All Topics / Help Needed! / Size of sinking fund …

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  • Profile photo of brownie74brownie74
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    @brownie74
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    Is $77,000 large or small for a sinking fund in a block of 30 units (6 stories), built mid-70's, in apparent good state of repair – at least externally – property has an external pool, underground carpark and gardens to maintain

    Thanks!

    Profile photo of foundationfoundation
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    Profile photo of brownie74brownie74
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    @brownie74
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    Thanks for the helpful post!

    Profile photo of foundationfoundation
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    You're welcome!

    It should be pretty clear that it wouldn't take much in a 30 unit property to clear out a $77,000 fund.

    So: This big.

    Profile photo of brownie74brownie74
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    @brownie74
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    So what sort of fund would you expect for that sort of property?

    I've just spoken to a property solicitor who reckons $77K is ok.

    Profile photo of foundationfoundation
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    Well why ask here? If your solicitor says it's okay, I'd assume that not only is he more familiar with statistics on sinking funds for multi-unit properties than myself, but that he also has some fairly intimate knowledge of the current state of the property and all scheduled or expected repairs over the next say, 5 years. I expect he also has checked the history – how often is the fund tapped and to what degree? For what purpose (regular/ongoing/special). Is the fund growing or shrinking over time in relation to, say, general costs of construction?

    Profile photo of brownie74brownie74
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    Nah, she knows nothing about the details.

    How would I find out information such as how often the fund has been tapped recently, etc. Is that publicly available?

    Profile photo of brownie74brownie74
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    maybe i should rephrase my question…

    As a rule of thumb, how much per unit would you expect to be in a healthy sinking fund?

    Profile photo of foundationfoundation
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    @foundation
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    brownie74 wrote:
    Nah, she knows nothing about the details.
    How would I find out information such as how often the fund has been tapped recently, etc. Is that publicly available?

    Ask for a copy of the 'body corporate certificate' I think it's called here in Vic. This should detail any pending legal action, upcoming works etcetera. Ask for a copy of the body corporate AGM minutes for the last 3 years. These should contain sufficient financial detail to form a general understanding of the outgoings.

    You can also simply ask the real estate agent or vendor a series of questions (in writing):
    – What is the average annual expenditure on maintenance over the last 5 years?
    – Are these expenses less than incoming BC fees or are they drawing down the fund?
    – Please list any proposed repair or maintenance work
    and so on. Others here should be able to provide you with more suggestions.

    As for the actual $ amount it all depends on the above. Ideally a sinking fund will GROW over time slightly in excess of inflation. This is to compensate for the fact that the building is aging and costs will rise. Who knows, $77k might be enough. Then again, the carpark might be about to be tarmacked at a cost of $100,000. Then you’ve got zip left in the fund and a ‘special levy’ notice under your door before you know it!

    Profile photo of emptypocketsemptypockets
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    So basically its $2500K per unit. That sounds okay unless there are pending repairs or maintenance that is being ignored.  I have a unit in a complex of 30 that has about 90K sinking. Check the strata report and previous strata meeting minutes for outstanding issues.

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