How Your Condo Management Affects Your Property Value
Sure, that condo looks nice and shiny now. But what’s it going to be like in five years? Ten? How about fifteen? Because I’ve seen what bad management does. By about year five, there won’t be a shower next to the pool. There’ll be a decontamination chamber. So factor in the management before buying:
This pool’s the secret to our property value. We drowned the management committee in it.
Management: The Most Overlooked Aspect
If there’s something first time condo buyers will overlook, it’s the management. It’s the most invisible aspect of condos.
See, you can buy a badly managed condo and have everything seem alright. Maybe for years.
Then the discarded furniture piles up in the stairwells. The pool becomes home to indigenous life forms. The lift takes a day off every other week. By the time you want to re-sell, you better hope your buyers are upgrading. From a cave.
And you can expect the property value to suffer, because bad management:
Raises Vacancy Risk
Creates a Poor Contrast to Surrounding Property
Ignores Asset Enhancement
Makes You Pay More for Maintenance
Makes Some Facilities Non-Existent
1. Raises Vacancy Risk
“Good news is, we’ve identified ONE demographic that would consider your place an upgrade”.
If your tenant wants to rent a condo, here’s a wild guess: She’s probably not poor.
That means she isn’t desperate for any old place to stay. Odds are, comfort is high on her list. And the major selling points will be great facilities, good security, excellent upkeep…everything that’s the opposite of what bad management provides.
Property investor Charlie Sng says:
“Tenants who rent condos tend to be expats, or the well-heeled type.
Most are not constrained by budget. If your condo is badly managed and run down, you will face vacancy, not just lower rental income. These are not the people who will bargain that ‘Oh, your place is run down, so you charge me X dollars less I will accept’.
If they don’t like your place, they will go and rent a better condo, and yours stays vacant.”
2. Creates a Poor Contrast to Surrounding Property
“Say it’s not near the train, but looks like it was run over by the train. Would that count?”
Let’s say you’ve had your apartment for 10 years, and you want to sell. As standard practice, you peg your price to the surrounding properties.
Now if your management’s been competent, that shouldn’t be a problem.
But what if the walls are leaking, the car park’s a trash pit, and the building’s exterior looks like an algae farm? I asked my former colleague Gerald Seah, who recently sold his property* at cost:
(*For the benefit of anyone who owns that property, we’re not naming it. But you probably know.)
“I sold my place for about the same price I bought it, which was devastating to me after so many years. When buyers came to view, it was an embarrassment.
Every block had two lifts, but for my block one side was always out of order. The rubbish chute, something was blocking it, and there was a bad smell that came all the way into the house. The intercom system sometimes worked, sometimes didn’t. I think my agent would pai (pray) every time someone touched the thing.
In the end, what advantage was the location? The condo across the street also got the same location, but everything was nice and working there. How to get the same price?”
3. Ignores Asset Enhancement
And we uh, installed water flows on the ceiling as a bonus Feng Shui feature.
I spoke to a property manager, who currently maintains a property near Beach Road. He declined to be named:
“A good management team doesn’t just maintain the building. They also consider asset enhancement. In other words, even after the condo has been around for years, they are stil thinking: ‘What can we add or change to improve it?’
In one of the properties I managed, we added a garden and reflexology path. We added a pets area. We extended the gym. And this was five or six years on; we were still adding facilities that weren’t there before.
If you are going to buy a condo that’s been around for a while, don’t just check the condition. Ask what facilities have been expanded or added. If it’s been around for 10 years and nothing’s changed, there’s a risk the management has become stagnant.”
4. Makes You Pay More for Maintenance
Uh, for this kitchen, you may need a few extra things to prepare dinner.
I don’t mean you’ll pay more maintenance fees, though that’s possible.
I mean this in a “I need it fixed while I’m still young, so I’ll pay for repairs myself” kind of way. Gerald (See point 2) ranted for a good 40 minutes, and added:
“One time the piping in the kitchen cabinet leaked. Every time you turned the tap, there will be a swimming pool in the kitchen.”
Later I asked them to fix it, and three days later still no response. In the end I paid for my own plumber.
I eventually found out the management was so slow because they were running out of money. Anything go wrong, have to wait, wait, wait until they raised the cash. If I wanted anything done on time, I also had to pay my own handyman on top of already paying maintenance.”
5. Makes Some Facilities Non-Existent
Actually that’s a plumbing problem in my living room. But leave “indoor pool” in the ad.
My nameless property manager friend (See point 3) brings good parting advice:
“Facilities do not exist unless they are well maintained. That is the mindset a buyer or condo owner or should have.
If the gym equipment is all rusted, a lot of it missing…there is no gym. If the pool is so dirty and slimy that no one wants to swim, there is no pool. You get the idea? When a buyer views the place, they will not just trust the listing. They will view the actual facilities.
If the facilities are too poorly maintained, they’re struck off as a buying point. It doesn’t matter if the condo has such a facility on paper.”
So keep the management in mind. And if you want other ways to guard property value, follow us on Facebook! We’ll keep you updated.
Image Credits:
ssedro, Mr. Thomas, alantankenghoe, WoogyChuck, meddygarnet, oddharmonic
Have you had problems with your condo management before? Comment and tell us about it!
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