Hi, my name is Carl and I live in the South West of WA.[
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I recently purchased Steve’s book and this is the first time I have read a book from cover to cover in years, thanks Steve for sharing it with us.One question that kept nagging at me throughout the book is, and i’m not sure it was covered although I plan to read the book again, what protection or safety measures have you seasoned positive cash flow investers got in place in the likely event of interest rate rises?
Heaven forbid that they rise to the highs of the ’80’s, but can anyone be sure they won’t?Thanking you in anticipation
regards
Carl
That is another reason to always look for positive cash flow properties. If the interest rates go up then you have a bit of room to spare before the property becomes negative cash flow.
If you have a number of properties then one option is to sell one of the properties, use the cash to pay lump sums off the other properties to get the total size of the mortgages down – reducing the interest bill. This is only useful if you have a decent amount of equity in the property though.
A similar scenario to look out for is if your property is vacant for a long time. The property becomes very negative for a while.
If it all turns VERY bad you could just sell up the whole lot.
Andrew
http://www.rentmaster.co.nz
Software for Landlords
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