How To Renovate Units in a Strata Title Building with Amanda Farmer
Amanda Farmer is the owner of Lawyers Chambers which is a strata title focused legal practice and she is also the host of her own podcast, Your Strata Property. Amanda Farmer has over 16 years experience in the strata legal sector and is also a Fellow and Council Member of the Australian College of Strata Lawyers.
She is also the founder of Women in Strata, a networking group for women working in strata management. As an increase in-demand speaker and educator, Amanda has been educating strata managers, apartment owners and residents for many years, through round table workshops, seminars, large scale presentations, and guest speaking. Amanda has presented webinars for the Real Estate Institute (NSW), presented at REI’s annual Women in Real Estate conference, presented for Strata Community Australia (NSW) and The Owners Corporation Network, as well as the Australian College of Strata Lawyers. Amanda has been interviewed as a guest expert on the television program Sky News Real Estate, demystifying the legal complexities of apartment living.
Join us as we discuss Amanda Farmer’s background and where she grew up and how that shaped her as a person, strata buildings and explain what that actually means, why she decided to get into the property sector and specifically strata, and much more in this episode of Property Investory!
Amanda Farmer is an accomplished strata lawyer and the host of the Your Strata Property podcast, the world’s only podcast dedicated to exploring the legal complexities of strata-titled properties. Farmer shares with us a little about herself and what she does.
I am a lawyer who helps property owners to demystify the legal complexities of apartment living. And I do that by providing resources and guidance inside an online membership community, which is called Your Strata Property.
We find out about Strata and what some of us might already know it as.
The term strata do trip up a few people because they don’t necessarily link it to apartment living. And in different states of Australia, they called strata apartments, different things. They might call it a body corporate. Some people are more familiar with the term body corporate than strata. So it’s something that I sometimes have to explain when I say I’m a strata lawyer. They say, Oh, what’s that?
She tells us about the factors that make up a strata building.
So it is apartments whether low-rise or high-rise, not free-standing houses. It’s a form of titling, we would say, as lawyers, a way of developing the land into buildings that numerous people can then live in. But we also have a low rise community that might also be strata or might be community living, we call it, and they might be townhouses or villas. So we don’t always assume that strata living or apartment living is a high-rise block. It can also be low-rise and we do have more and more common, really, these extended expansive communities that contain strata buildings that then also contain large common facilities like a recreation area or a country club, private roads, a gym, a golf course. So developers are getting really clever about using this kind of titling structure and that makes me really excited.
Even with a lot on her plate, Farmer can still manage to have a fairly easy going day to day life.
My day at the moment, well on the personal side I start with getting my six year old ready for kindergarten, we started kindergarten this year which is interesting. I do the morning shifts of the parenting and my husband works early and finishes early, so he’s on the afternoon shifts. We walk to school, which is lovely. We just got a new puppy that we’ve welcomed into our family in the last couple of weeks. So we walk the puppies to school. Then probably two or three days a week, I’m actually working from my Home Office, which I really love to do. I have a good set up, I have a podcast myself, so I’ve got my office set up for my videos, my recordings. I genuinely enjoy a fairly peaceful day. Let’s say that I don’t like going to court too often, so I try to keep away from that.
But I do lots of emails, writing advice letters for clients, whether they’re strata managers or owners or developers. Might have a telephone conference or if I’ve got a new client, I’ll often go out on site. So I’ll go and see their property or the building, the picture’s worth a thousand words. I like to do that. On Fridays, I generally record interviews for my own podcast. I’m talking to influencers and key people in our sector and sharing good information for strata owners and strata managers. So I might squeeze some exercise in. That’s always a good idea in the afternoon but I am ruled by my calendar. If it’s not in the calendar, it does not get done.
In spite of being a successful lawyer, Farmer had greater ambitions and decided to do something about it.
I started my own business about six years ago and before that, I had worked for the same firm for about 10 years. So I really came out of uni and worked for the one small business and then moved into my own business. While I was working for somebody else, we actually did a lot of family law, if you can believe that. And this is going somewhere and helping people with their divorces, their property settlements, and their children. I wasn’t really into that. We did a little bit of strata law as well. But the bulk of it was family law. I enjoyed the strata much more. I found it exciting, challenging, fast-changing, always something new coming up that the legislation didn’t cover and that the lawyers hadn’t thought of. And so when I started my own practice, I decided from day one that it was going to be a strata specialist’s practice.
