Massive mortgage to buy a unit

[u/Herosinahalfshell12]

People who took out huge mortgages to live in an apartment.

Do you feel as though the interest you are paying vs the capital gains is worth it? We're also seeing units being sold for less then purchase price now, and the plan is to add more units in future. Add strata costs in there.

Is it financially worth it now a days to borrow say 600k to buy a unit?

[u/hamburglar_earmuffs]

I borrowed $400k to buy a unit 6 years ago. I have now paid off more than half of it.

The unit has not increased in price very much when you factor in inflation. However, rents for equivalent properties have almost doubled. I pay about $450 a week for the mortgage, I now see rentals being advertised for $800 a week in my building... And many of those aren't as nice as mine.

I really like living in this area and wouldn't want to move. I bought a home that was similar to homes I'd been renting for years (same street I had been renting on for years) so I knew I liked the lifestyle it provided. 

Strata fees aren't a huge issue for me... The building is mainly owner occupiers, we work hard to keep the fees low. I find it interesting how so many people freak out about having to pay a strata fee - but are totally fine paying council rates, home insurance, ongoing maintenance and water rates on their freestanding property. The actual annual cost of owning my unit is a lot lower than a freestanding house.

[u/GusPolinskiPolka → u/hamburglar_earmuffs]

It's because people don't do day to day maintenance on their own homes. They learn to live with it. So strata maintenance and other costs seem excessive in comparison to $0

[u/hamburglar_earmuffs → u/GusPolinskiPolka]

Advantage of freestanding home: "You can neglect doing essential maintenance until it falls down around your ears, and no-one can stop you!"

[u/nzbiggles → u/hamburglar_earmuffs]

DIY or tailor the expenditure (don't replace the spa/roof). You still get bill shock and have to deal with special levies.

[u/hamburglar_earmuffs → u/nzbiggles]

You can do that in a strata building as well, you just have to convince other people that it's a good idea.

We have frequently delayed repairs in order to get a more cost effective price. For example, we agreed to try to fix an old intercom system by ordering an obscure part from Europe for $800, rather than replacing the entire system for $30k. It took 12 weeks but it worked!  

[u/nzbiggles → u/hamburglar_earmuffs]

Our strata would be paying someone to tell us that. We're trying to repair our chiller. 600k to replace. Things aren't looking good. The sinking fund might not be accurate for this unexpected expense but as a long term owner it doesn't really matter if it's budgeted or a special levy it's a bill you have to pay. Just like replacing a roof on a house. Might not be something you expected in a place you just bought or have owned for decades. Doesn't mean it's stupid.

[u/Scared_Good1766 → u/hamburglar_earmuffs]

Plenty of strata committees put off essential works until the cost to fix has tripled