Cash on Cash Return

Viewing 6 posts - 1 through 6 (of 6 total)

nangunia
Member
@nangunia
Join Date: 2004
Post Count: 7
March 28, 2004 - 12:57 pm
I’m reading 0 to 130 at the moment and need some feedback on cash on cash return. My question is if you paid a smaller deposit say 10% not 20% as Steve has illustrated your intial cash needed would be lower so you would end up with a high cash on cash return?
My actual question is
Why then would you pay a higher deposit?
Or have I got this all wrong!
RussH
Member
@russh
Join Date: 2004
Post Count: 342
March 29, 2004 - 12:36 am
If it is a commercial property you are required to put up 20% deposit and I guess for res. it depends on your circumstances and what the bank will lend..If you use 20% deposit then you dont need mortgage ins.Brokers will tell more.
So many +CF properties in Western Australia.Let me help you. And we can achieve a win win situation.Russ.
rakky
Member
@rakky
Join Date: 2004
Post Count: 26
March 29, 2004 - 1:17 am
A deposit of 20% and a lend of only 80% means you avoid mortgage insurance which is very costly – thousands of dollars infact.
geo
Member
@geo
Join Date: 2003
Post Count: 1,194
March 29, 2004 - 2:10 am
Hi there,
The other reason to putting down greater deposits (only if you have more to spare) is that you have paid off a greater part of your debt which allows two things:
1. Increases your return from your rental as you are paying back a smaller interest repayment to the bank. and
2. Increases your equity in that property – thus allowing you to re-borrow a greater amount from that property for the purchase of several other properties.
Hope this helps.
Kind regards,
George.
“If You never never ask, you’ll never never know”
nangunia
Member
@nangunia
Join Date: 2004
Post Count: 7
March 29, 2004 - 2:25 am
Thanks everyone for your help on this.
Regards Janet
brent
Participant
@brent
Join Date: 2001
Post Count: 165
March 29, 2004 - 2:12 pm
Originally posted by RussH:
If it is a commercial property you are required to put up 20% deposit and I guess for res. it depends on your circumstances and what the bank will lend..If you use 20% deposit then you dont need mortgage ins.Brokers will tell more.
So many +CF properties in Western Australia.Let me help you. And we can achieve a win win situation.Russ.
Keeping an 80% LVR (or better) also tends to keep the banks on your side when it comes to giving you money.
Brent Hodgson
PropertyInvesting.com
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