Units are back on the radar for a lot of investors right now, and for good reason. Affordable entry points, strong yields, and tight vacancy make them an attractive play in the current market. But there are some serious due diligence traps that keep coming up, and I am seeing investors get burned by them more than ever.
Here is what you need to be checking before you sign anything.
Strata Levies 👉
Get the strata report and actually read it. You are looking for the size of the sinking fund, any upcoming special levies, and whether the building has deferred maintenance sitting in the pipeline. A building with a depleted sinking fund and ageing infrastructure is a ticking bill. That 6% yield can evaporate fast when a $15,000 special levy lands in your first year of ownership.
Building and Pest Inspection 👉
Non-negotiable, even for units. You want to know the condition of the common property, not just the four walls of the unit itself. Concrete cancer, water ingress, and structural issues in common areas are your problem as an owner too, not just the body corporate's. Often times you can look at the strata reports for the building condition but you still want to do a pest inspection! Do not skip this step because the unit looks clean on inspection day.
Insurance 👉
This one is catching investors off guard more than anything else right now. Some pockets in Melbourne and other parts of the country are effectively uninsurable or facing premiums so high they destroy the investment case entirely. Before you get emotionally attached to a property, confirm that building insurance is in place for the strata, check what it actually covers, and verify it is current. If it is a high-rise, check whether the building has had cladding issues flagged, because that affects insurability significantly.
Flood Overlays 👉
Pull the flood overlay map for the specific address, not just the suburb. Two streets can have completely different flood risk profiles. Some areas in Melbourne cannot get flood insurance at any reasonable price, and that is a risk that does not show up in the listing photos. If a property sits in a flood-affected zone and insurance is unavailable or prohibitively expensive, walk away regardless of how good the numbers look on paper.
High Rise Specifically 👉
Be extra cautious with high-rise units. Oversupply in some precincts has kept values flat for years. Body corporate fees are often significantly higher, maintenance costs on common areas are greater, and resale can be more difficult when there are hundreds of identical units in the same building or precinct. The yield might look attractive but the total return picture often tells a different story.
Due diligence on units takes more work than houses, not less. If you want help reviewing a specific property or want a second set of eyes before you commit, jump into the Under450k private community where we work through this stuff with members every week.
Disclaimer: The information provided in this article is for educational and informational purposes only. It is not intended as financial, legal, or professional advice. Always do your own research and consult with a qualified professional before making any decisions. The opinions expressed here are solely those of the speaker and do not reflect the opinions or views of any other organisation. By using this information, you agree that the creator of this content is not responsible for any financial or other losses you might incur.