Strata Finance: It’s a flexible funding facility, not simply a loan.
Recently, we asked our Business Development Managers across Australia to share the most common misconceptions they hear about strata funding… and the answer was unanimous!
When discussing funding options with owners, they frequently hear, “Oh, a funding facility? That works just like a standard loan, right?”. This notion tends to surface even before we step into a general or committee meeting.
But here’s the reality – a funding facility isn’t the typical run-of-the-mill loan. It doesn’t come with the same upfront commitments or lock-in terms that are usually associated with a conventional loan.
This article highlights the key differences between a conventional loan and strata finance facility, to empower Strata Managers and Owners Corporations to make informed decisions about their funding options. We’ve simplified this topic so it’s quick and easy to understand and share with your colleagues and clients.
Flexible Funding for Fluid Situations in Strata
In strata, funding needs can be uncertain and fluid. The full scope of an issue often isn’t clear until professionals assess it and, in some cases, not until they commence work. And that is why a Strata Finance Facility with swift access to approved funds is an effective way for Owners Corporations to navigate unpredictable situations and fluctuating costs.
Strata funding also provides a variety of flexible and simple products to cater for the specific requirements of each Owners Corporation’s situation. Extendable drawdown periods, length of terms and up to 24-months of interest-only payments, and quick access to draw on funds as required.
Tailored for Strata Schemes
Unlike conventional loans, strata funding is extended to the Owners Corporation, not an individual. Strata finance aligns perfectly with the strata scheme’s legal structure and purpose:
- It’s extended to the Owners Corporation, not an individual.
- Repayments can be incorporated into ongoing levies, spreading costs over time.
- This approach reduces the immediate financial burden on owners by up to 90% in the first year.
- It eliminates waiting for the Capital Works Fund to accumulate the required capital.
- Immediate access to funding allows prompt repairs or upgrades, enhancing property value and liveability.
- Prompt remediation of building issues saves money.
In the face of unexpected costs or urgent repairs, remember –
strata finance is a facility, not just a loan! It’s a solution that has been specifically designed to help Owners Corporations navigate financial challenges more effectively and with greater flexibility. Strata finance is about flexibility, not constraint. It’s about simplicity, not complexity and about having the freedom to adapt to the fluidity of changes. It’s about being prepared, not reactive.
So, next time you’re faced with a financial decision, remember, it’s a facility, not a loan!
DELAYS = $$$$: A Summary of Insights from Lannock Strata Finance’s BDMs
Strata communities across Australia have faced numerous challenges recently, including changing legislation, COVID-related delays, defects, supply chain issues, inflation, and a shortage of contractors.
Our BDMs, who work closely with these communities, have shared some valuable insights. One BDM highlighted: “Addressing problems when first identified could have led to significant cost savings for my client who delayed works from 2018.” Another BDM added, “Delaying necessary works will inevitably cost you more money!”
Here’s why, as shared by our BDMs from their recent experiences:
- Inflation & Rising Costs
I always inform my clients that delaying work often leads to paying more due to inflation and rising material costs,” shares one BDM. - Expanding Scope of Work
Another BDM points out, “Over time, we’ve seen that issues can worsen, increasing the scope of repairs and costs.” - Impact on Residents’ Enjoyment and Asset Value
“Deteriorating assets can negatively affect residents’ enjoyment of amenities and the liveability of residences. This can then impact occupancy rates and property values,” recounts another Lannock BDM, echoing a conversation with a strata manager.
To learn more about how Strata Finance can benefit your Owners Corporation contact Lannock. To discuss your property’s strata management needs or receive a FREE management proposal contact our friendly team. We also offer more helpful resources and community living news in our FREE newsletter.
