We often get asked ... What is a strata fee? Where does my money go?
If you live in an apartment or a townhouse you have a strata fee. The strata fee can be broken down to four main areas.
1) The Annual Budget - This is the cost of maintaining the common property day in and day out, year after year.
2) The Contingency Fund - This is a fund that you contribute to each month for those larger "down the road" expenses. The contingency fund isn't designed to cover those costs entirely, rather to minimize them when they do occur (and they will).
3) The Management Fee - This is the cost of having an outside company manage the property on behalf of its owners. If you live in a "Self Managed" complex this will not apply to you.
4) Insurance - Your strata fee contains the insurance for the structure and the common property. You will however want to get content insurance to cover your personal possessions. Also, the insurance on the structure is to cover the cost of replacing it to its original condition. So, if you replace a $15,000 kitchen with a $25,000 kitchen you will want to get your content insurance to cover the difference.
In most cases, if you live in a condo or an apartment, your strata fee will include the cost of the natural gas that is used in your fireplace and/or heats your water.
One thing that can cause strata fees to be higher are amenities like a gym, hot tub or pool. If you are the type of person who won't use those amenities you might want to consider purchasing a different property.
Strata fees for new or newer properties sometimes have a strata fee that appears to be very low. It is a good idea to contact your Realtor and get an average of strata fees of older, similar properties in the area. This will give you a better idea of where the strata fee might be heading to in the future.