not least, keep up with all the HOA meetings and ensure you've seen meeting notes from at least the previous year just to avoid any hidden issues that may have cropped up. On the other hand, if you're buying into a development of "off-plan", be sure to ask your developer or property practitioner the following questions.
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Does the HOA have a set developer? If so, who are they, and how do you contact them?
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Who will pay for any damages incurred during the development stage?
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Who has access to HOA membership, and how will the committee be run?
Contact Ikonic Real Estate today.
For Real Estate professionals you can trust and rely on for industry-related expertise, contact us below for more information.
If you are looking to live in Silver Lakes Golf and lifestyle Estate, Silver Stream Estate, Lombardy Estate & Health Spa, The Ridge Estate, Six Fountains Estate, or Willow Acres Estate and surrounding areas, then Ikonic Real Estate is your preferred property practitioner to assist you in all aspects of the selling and buying process.
Office Number: 083 452 5599
Cell Number: 083 452 5599
Email: martin@ikonic.co.za
Ikonic Real Estate holds a Fidelity Fund Certificate issued by the Property Practitioners Regulatory Authority.
Author: Bryce Anderson