And that was super scary because it meant leaving behind a bunch of clients and potential revenue from family law, which was very nicely paying and basically starting from scratch. So what I did was go out and start delivering free workshops to strata managers. So the professionals who manage these apartment buildings are a bit different to property managers who might manage it as just a rental for a landlord. But these guys are managing the whole building, looking after the common facilities and working with the strata committee to solve all the day-to-day problems. So I’d go to their office and deliver them one or two-hour workshops on an interesting subject. And that’s how they got to know me. Got to know that I was the new kid on the block and I knew what I was talking about and started building up my business and that soon turned into delivering presentations for owners as well.
And I go to these evenings and deliver presentations and I’d answer as many questions as I could, but I would then have a line of owners at the end of the night still with these burning questions that they wanted me to answer. And I found that the answer that I could give in two minutes, that was very easy for me, was such a big win for them and such value to them that I thought, ‘Hey, these people shouldn’t have to be paying hundreds and hundreds of dollars an hour on lawyers, global rights to be able to get this advice.’ And I thought, there’s got to be a platform where I can leverage this position or rather than presenting to a room of 50 or 100 owners, I can present a thousand every week and deliver these short pieces of information that solve big problems for people who are living in apartments. So therein the podcast was born.
After growing up in the Eastern suburbs of Sydney, Farmer found it hard to leave that area.
I grew up in southeast Sydney in a suburb called Chifley, which a lot of people don’t know when I say it. It is past Maroubra. That’s often more well recognized in the southeast. It’s near Little Bay and La Perouse. I grew up there with my parents, my oldest sister and my younger brother and I’ve pretty much stayed in a similar area. I’m in the eastern suburbs now. I went to an all-girls Catholic school in Waverley and I can pretty much see that school now from my office. I haven’t gone too far.
The place that you come from can easily shape the person that you become.
I mean, Maroubra has changed significantly. I am close to Bondi at the moment and the amenity that we have here, we’ve got the marvelous Westfield and anyone who lives in the eastern suburbs will remember when that opened up and the train station. I think young families who are trying to get their children into good schools tend to flock to this area. And that’s actually putting a bit of a strain on the schools. I love living here because I can walk out the door and I am in the middle of everything. I can be on the train in the city in 10 minutes. I can be at the beach. We have a car, but I probably haven’t been in it for about four weeks. I just love living like that and I love walking. That’s the beauty of being in an area. It’s high density, but it has all of the good stuff that comes with an area, with a vibrant community.
After high school, Farmer decided to pursue her life long desire and continued her studies until she achieved it.
I did go straight to university. I actually did an arts degree first. I should trackback and say I’m one of the few lawyers who actually came out of the womb wanting to be a lawyer. I realise that now with the more lawyers I met and how unusual that is. I’m a happy lawyer, also unusual. I finished school and I wanted to do law, but I wanted to do it at a particular place. I wanted to go to Sydney University. I didn’t get the 99.9 infinity that you need to get to go into law there. So I started there with an arts degree and I made it in ancient history and English. What I did do in the first year of Uni was I got a job in a legal practice because I thought to myself, that’s what I want to do, I better go and see what it’s really like.
I started working part-time and have always worked since I was at school. After three years of arts, I decided I still wanted to be a lawyer and I did graduate law at Sydney University. So that was another three years of law. But having that practical experience all throughout that process was just invaluable because I didn’t finish my law degree and then go and get a job and say, oh, this is what lawyers do. They just sit at a computer and write letters all day. I thought they were exciting. They do just sit at a computer, write letters, all daily civil lawyers do. But I quite enjoy that. So anybody who’s looking for a career change or as a young person is looking to find out what a career is all about, definitely get out there and experience that for yourself, don’t guess or assume.
Parents can influence in so many different ways and for Farmer, it was quite unique.
No influence from my parents to go into law. I’m pretty sure the first and may remain to date the only member of my family to go to university. So it certainly wasn’t something that was known to us that that’s what you did or that we were pressured to do at all. My parents both own their own small businesses. So my mum owns a childcare center and my dad had a business in demolition and excavation. So very much my work ethic comes from my parents and it was always drilled into us that whatever it was that you were doing, you were working. I was home while I was studying. I was studying and working, stayed at home. The other thing that was drilled into us was property ownership. That’s where I get that from. I worked, I saved my money and I had bought my first property by the time I was 25 actually, which in the eastern suburbs was quite an achievement.
So how did Farmer become interested in venturing down the path of property investment?
I met my boyfriend who’s now my husband. I think I was about 20 when we met and we were together for a few years and he was a little bit older than me, so I’ve been working full-time, had saved up some money. I was saving up money for a property and I said to him, ‘Hey, you should do the same thing. You should buy property. It’s a really good idea.’ He didn’t sort of have the same background with his upbringing that I did in terms of property ownership. My parents would sit around the table with my uncle and my auntie and someone was always buying something and talking about it. And that was always interesting and exciting to me. So I helped him on his property journey, buy his first apartment.
