When Council Doesn’t Understand; All Owners Are At Risk
Strata councils need to work hard to manage all the details, between the owners, possible renters, and the property management company.
Imagine the strata council that doesn’t understand the difference in building construction choices, the actual structure they have invested in, and don’t have a recent report detailing issues. They need a report broken into Low Priority and High Priority. That will guide how their Contingency Reserve Funding will be spent.
Full Inventory & Schedule
When Focus Inspections is completed with the Depreciation Report, the Council and Owners will have:
-What common assets are owned by your Strata Corporation?
-Full list of every part of the structure in the review: from major components, like plumbing; all the way down to hinges on doors. All of these affect the value of the building and your investment value;
-What is the condition of each part? Some components need regular replacement, some need regular maintenance and some are good for many years.
-What is the scheduled maintenance for each item?
-What is the cost of maintenance or replacement?
-Preventative Maintenance and a Replacement Schedule. In commercial buildings, it’s estimated that each $1 spent on preventative maintenance saves an additional $4.40. That’s why you need the schedule.
One Strata Council understood their windows were rated for 25 years, so they decided to replace them all. That’s wasn’t necessary for all – in fact only 20% needed immediate attention and the remainder could wait years as their quality was still high.
-How much is it being used?
-Probably time to replacement
-Current condition of the component
Do you have the skills to read and understand a Depreciation Report? By their nature, Reserve Fund Analyst’s and engineers are very detailed and never give a “Yes” or “No”. You need to understand the true situation so smart decisions can be made to take action, or wait until action is actually needed.
Do you have the budget for snow removal? Probably. Do you have the funds ready for boiler replacement? If you don’t know the answers, you need to learn:
-Current condition of the boilers;
-Replacement cost, including labour;
-Amount in your Contingency Reserve Fund that is actually available, quickly
Strata Management companies need to know all the details, so they can pass these along to the Council. With a detailed Depreciation Report, they have strong base to build their maintenance schedule, so the assets are maintained, and the costs are predictable and manageable.
What Happens Without A Depreciation Report?
-Owners and potential owners have more difficulty in obtaining a mortgage
-Expensive components of the building and structure can fail, causing loss-of-use and expensive emergency replacement
-Unsafe conditions can
Slow, hidden aging can occur without a Preventative Maintenance plan to look for issues on a reasonable schedule.