Strata or house?

[JohnA]

Hi

Almost ready to purchase another IP. With our budget we can buy closer in - unit, townhouse etc with strata fees or further out house with no strata. I will be buying in NSW. Long term buy and hold.

I am at present anti strata (house on own title is all I have previously had).

I would be interested in other perspectives. Or links to previous debate / comment on this.

Can you get duplex or townhouses without strata.

Thanks

 

[wategos]

Strata fees cover building insurance & maintenance, you're still paying for these with the house (& generally much more in my experience).

 

[JohnA]

Hi Wategos

Yes I can get my head around that. The part I am not so sure about is the 'sinking fund'. Is that where the maintenance money comes from?

So with a house you would not pay strata but building ins out of own pocket. And maintenance as it arises so $ are kept in own bank account until then.

With strata you pay quarterly an amount that covers insurance and puts $ into a kitty for maintenance of all properties in the complex.

Does the sinking fund generally cover all maintenance or are there times when something needs fixing and its 10k and each unit holder gets a 2k bill?

 

[The Y-man]

John A,

Think more in terms of

annual strata levy: rates, insurance, maintenance (cleaning, gardening), repairs, and utilities (for common or shared use).

sinking fund: money put aside for major works (where it would not be practicable to raise in a 12 month period such as lift recabling or replacement of a large scale pool heater) and renovations.

In terms of tax: Levy can be claimed in tax year. Sinking fund - no claim. Capital base adjustment when selling property.


The Y-man

 

[travelbug]

The sinking fund is designed to pay for all foreseen work but sometimes unforeseen things happen. The same as with a house, sometimes you discover the roof needs replacing and you have to fix it.

Work out net yields when making comparisons.

If you can't get your head around it buy a house.

 

[JohnA]

Thanks for the replies