He bought a one-bedroom unit in Kingsford and he renovated that and I watched him do this. He renovated the bathroom, spruced it up a bit and he then lived in it for a short while. Then the year that we were engaged to be married, by then I had saved enough money to have a deposit on a two-bedroom property, which ended up being in the block just next to him. So by the time we were married, he had a property that he owned and I had a property in I owned, which was just a fabulous position to be in, an unusual one for our generation at that age. So we also renovated my property. We renovated the bathroom and the kitchen, a new coat of paint. So these little things that you can do in strata apartments that can really add value.
When we were both looking, we were looking for properties that we could do that with. We’re looking for older style properties. Both of them were sort of 1960s red brick walk-ups. I think my building had eight units in it. He’s had about 16 units in it. So a nice size and we were able to make those improvements and we lived in them, which was great. Then when we got married, he moved in with me and we rented out his apartment. So he had some nice income from that as well.
Farmer talks about the properties she has invested in with her husband and shares the story on how it influenced their decision on where to buy.
We ended up selling his one bedroom and we bought a house. So the funds that we got from that sale was the deposit on a house in Randwick. So again, we didn’t move very far. We then rented out my two bedrooms and we lived in the house. So we kind of had established this sort of feedback process where we bought one, we lived in it, we bought another one, we rented out the other and lived in it. We sold that one, used that for the deposit for the next property and I think for young people today who are just getting started, I don’t profess to be a property investment expert, but I think that’s a great strategy. You’re living in these properties. So there’s some tax benefits there and you’re improving them while you’re there if you can whether you’re renovating bathrooms and kitchens. We bought our house and we then lived in that house for about nine years. In the process, we sold my two bedrooms as well. And that funded the start of my business.
There were a lot of different factors that needed to be accounted for when she bought property and some of them were out of their control.
The house that we bought, at first I thought we wouldn’t be able to afford it. I had gone to look at it. I thought, oh, it’s going to be completely out of our price range but the house sat on the market for a little while and by the time it came back around to us, the owner had lowered their price, their expectations, and they were really ready to sell the house. I didn’t have any parking, but it had an expired DA approval for the driveway and for parking. So we looked at that and said, you know what, we can live with no parking for two years. We both rode motorbikes at that stage. We can apply to the council to put in a driveway and there’s another value add down the track. So we did that in the process. We had the parking added in and parking with a house in Randwick. Immediately we added some significant value. We renovated the house within about five years after we had our son, we did quite a big renovation. And then one day we got a letter from the state government that said, we are compulsorily acquiring all of the properties in this street because the Prince of Wales Hospital is expanding and we want to knock down your house.
So that was a forced sale and compulsory acquisition is a forced sale to the government. Now, if I track back and say when we bought this property, it is between the hospital and the University of New South Wales. Anyone who knows the area will probably know exactly where I’m talking about. We bought it, at least in my mind, knowing that one day it would be bought by a developer or university or the hospital. It was just that sweet spot and we knew that the university already owned a number of houses in that street. I’ve always been a person in which I don’t buy forever family homes. It’s just not in my blood. I like where I live and I’m comfortable, but I always think, okay, this is my family home, but what’s the value that we can add here? What is this area going to do in the next five, 10 plus years?
So I was thinking that when we bought and when we got this letter, I said to my husband, here it is, this is the day that we talked about. We now need to negotiate very seriously and make sure we get the best deal we can from the state government. So what they do in those situations is they pay for your legal fees. So we immediately hired a lawyer who is an expert in compulsory acquisitions and they pay for you to get your own valuer as well. So we had that lawyer recommend a really good value. We knuckled down and went back and forth with the state government about what we thought a good price to pay for the property was. They do pay market value and they also pay compensation on top of that. So they will pay your stamp duty on your next property. They will pay disturbance and amount for the disturbance. Everybody’s disturbance is different depending on your particular situation but from our position, we basically got a 200 grand windfall selling.
She gives some wise advice to anyone that finds themselves in a similar position.
I say all of this knowing that I am in the property sector, I am a lawyer. This kind of stuff I am more comfortable with than the average and there were a lot of displaced people in our street, elderly people, people with families who the kids were in school up the road and it was a very emotional, very difficult time. The process got bad media but that’s kind of the way it goes with these processes. Nobody wants to talk to me, for example, who actually had a good experience. They want the sad stories, but my advice to anyone in that situation is just to make sure you get good legal representation. Somebody who understands your rights and will fight for them and make sure that all of your costs are covered at a good value or who go into bat for you when you have that round table discussion and try and get as much as you can.
After going through that ordeal Farmer proved that no matter how bad it can be there is always a light at the end of the tunnel.
