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From: Sergey Golovin
G'day folks,
I would like to explore "sinking fund" arrangements if I may please.
I have recently purchased new townhouse in the new (small) block of 6 and we had first strata meeting.
One of the questions was how much shell we put aside for sinking fund.
To my surprise other residents showed extremely common sense and practical approach to that issue despite the fact that they all owner occupy and have nothing to do with investment as such in regards to existing building. I do not know if they have any other properties elsewhere.
There was three possibilities presented at that meeting –
1. To put aside as much as possible. The more money in the fund the secure the future.
2. Enough to cover the expenses (this is where I am coming from).
3. Put as little as possible (the minimum required by law) simply because the building is new and does not require to much of maintenance (it also on 7 years warranty) and all money we put aside will not be enough to cover all expenses any way ($12,000 in today’s money will buy us new driveway if required, but in 10 years time all those money would be devalued and represent only half of the original buying power) but we can use available money elsewhere for now. On other hand – why put all those money into the fund (which will sit there in the bank for years to come) and sell the property and let someone else’s rip the benefits.
Guess which way did we go.
What do you think is money in the fund good idea?
Serge.
G'day folks,
I would like to explore "sinking fund" arrangements if I may please.
I have recently purchased new townhouse in the new (small) block of 6 and we had first strata meeting.
One of the questions was how much shell we put aside for sinking fund.
To my surprise other residents showed extremely common sense and practical approach to that issue despite the fact that they all owner occupy and have nothing to do with investment as such in regards to existing building. I do not know if they have any other properties elsewhere.
There was three possibilities presented at that meeting –
1. To put aside as much as possible. The more money in the fund the secure the future.
2. Enough to cover the expenses (this is where I am coming from).
3. Put as little as possible (the minimum required by law) simply because the building is new and does not require to much of maintenance (it also on 7 years warranty) and all money we put aside will not be enough to cover all expenses any way ($12,000 in today’s money will buy us new driveway if required, but in 10 years time all those money would be devalued and represent only half of the original buying power) but we can use available money elsewhere for now. On other hand – why put all those money into the fund (which will sit there in the bank for years to come) and sell the property and let someone else’s rip the benefits.
Guess which way did we go.
What do you think is money in the fund good idea?
Serge.
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