Tackling Outdated Depreciation Reports: Is Your Strata Ready for Today's Costs?
In today’s episode, we’ll tackle the pressing issue of outdated depreciation reports based on archaic maintenance cost predictions. It’s time your strata gets a refresh!
Own a condo or townhouse? Remember when depreciation reports were created, with future work valuations made way before the unprecedented supply chain hiccups and the skyrocketing costs of construction materials?
The crux of the matter is this: Many condo strata groups haven’t squirreled away enough funds to match the updated repair costs. The result? Strata fees are either skyrocketing or being replaced by levies or assessment payments. The answer? Ensure your strata’s depreciation report reflects the current market, not the pre-pandemic, pre-supply chain chaos era.
The hurdle? Depreciation reports come with a hefty price tag, sometimes running into thousands, contingent on the size and intricacy of the strata’s assets and infrastructure.
Drawing from my stint as a strata president and vice president, let me illustrate with an example. A standard 8-foot 2×4, which, fun fact, isn’t precisely that dimension, now sells for around $4 CAD. A jump from its price five years ago, which hovered around $2.50. Factor in taxes, and the overall cost ascends by an alarming 60%! And this is just wood – think about more intricate components like windows or electrical supplies.
If your strata had set aside a $1,000,000 budget, it’s quite possible there’s a gaping shortfall. Enter the dreaded levy. And here’s a tidbit – securing a mortgage to cover a levy? Rarely possible. To brace for future expenditures, strata payments might need an uptick. Not sowing panic, just emphasizing preparedness.
It’s high time to engage with your strata. Gear up for what’s on the horizon.
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Catch you soon, and a big thank you!