The process was probably about a year from the time you get the letter saying that this is going to happen. There are legal timeframes that they have to allow you. So it doesn’t happen fast. We probably moved more quickly in terms of agreeing on a sale price because I was quite keen to do that at the time when the market was strong. This was January 2018, so it was kind of the end of that really strong market that we had in Sydney. We were confident that we were going ahead and this is something that we wanted. So about a year and then we decided to purchase a strata apartment to live in. So 10 years of living in a house, we decided to go back to strata and I have to let my husband off the hook here. It was actually my suggestion. It was something that I was really keen to do.
Thinking about why it gets back to that convenience. I think we had this beautiful house. We had the front yard, the backyard, we’d done the renovation. We’ve only got one child. So space was already too big for us. As much as we said we loved having a garden and we wanted to do fabulous things with it and we wanted to spend our weekends maintaining it, we didn’t want to do that. Nor pay people to do that, you work all week, you don’t want to spend your weekend working on your house. And that’s often what happens when you have a house. Now, living in strata is very different. You walk in your front door and it’s much more contained and you don’t have that outdoor area and you don’t have those maintenance responsibilities because they’re shared by the building.
And that’s all done according to a schedule. I’d made a decision a couple of years ago that I wanted to travel more as a family and we’d already had that in chain that we had a European trip that we’d done. And we’ll be scheduling another one and I thought, if we do this every year, we want to be able to just lock up and leave. I wanted to stay in the area, so I wanted to stay in the east and I knew that we’d be spending more money buying a house then in the east and we could save a bit of money buying just as beautiful and just as spacious, an apartment, which is what we ended up doing and really significantly reducing our debt so that we could focus on that lifestyle.
She explains what the best amount of units to have in a building and the reasoning behind it.
Two to four you can have problems because if there is a disagreement, it’s really hard to resolve that and your neighbours are right there and you see each other every day and it’s hard to raise money for a significant work. So bigger than that is generally my suggestion. The recent research shows that the sweet spot is about 40 units because that apparently is small enough to have a nice community where you know each other and that you remember each other, you can say hi and bye, you remember names, but large enough that you have the funds to meet significant expenses. So if we need to replace the roof membrane then raising a levy for everyone to contribute to, that cost is not so overwhelming. So I found that really interesting. I currently own and live in an apartment block of 37.
Everyone always finds that moment when everything suddenly seems to fall into place.
I think I would say that point about improving the property and especially if it’s your family home. I have been very committed and I suppose this has come from being successful early on with the apartments that we bought, very committed to, don’t buy new, but something that you can improve on and whether that is a full renovation or just a small aspect like a bathroom or repainting, looking at property and think, ‘How can I improve on this?’ If you can’t improve it in any way then you better be in it for the long haul and when you think about strata and apartments, this is another reason why I love it, there are so many other ways that you can improve because you can improve the building. You can look at spaces where, you go, ‘Okay, where can we add parking?’
That’s something that we did with my two bedrooms and we added a parking space in front of everybody’s garage. And because I understood the process of how to do that legally, I was able to do it for the building. We registered a bylaw on the title. So when it came time to sell, we sold that apartment with two parking spaces instead of one. So there’s lots of opportunity for that kind of thing. Where can the building expand to the rooftop and build two more apartments on the roof and then sell those apartments and take a windfall for everybody in the building? Where can we add sustainable features in the building though? So where can we go green? Where can we go solar? Where can we install better lighting and save money? And so when I’m looking at apartments, I’m looking at all the ways that this building is not doing very well and that if I can come in with my knowledge and be able to improve, then that’s going to improve my bottom line when it comes time to sell.
Simplifying Strata Title Property Intrincies of Apartment Living
There are many apartments on the market to choose from and one of the common questions investors ask is, what makes a good strata building for investment?
I think to start first by looking at the age of the building. I wouldn’t look at anything that is less than 15 years old. And I’ll tell you why. It’s because these days about 70% of brand new apartment buildings have building defects and that is a very serious problem in New South Wales. It also happens in other states as well. And there are some steps that have been taken by our state government in terms of legislation to try and correct this. But we’re just not seeing that flow through yet. So I don’t do a lot of conveyancing, but if a client does come to me with a contract to purchase a brand new apartment off the plan, I have a stock standard advice and that advice starts with do not sign this contract. I just did the number of apartment owners I’ve seen go through about seven years of hell trying to chase a developer or builder that’s disappeared.
