Hi just wondering what people are doing regarding investing loans… it seems to be hard to find properties to positively gear (not impossible but hard) with p&i. Is it recomended to stick to p&i payments or maybe go i/o to maximize possitive rental return. Help plz lol
Rental return doesn’t really come into it. If you have other non deductible debt you would want IO otherwise you will be throwing money away by paying extra tax. Even where there is no other non deductible debt you should consider an IO loan with an offset as you can save the same amount of interest while building a buffer which can enable a quicker tax effective retirement.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
You will find it hard to source properties that are cash flow positive even on an interest only basis assuming you are borrowing 100% of the purchase price + costs.
As Terry mentions the type of loan has very little to do with the property selection process.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
as per above, but yes majority of investors do choose interest only to minimise their weekly commitment.
BuyersAgent | Precium
http://www.precium.com.au
Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
Structure your loans to enable the best flexibility and tax – not to artificially manipulate the ‘cash flow’. Revenue minus expenditure, the rest is just fluff if structured correctly.
I actually wrote an article about this topic recently, it might be of assistance for you: http://www.precisionfunding.com.au/interest-only-vs-principal-and-interest/
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
I generally opt/recommend interest only on all IP debt and either P&I/IO on owner occupied debt (depends on the clients situation) – here’s a blog entry on the topic
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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