Buying a Strata Portfolio
It becomes a big decision to either buy a strata portfolio or strata roll to start a business or add to an exisiting business. Following are some initial considerations before deciding on your options.
What to consider when buying a strata portfolio
You have made a commitment to buy a strata portfolio or strata roll but have you considered the following?
Reputation of the vendor
The integrity and personal qualities of the business owner are a critical factor in determining a purchasing decision. If you’re not comfortable with an individual, go with intuition over the numbers. In general, you should expect to have a positive experience with individuals who:
- have been introduced to you by someone you have an existing relationship with
- have a proven history of success
- have been committed to their business, as well as their lifestyles
When companies are looking to merge, finances are usually considered the most important consideration. However many mergers fail because of lack of cultural fit. Two organisations with similar shared values would tend to have more success with a merger. These shared values can work well because it allows teams to work together more efficiently in post-merger operations.
If you are running an efficient office and have your software and hardware running smoothly, it is often not a smooth transition to integrate a building which has been running an alternative software or hardware that is old and dated. The adequacy and currency of operating systems is critical in business along with the support arrangements which are in place. The integration of buildings into existing strata software can be a critical consideration when considering a purchase.
It is common in strata management for there to be a variation in contract agreement commitments from one year to three years and some even month-by-month. You will also find that many of the agreements are not signed as they have been ongoing for so long. This does not offer security in your purchasing choice therefore investigating how many signed agreements there are and the length of commitment are important.
Other risk considerations
- Weak economic conditions or weakness in specific property markets.
- The potential loss of key clients with large portfolios.
- The loss of key personnel, for example where there exists a concentrated reliance on key Strata Managers to maintain and grow lots managed, or where there is reliance on a single Strata Manager to maintain a relationship with a large building. If they leave the building may leave as well.
- Poor attention to basic business practices of cost control and business planning.
- The impact of large competitors using pricing power to steal Lots Under Management or to force prices down.
StrataMax can Assist
StrataMax have been operating in the strata industry for over 25 years and have a thorough understanding of strata. With our expertise and strong network, having a confidential conversation with us may give you clarity and understanding about how you can go about buying a strata portfolio or strata roll.
All information gathered from discussions will remain confidential. Potential buyers or sellers will be supplied with details of interested parties and will be free to contact them or alternatively engage a business broker or other third party. StrataMax acts purely as an introduction based service and will have no involvement in negotiations, data verification or any other business negotiations. There is no charge to use this service.
Feel free to contact us on 1800 656 368 to express your interest in either buying or selling a strata portfolio and see how we can help.