There’s no insurance for high-rise buildings. They’ve had to go ahead and contribute more money after they’ve been absolutely stretched to the limit. Might be their first home in a brand new apartment. They’re just not a good idea. So I wouldn’t look at anything less than 15 years old up to about 40 or 50 years old. We have some really great older buildings in Sydney, but you don’t see them. You sort of think about apartments, you think all these 200 lot 15 story plus builds is, that’s what’s being promoted to us. That’s what the developers want us to buy. But there are definitely good older buildings out there. As they get older, do be aware that there are usually some phases of significant remediation works to be done. So the roof membrane will probably have to be replaced. There may be concrete cancer in the balconies.
So those are big jobs and they’re quite common jobs for buildings that are about 35 years old. So the way you find out what’s happening and what you might be up for in the future is to make sure you go and inspect the books and records of the building of the owner’s corporation before you sign the contract. That is a really important part of doing your due diligence. When you’re buying a strata apartment, you must go or have your lawyer go or hire an expert to go and look at those books and records and see what is on the horizon for this building. Is it in the middle of litigation? Are there big levies coming up to pay for works? Does everybody hate each other?
Should you still go ahead with these properties or is it better to steer clear?
It depends on what the problem is. And it also depends who you are, who the buyer is. So I might buy into a building that’s in the middle of litigation and has some major work coming up because I know how to handle that and I’m comfortable with that. And I know that I’m shaving off some money on the purchase price because I’ve said to the vendor, ‘Hey, I’ve just inspected the records and there’s a loan on the books for 500,000 that’s going to have to be paid back.’ So I know my levies are going to go up in six months time. So I’m going to knock 20, 30 grand off the purchase price for that and somebody else has looked at that loan and gone, ‘Oh, I’m not touching this place. I’m not going to buy it.’ Because they don’t sort of understand what that means. So it depends on what it is. Depends on who you are. I know other people who would just say, ‘No, I’m a busy person, I work hard, I do not want any problems with my home. I’m going to live in this place. I can’t afford for the levies to go up, so I’m going to have to walk away.’ So you really have to assess that from a personal point of view.
She talks about her decision to move into a strata complex and shares why.
We settled with the government, so we were cashed out, we were ready to go. I decided that if we’re going to live in strata, it was going to be a very nice apartment. It was going to have views. It was going to be a place with great amenity and Bondi really ticks a lot of those boxes. So that was where we ended up focusing. And this particular apartment on the papers, on the books and records, had problems. This building had problems and they were problems that other purchasers had been looking at and then walking away from the opportunity because of those problems. So I used the example earlier of the loan on the records. That’s exactly what this building had. They had borrowed some money to do some, as I said, significant remediation work.
It’s a 35 year old building is ready for it and that’s possible for strata buildings to do. And often buildings want to borrow money instead of raising levies because the owners can’t afford to put their hand in their pocket and put the money up straight away. But they can afford to make smaller loan repayments over time. But what happens when you borrow money is that it’s shown as a debt on the records and if you do want to sell purchases are coming in and saying, why is there such a huge debt on the records and what does that mean for me? You’ve got the benefit of this loan and I’m going to have to pay it off. So I use that as I said to my advantage in negotiating with the vendor, I worked out what the repayments would be over time and I knocked that off the purchase price. I said, ’Well, we’ve got to be negotiating around this end, not that end.’
Fixing up some of the issues of the building can provide value down the track.
Nothing else specifically about issues. The building definitely had and still has a lot of potentials when it comes to improvements. It is in an incredibly unique place in the suburb in that it’s very accessible to all the amenities, but it’s at a quiet end and it overlooks the park. It’s actually one of the very first Mirvac builds. They still have a reasonably good reputation. It had been a little bit neglected, let’s say, for the last 10 to 20 years around that time when things really should have started to be done. Carpets and painting and exterior work, none of that’s really being done. So I’ve looked at that and said, ‘Well, I can come in, I can explain to the owners why this is so important and how it can add value to everyone’s investment’ and I can start getting that process underway and I’ve paid less because those things haven’t been done. But when I come to sell and this building is spic and span and it’s looking great, then I’m going to see that value there for me.
Farmer tells us about the importance of turning up to an annual general meeting in your building.
You need a majority of the people who are present and voting at the meeting to pass a levy. So that doesn’t mean a majority of owners in the building. It’s only the majority of those who turn up to the BC to vote. So it can actually be a lot less. I know in our building, as I said, we’ve got about 37 lots. If we get 15 or 16 people at the meeting, that’s crowded. So we’re only having to convince eight or nine people that the levies at this amount or whatever the proposal is that we want to put in place at the time that it’s in the building’s best interest. And a great way to do that as well is to have a good strata manager. So the strata manager is the person that the building engages to do all the day to day stuff like issue invoices for levees, organize the plumber when something goes wrong, organize the electrician, pay the gardener, attend the meetings and explain to the owners what their legal obligations are when it comes to repairing.
