Thanks Richard…that makes sense. I just don't see how the benefit of maximising interest deductions is better than paying off debt and potentially saving thousands in the long run…

I do see how in the short-term how it provides a great spring-board for contributing to more property. I guess that's what most people on here are looking to do!

Cheers

Still working through the issue of IO vs P&I.

I understand the logic of paying off the principle for the purposes of a PPOR. However what if you don't have a PPOR, only investments? Wouldn't paying off the principle place you in an equally advantageous position in terms of future borrowings because you've reduced your debt? I don't see how reducing debt, thus improving LVR doesn't assist in expanding one's portfolio?

I would have thought the benefit obtained through keeping the interest payments at their highest (through IO loan) isn't as favourable in the long-term as paying off principle and putting yourself in the best position to expand.

Then again, having a healthy amount in your off-set will fund a significant contribution to future properties, thus reducing borrowings…provided you don't spend your off-set balance!

Sorry, I just don't see why paying IO on all investment loans is dramatically better than chipping away at debt…it seems in the long run, they work out the same…? IO loans only seem to provide short-term CF benefits and wouldn't having a healthy sum in an off-set reduce your interest payments there-by not maximising the interest deductible?

Now I'm really confused, I'm no accountant so please correct me!

Hi everyone, thought I'd add my comments. I live on the outskirts of Bathurst/ Orange and have just bought IP2 in Orange. Here's some things to consider about both suburbs.

– Be careful about catering to the miners who are here for the construction phase of Cadia-East. It's got about 2 years left (construction phase) and Cadia has just had a Miner's Village approved to be constructed in Blayney (across the road from me!). It will directly impact short term residential leases and hotels/ motels in the Blayney/ Orange region.

– I believe the area is still a solid choice for investors (hence IP2!) due to the many industries that support the region – Bathurst particularly has quite a diverse base. The areas I'd avoid are Kelso and parts of Sth and West Bathurst. My husband is a Paramedic in the area so has become quite familiar with the not-so-attractive streets.

– When we spoke to a few Agents in Orange, they commented that furnished residentials are harder to move. Obviously the market is so tight at the moment everything is moving, but something to keep in mind for the long-term. Also, while it's great rental return, make sure you know all the expenses you're up for. Electricity bills in this area are insane over winter!

– Definitely go with a property manager – you really don't want to be dealing with the tenants. We're going through the process of appointing a manager now in Orange if you want any feedback.

– Having looked at both Bathurst and Orange, rents to me, seemed quite similar. Everywhere in the region is tight so rents are comparable. I wouldn't say Orange is producing much higher yields, or if they are, it will only be for a few more years while mining is hot.

– There's a mine under investigation just outside Blayney on the Bathurst Rd called 'McPhillamy's'. If this goes ahead, it will certainly keep the region at low vacancy. From what I've heard, the issue of water management with the mine is what will affect whether it goes ahead.

Overall I think the areas of Bathurst/ Orange and even Blayney are solid choices, not just in the short term. Just be careful about catering to the miners as the long-term job creation may not sustain the current high demand during the Cadia-East construction phase.

Hope this helps!