princ&interest

Hi Sean,

Thanks for your post and welcome to the Property Investing.Com community.

Let’s see abouyt answering those questions…

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1 could you send me a formula for princ&interest loans?

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The formula is actually that of an annuity calculation, which makes it quite complicated. If you really want I can look up the formula, but these days there are that many online loan calculators as well as financial calculators that you don’t need to know it.

Nevertheless, if you want a statistics lesson, then try:

http://www.duke.edu/~charvey/Classes/ba350_1997/preassignment/preassign.htm

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2 when purchasing a pos geared property do you use interest only loans?

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I use both interest only loans (primarily on my commercial properties) and P & I loans. My decision on which loan to use depends on a number of factors including the investment strategy, prevailing interest rates and the risk assessment of the property.

There is a body of thought out there suggests interest only is the way to go since you maximise your cashflow. However, I am of the belief that repaying debt is a good thing since it reduces investment risk and also increases cahflow by reducing the interest cost.

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3 does the 11sec rule apply to duplexs/blocks of flats/multiple dwelling blocks?

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I think it should. But remember that this is only a filtering tool. There are times when properties outside the formula will still work, and certainly times when deals inside the forumla will not.

Do you think it should apply? Why or why not? I’d be interested in discussing this more if you like.

Thanks again for your post and I hope to see more contributions from you in the future.

Regards

Steve McKnight