And maintaining the property. So they definitely have to do that by law. And explaining why the levy amount that’s being proposed is being proposed. You know, if everybody pays this much per quarter, then this is how much we’ll have in the bank and then we’ll have this much at the end of the year and then we’ll be able to replace the roof membrane, which is currently leaking into unit number 35 and number 35 is going to sue us if we do not replace the roof membrane. So sometimes you have to be as black and white as that to say, ‘This is a legal obligation, you’re going to end up in court paying lawyers to resolve this if you don’t raise the money now. It needs to be done.’
Renovating is not as easy as they make it seem on TV shows like The Block.
This is a mistake that I see lots of investors make. They think that they can just buy a rundown old apartment. They can gut it, produce something fabulous, do a block renovation or a Cherie Barber renovation and they’ll be making a motser and they’ll turn it all around in four weeks. That is not going to happen. And it’s important that you understand that before you buy so that you can budget. If you’re buying just to flip, then you’re not going to have tenants in there. You’re not going to have rental income. You’ve got to make sure that you can cover your mortgage if you’ve borrowed to buy in the process of waiting for approvals and for renovating. So for renovations that are going to affect waterproofing, that are going to affect structural items, so they’re going to change structural walls or that are going to change the external appearance of the building, you must have an approval at a general meeting of the owners corporation and you’re going to need a bylaw to be prepared.
So that’s a document that should be prepared by a strata lawyer that explains all of the work that you’re doing and it shifts the responsibility to you for the work. So it removes the risk from the owner’s corporation. That bylaw has to be approved at a general meeting. And the fresh hold for bylaw approvals is higher than a majority. In simple terms, it’s actually a two-thirds that we would need to approve a bylaw. So you need to get your bylaw underway. Once you’ve got that done, you need to send that usually to the strata manager, if they’re the point of contact. And you need to say, ‘I’ve got this bylaw, I want it to be put forward at the next general meeting of the owners corporation for consideration.’
You can’t start your work until that bylaw is approved. Now, these meetings at shortest might take four weeks to convene. The owner’s corporation might say, ‘You know what, we’re not having a meeting for six months. We don’t have one due. We don’t really feel like calling one. We don’t really like you. We don’t really want them to work building.’ So it’s very difficult to force a meeting without a tribunal order. So you may be waiting much longer for the meeting to happen and then, of course, you’re doing your work and that takes time. And there are always things that crop up to extend that. So I’d definitely be looking at six months if I was buying to renovate a significant renovation as an investor. Nothing’s really going to be finished within six months.
Even if you own your apartment in the building, sometimes you still need to get renovations approved.
Paint jobs don’t. So that’s cosmetic work. I’m installing built-in wardrobes, replacing carpet, that’s not a problem. That’s all cosmetic. Kitchen renovations do require general meeting approval. They don’t require a bylaw, but they do require majority approval at a general meeting. So there are some things that you can do quickly and they’re the ones that you’re really doing your four-week ultra-fast renovation. There are great ways to improve value in strata apartments without doing those major renovations for sure.
We discover the need to brush up on the building’s bylaws before beginning a renovation.
My website has lots of information at yourstrataproperty.com.au. The podcast has been going for about three years now. So it’s built up this lovely library of info about all things strata and it just takes a quick search to find something that’s relevant to renovation works. Strata lawyers prepare bylaws as something that we’re all very comfortable with. Make sure if you do need a bylaw before going to a strata lawyer because that could just be a waste of time if you get someone who doesn’t really know what they’re doing. The strata committee or the manager will just send it back to you and say, ‘Nope, try again.’ You’re probably paying about, I charge about a thousand dollars to do a bespoke bylaw, but I also have templates on my website. So one of my templates that’s the most popular is actually the renovation works bylaw and that’s much, much cheaper than bespoke advice. So you can check out the template as well.
Planning out the steps ahead on how to improve your property is really important.
We’ve implemented a few things. One big thing that we have done, which is really important for all buildings is to plan. And our legislation in New South Wales actually requires strata buildings to have a 10-year plan for what we call capital works. So things that are repair and maintenance items, that absolutely must be done. You have to have a 10-year plan for that so that you can start raising money now for something that will need to be done in five or 10 years’ time. So this building didn’t have that plan when I came in. So they were a little bit lost in terms of what to do and when to do it but we have now had that plan put together. Now the next general meeting that we have, our AGM, we will be able to adopt that plan and start raising levies in the right amount to properly budget for these future works so that when it comes up that we do have to repaint the exterior of the building, for example, the money is sitting in the fund ready and waiting and we don’t have to borrow money, so we’re not going to have one of those big debts on the records again.
