For the majority of Australians, the major source of funding for our future retirements is superannuation, and for many of us, we own a strata unit as part of our assets.

As we age, it is critical to ensure we save sufficient funds to cater for our retirement as the Government is making it abundantly clear that the aged pension will not be available to all Australians.

For those over 50, it is getting harder to see retirement as the Government is pushing for all to work to 75. However, for the younger generation retirement may be completely out of reach unless sufficient funds are available in their Superannuation account to completely fund their retirement.

Thus it is critical to ensure the maximum contributions are made to superannuation.

This could mean everyone sacrificing some luxuries to boost contributions. Alternatively, you could ensure you save sufficient funds through smarter purchasing and contribute those funds to your super account.

If you own a Strata unit, making savings is a very easy manner to boost your super balance.

Harry Dent, the noted US Economist has stated that “2016 could be the worst year for stocks from beginning to end, since 1931”.

If this predication comes true, then we all need to ensure we save money wherever we can.

Owning a Strata unit gives us many avenues to save money. I have just shown how to add $45,000 to the super fund just by getting 2 quotes for statutory inspections and using QBM.

Are there other methods of saving money?

Definitely!

Following are a few methods to save potentially Hundreds of Thousands of Dollars just by being conscious of decisions made by the Executive Committees and your Strata Manager.

1. Get professional advice from someone who has your best interest at heart.
2. Correctly maintaining the complex.
3. Undertake professional Safety Inspections each year and rectify identified faults.
4. Develop a Sinking Fund by a professional who understands how to maintain a building.
5. Develop a yearly works program in advance.
6. Get quotes for all expenditures.

Get professional advice from someone who has your best interest at heart.

Would you buy a second-hand car, and have the seller do the quality inspection for you?

I don’t think so.

But every day, strata complexes engage contractors to undertake inspections, who are the same people used to fix any issues identified.

How objective and independent could that contractor be?

Always engage only contractors who have no vested interests and are completely independent of any rectification works.

Savings per year – $ Thousands

Correctly maintaining the complex.

There is an old saying – “If it ain’t broke, don’t fix it”

Unfortunately for many things today, and especially buildings, this phrase can cost a Strata complex money.

Buildings and the things that make up a building require maintenance to keep them working correctly. When something breaks, it can result in major expenditure to fix related fixtures or fittings and not just the specific broken item.

However, there also comes a time to stop maintaining parts of a building and replace it instead. This is where the professional advice from an independent expert is so valuable.

Savings per year – $ Thousands

Undertake professional Safety Inspections each year and rectify identified faults.

Unfortunately, some unit owners see safety inspections as an expense that can be saved. They don’t see the big picture and understand that safety inspections should be treated as an investment in the Strata complex.

Safety inspections, especially when completed by a professional experienced in buildings, can identify building-related issues that may not seem to be a safety issue at first, but with a little time can transpose not only into a safety issue but become significant building faults.

Regular safety inspections can also save money in other ways that are even more tangible.

• Stopping accidents

When safety issues and building faults are identified and rectified promptly, two things tend to happen that save the complex money.

1. Legal cases where persons sue the complex after an injury are eliminated;
2. Insurance premiums are reduced due to a lack of payouts for injury cases;

Savings per year – $ 10’s of Thousands

Develop a Sinking Fund by a professional who understands how to maintain a building.

Sinking fund reports are developed for 3 purposes.

1. It’s the Law;
2. Supplies a list of works that may be required over the coming years to keep the complex in a satisfactory state of repair;
3. Identifies the value of repairs and upgrades over coming years to allow levies to be set correctly;

Just by having a Sinking Fund report developed you meet your statutory obligations. But for it to be meaningful, you need to ensure that the person preparing the Sinking Fund understands buildings and their maintenance requirements.

For a Sinking Fund to be of benefit to the Strata and potentially save money, the following should be part of the process:

• The Committee should discuss the need for work and what is broken before the reports preparation;
• A representative to meet the person preparing the Sinking Fund on site;
• A site inspection must be undertaken;
• Ensure the report is clear to read and includes all future required works and adequate budgets;
• Obtain a draft of the report and make comments as required before the final report;

Savings per year – $ Thousands

Develop a yearly works program in advance.

A Sinking Fund is prepared years in advance of any planned works. As such it cannot be relied upon to obtain quotes for works in any particular year.

The best method to save money and ensure the complex is fully maintained to protect your investment is to use the Sinking Fund as a guide and prepare a yearly maintenance plan.

This plan will be developed after an inspection of the complex by the Committee. The Committee should identify the current state and condition of the complex and develop a list of works required for the following year.

As an example, The Sinking Fund may show that repainting is due in 2017. However, after an inspection, it is identified that the buildings could be washed to extend the paintwork by another year or more.

With this complete list of works, quotes can be obtained in advance so that all works are planned and not undertaken due to breakage.

Planned works are cheaper to perform than urgent rectification works.

Savings per year – $ 10’s of Thousands

Get quotes for all expenditures.

As shown at the beginning of this article, by obtaining quotes, this complex saved $2,758 ** in the first year. That is a saving of 44% just on statutory reporting.

For this complex, if these same savings could be achieved for their maintenance and capital works programme over 10 years, a saving of $435,027.

Conclusion

We all agree that we need to add to our Superannuation balance to fund our future retirement. If you own a strata unit and by following these simple steps, you can significantly add to your Super fund.

As shown here, for little or no effort, this complex can save over $500,000 in the next 10 years to allow unit owners to contribute to their Superannuation.

* Based on 7% return and undertaking statutory inspections of Sinking Fund, Insurance Valuation, Fire Safety Reporting and Safety Inspections over a 12 year period.

** Also includes a Safety Inspection

Speak to the professionals at QBM today for all your compliance reporting.[/vc_column_text][/vc_column][/vc_row]