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annier
Participant
@annier
Join Date: 2006
Post Count: 1
July 18, 2006 - 3:20 pm
I have a rental property in Perth which I purchased for $180,000 eight years ago and now worth approx $330,000. I still owe $150,000 and the investment is negatively geared.
After reading Steve’s book I am wondering if I should make my IP CF+ by:
1. Changing my loan to interest only.
2. Fix my loan
3.Increase the rent
You probably think this is a no-brainer but I want to be sure this is a good move for me..
Your comments pls??
Mortgage Hunter
Participant
@mortgage-hunter
Join Date: 2003
Post Count: 3,781
July 18, 2006 - 10:09 pm
Increasing the rent is always a positive thing – as long as the market can bear the increase.
Most investors use IO. Esp if you plan on buying more IPs. If this is to be your only one then the choice isn’t so clear.
Hope this helps.
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985
Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
888Abundance
Participant
@888abundance
Join Date: 2005
Post Count: 60
July 20, 2006 - 1:36 am
I think Simon has provided you a hint.
You’ve done well so far with your IP?
The question is:
1. What’s happened now to make you want to make changes?
2. What’s your long term plan?
For example, if it was to get another IP, and continue accumulating IPs, then the few things you suggested should probably be part of your refinance strategy.
Maybe you could leave things as they are, refinance and access the equity and look for positive CF property for your next purchase.
On the other hand, if you’re concerned about interest rates movements and your ability to keep servicing the loan, that would be something different again. You might want to fix only part of the loan and leave part variable for an each way bet.
Probably still comes down to the reason behind why you want to do things in the first place (why do you want to fix and go IO?).
Gary[aacool]
Author of “Property Millionaire: The Guidebook to having Great Australian Dreams”
Creator of “Property Millionaire-The Boardgame”
http://www.888abundance.com