Farmer doubles down on the importance of planning and budgeting when it comes to investing.
They definitely had levies and had a sinking fund, but the levies have been far too low. So this is a mistake that a lot of people make and it often is investors, I have to say, who thinks that having low levies is a good thing. That’s a really important point to make when you’re looking for strata apartments. If you see low levies but you see a building in need of attention and you see items that do require regular maintenance, like a pool or a gym or lift, then levies shouldn’t be low. Levies need to be higher. And if they are not high enough, then ultimately you’re going to reach a stop point where there’s no money left in the fund and you’re going to have to put in your pocket and put in a lump sum like 10 or 20 grand or you’re going to have to borrow money.
So a lot of buildings because they don’t have those professionally prepared plans in place which is done by someone who’s similar to like a quantity surveyor. They’re a little bit lost and the people who go to the annual general meeting and vote on these things just want a simple, quick, cheap solution. Simple, quick, cheap, obligation. And particularly investor owners are looking at their bottom line and saying, ‘Well, I’ve got a budget throughout the year of what I can contribute to levies and this is the limit of it.’ And they just don’t have the foresight to look down the track and say, ‘Well, ultimately this is in the long term interest of my investment increases the amount.’
There has been a crackdown on smoking in Australia and it has become a highly debated issue when it comes to buildings as well.
It is possible to deal with smoking by introducing a bylaw to your building. And we actually have recorded cases in New South Wales that make clear that a building can ban smoking certainly on the common property, so in the common areas, but also within locks. So within units you can actually stop an occupant from smoking in their own home. And that’s because of smoke drift. It’s because it’s so hard to control the movement of smoke from a lot onto the common property. And obviously the health effects that are very well known about smoking and the fact that smoking causes a nuisance and we do have in our legislation that owners are not to cause a nuisance to occupiers and not to cause a nuisance to other occupiers. So what our courts and our tribunals have held is that smoking is a nuisance and if you’re causing that nuisance and the only way to stop it is to stop smoking, then it is reasonable for a building to have a bylaw that says you cannot smoke anywhere on this property. So that’s a really popular question and that’s becoming a really popular bylaw as well. A non-smoking bylaw for buildings to implement.
With the crackdown on smoking, she talks about the value of non-smoking buildings.
I’ve certainly seen where smoking has caused a significant loss to a landlord. There was a tribunal case a couple of years ago where a landlord was renting out their apartment to a young family and the neighbour was a chain smoker and this young family was suffering and suffering because of the impacts of the smoke drift. And the landlord didn’t do anything. And the landlord ended up being fined $11,000 by the tribunal for their failure to provide a safe and healthy living environment for their tenant. And what was interesting about that case is that in the reasons for the decision, the tribunal said, ‘This landlord could have approached the owner’s corporation, the body corporate, and could have asked them to intervene and could have asked them to introduce a bylaw that banned smoking. But the landlord did not do that.’ So that became a real scary case for landlords to say, hey, even if it’s not someone smoking in your apartment, you’ve got to be aware of what’s happening around the building because that can come back to bite you.
Farmers talk about the influence that others have had on her career.
Mentors are vital to me and it’s something that I recommend anybody, everybody has. Depending on where you’re at in your stage of life. I have business mentors, I have mentors who are friends of mine who could mentor me on a more personal side. I have some professional mentors who I pay. I think from a property side of things definitely as I said earlier, my parents were a big influence on me. Seeing them be successful with property and my extended family, I was able to turn to them to seek their advice and their guidance. Looking at properties, ‘What do you think?’ Taking someone with you who’s been there, who’s purchased, particularly looking at apartments and someone who knows apartments and knows what to look for. Anyone who’s got building experience. I’m lucky to have a brother who’s a carpenter, so we have a good skill set there in the family. But absolutely seeking out those mentors. I just think someone who’s been there and done that is just going to fast track your success. So you can skip so much when you’ve got the knowledge of that person who says, ‘You know what, don’t go down that path because I did and this is what happened.’ You can really avoid that pain just by talking to that person.
Continuous learning is always important. The farmer likes to read to keep her mind at work.
I do enjoy a good personal development book. Having said that, I also read a lot of fiction just to turn my brain off at night. But one book that really scratched an itch for me was the book called, The Slight Edge by Jeff Olson. I say it scratched an itch because it’s all about the little things that call it, ‘successful people,’ do every day that builds up over time and looking at people who seem like massive successes. How did they do it and how do they keep doing it? And what this book teaches you is it’s these little things that keep coming together and he uses the example of compound interest. You just keep putting that money aside and it earns interest on interest, on interest. And I think when I became a parent, I thought, you know, I feel like I’ve had a pretty good life.
