Protecting your investment has several elements, the two most important being:
The general look and feel of the scheme (it’s management, upkeep and security)
A “healthy” set of financials
It is common to see a churn in the scheme executives from one AGM to another. The scheme executives stand in a fiduciary capacity to their fellow owners acting in the best interests of the scheme as a collective. Experienced scheme executives will know that whilst ensuring the services received by the scheme are value for money, it is often not the cheapest service providers that will benefit the scheme. Compromised security for instance, can adversely affect property values.
Presenting budgets year-on-year which don’t keep up with inflation will only result in the pain of a special levy in years to come together with painful increases. Owners should always apply logic to what is being proposed to them by their scheme executives when approving/considering budgets. The budget must always include a provision for future maintenance (this being law in Sectional Titles schemes).
If guided well by an estate agent, buyers will usually ask to see the last audited set of annual financial statements (AFS) along with other important documentation such as the conduct rules, scheme plans etc. Whether the scheme is a Homeowners Association (HOA) or a Sectional Titles development, buyers should at least be asking the following questions when looking at the AFS:
Does the scheme have sufficient cash reserves to undertake necessary maintenance?
Does the scheme have a long outstanding debtors’ problem which impedes the cash reserves? The longer a debt protracts, the harder it will be to collect.
Are there any abnormalities in the expenditure which raise questions (fluctuations year on year)?
Whitfields continues to enhance its systems and processes to aid with levy collections and overall financial management.
The old saying “strike whilst the iron is hot” has never been so true in the current challenging economic climate.