In the bonus chapter Steve mentions that you should always repay your debt to help manage interest rates rises. The line below bring me to my question.
“Plan to repay debt: Except for the commercial property that we own, all other dwellings in our portfolio are on principal and interest repayment terms”
Why are commercial properties not on a principal and interest loan and why do you not want to repay the debt on them?[biggrin]
usually because commercial prop. are more secure in terms of rent. The other option is that you probably don’t ever want to own a commercial property – you’ll on-sell it later on for a higher capital gain but it is goodto own residential – that’s why you pay residential off.
“If You never never ask, you’ll never never know”
Thanks Geo.
I am curious as to why you don’t want to own commercial property.[cap]
me personally – I would like to own them – Steve probably doesn’t – so he mentioned it in the book from his perspective as I would believe. But there are many factors that differ commercial from residential. The other reason is that some institutions will increase the interest rate when you take out a commercial loan – so Steve maybe mentioned about paying off ineterest only from this perspective because the rates will be higher and you want the deal to remain +CF.
“If You never never ask, you’ll never never know”
You must be logged in to reply to this topic. If you don't have an account, you can register here.