I feel like I’ve been lucky maybe with some decisions that I’ve made. I enjoy what I do. I’m on a good path. I’m happy. How do I, as a parent, make sure that my child has the same or similar good experience? And so I became very focused on what are those things that maybe I do subconsciously or what are those things that my parents taught me that I didn’t realise they were teaching me that I can then pass on. So that book really answered a lot of those questions and I think it’s a great book for parents to read and even to give their kids when they’re a little bit older. It’s about good health. It’s about eating right. Good years are made up of good months are made up of good days and made up of putting the right thing in your mouth and making sure you get exercise. Good relationships are about talking to that person every day and spending time. So when those things are working out, then you start to find that the bigger things start working out as well.
There are still pieces of advice that stick with Farmer to this very day.
The best advice has probably come from a mentor of mine which is, ‘Be uncomfortable with uncertainty.’ This is something that I find a lot of people struggle with and I struggle with it as well. Just being in the moment and not knowing what’s gonna happen next or not knowing what the right decision is or not knowing if this is the right decision and being okay with that. Some people are frozen in time because they can’t make a decision. I saw this sort of 10 years ago when a lot of my friends with buying the property and you think, ‘Just buy it or just jump in and just do it. It’s never going to be cheaper here in Sydney than it is today.’ You’ve got to take that step. And I saw a few of them just so frozen with having to make that decision.
Whereas I, for whatever reason, was more comfortable with, ‘Look, I don’t know how this is gonna work out, but I’ve done my research and I feel I’m making an informed decision and I’m making an informed risk. I think this is a good decision. I’m still a little bit uncertain, but I’m never going to be 100%, so let’s jump. I’m young enough that it’ll work out.’ And I think it comes up in so many different ways. When you don’t know what a client is thinking, you don’t know how a case is going to turn out. That’s okay. It’s all right to be unsure. And the other way to say this is if you’re not sure then just stand still for a minute. Take a breath and the answer often shows itself. If you just slow down, feel that moment of discomfort, that moment of being unsure, then often the answer will come to you.
We discover some of the things that Farmer has learned over the course of her career through experience.
10 years ago I would have said the world is bigger than you think. The opportunities that you think are out there, 10x that. There’s more than you can imagine. Think big. I think I’d say think big because when I do look back 10 years ago I was thinking about what my life would be like and it seems kind of simplistic what it is now. I think maybe that’s just part of being older and being more confident. Now I feel more like, yes, there’s so much I want to do. There are so many places I want to be both physically and emotionally and I can do it because the world is big and we have this lovely modern world with technology. Whatever you want, you work for it and it can be yours. So I think I’d be telling myself from 10 years ago that’s the future. And go, girl.
There is still plenty more that Farmer wants to accomplish in the future.
I’m very excited about building the online side of my business. I’ve been doing that for the last three years and again, it’s one of those things I thought lawyers could never do. That lawyers couldn’t provide online services, that I would forever be tied to the billable hour with my backside on a seat and I had to be sitting across from a client to be able to make money. That is so not true. So anybody who thinks online businesses are for people selling tee shirts and soaps, no way. You can definitely do professional services, otherwise, there can be an online component to that and I’m talking about selling, I’m talking about selling online. That’s the freedom that’s given us to be able to travel, to be able to be in another country overseas. Taking a break and still making money is amazing. I do have a plan for the next five years and I know that I’ll achieve that and I’m really excited to be on the other side of that and keep enjoying life.
Farmer shares with us whether intelligence, skill, and hard work played a role in her success or whether it was just luck.
I think luck does play a big role. I didn’t credit luck enough when I was younger. I was lucky that my very first job was with who it was with. A man who is still my mentor today, a lawyer who really shaped my view of what Lawyering was about. That was just luck that he was there and he accepted me to come and work for him. That we found each other. I think hard work as well just probably plays an equal role. Let’s say that. I always assume that I don’t know enough, that I don’t know the answers, that I’m going into a meeting with people who normal than me. So I over-prepare. That’s always put me in a good position because I ended up being the person who is most prepared at the table. So hard work definitely plays a big role. It’s a bit of both. Tyrone, that’s all I can say.
Finally, she tells us where we can reach her and keep up to date with what she is doing.
So the best way to connect with me is via my website, which is yourstrataproperty.com.au. If you head over there, you’ll see lots of free resources. There’s an ebook about the number one thing that dramatically improves apartment living. You can download that and find out that secret. I could also tell you the secret, which is a functioning strata committee, dramatically improves apartment living. Let me tell you, that’s really, really important that you get your strata committees under control. You find the podcast there as well, and you’ll be able to connect with me there.
This episode was produced by Andrew Faleafaga with narrations and interviews conducted by Tyrone Shum.