The Depreciation Report:
A depreciation report provides important insights for buyers looking to buy into a strata corporation. It not only speaks about the current condition of the physical components (as long as the report is recent), but also the financial state of the strata corporation. Some of the most important information in a depreciation report can be found in the following two sections:
- The evaluation of the strata’s physical components
- The financial analysis and forecasting
Omitted Components:
One issue we often come across when reviewing depreciation reports is omitted components. Oftentimes this is due to the strata council directing the author of the report to omit certain items, which is a significant concern because excluding some items from the report leads to an underreporting of future capital expenses.
In simple terms, by excluding some items from the report, it appears as though the strata will have less to spend on future capital projects, than in reality. If not caught, this practice can be extremely misleading to potential buyers.
If you want to learn more about what to look for in depreciation reports, you can checkout this article titled “The Problem with Depreciation Reports”, written by Condo Clear’s founder and Managing Broker, Ryan Stenquist.
Next week we’ll look at alterations within strata units, as reported on the Form B. If you have any suggestions for other topics you’d like us to cover, please let us know at info@condoclear.ca.
A little about us:
- We are a fully licensed brokerage under the BCFSA, and carry Errors and Omissions (E&O) insurance.
- We’ve been in business since 2017 and have completed over 1,800 strata reviews to date province wide.
- Our Review Advisors have firsthand knowledge and experience. They’ve all been practicing strata managers.
A little about our services:
FAQs: How do Condo Clear’s services work?
Pricing: How much do Condo Clear’s services cost?
Here is a Sample Buyer’s Review that you can look through. If you have some time, we would love to setup a quick chat, to talk more about our review process and go over any specific needs you might have.
Ryan Stenquist & Magurel Mic
Condo Clear Services Inc.
