All Topics / General Property / Paying Principal & Interest for IP

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  • Profile photo of TakeActionTakeAction
    Join Date: 2005
    Post Count: 5

    Having read Steven Knights Book – 0 to 130 properties in 3.5 years
    I was very surprised they accumulated so many investment properties paying Principal and Interest.I have always been advised to pay interest only to accumulate +ve cashflow Investment properties ASAP to keep up our purchasing momentum and to aim for 10% return. It is hard enough to negotiate the deals to buy at a 10% to 15%discount and to get 10% Return paying Interest only, let alone trying to pay principal as well.

    Your comments please.

    Is it better to reduce our purchasing rules and pay Princpal as well??

    Profile photo of PropertyGuruPropertyGuru
    Join Date: 2003
    Post Count: 1,502

    Hi welcome to furum,

    Yes you are right it’s hard to find 10%+ return property now a days but still you can find. I just negotiated this week one property for 15% discount so that’s very easy. I will prefer to go for Interest only loan and keep the rest of the money in off set account.

    PropertyGuRu [sultan]
    Mortgage Consultant
    [email protected]
    MSN ID: amitash, Yahoo Id: bornguru

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    Profile photo of ToeEdgeToeEdge
    Join Date: 2003
    Post Count: 20

    IMHO if you still have non-deductable debt (on a PPOR for example) go for IO on IP’s. Otherwise, go for P&I on IP’s. This is an efficient way to build equity. But I’m no expert…….

    Profile photo of DerekDerek
    Join Date: 2004
    Post Count: 3,544

    Hi TA,

    A number of Steve’s 130 properties were wrapped and as such cashflow becomes a decreased issue.

    [email protected]

    Property Investment Support Available.

    Profile photo of ian_from_brisbaneian_from_brisbane
    Join Date: 2003
    Post Count: 97

    I agree with PropertyGuru’s approach… If you work out how much the repayments would be under P&I, then every time you make an interest payment for your IO loan, put the difference into an offset account. This way it will be ‘costing’ you the same as a P&I loan each week/month, but the equity that you directly create will be much more easily accessible (just withdraw from your offset account).


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