All Topics / General Property / Interest Only for cf+? Please help!

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  • Profile photo of unifiedunified
    Member
    @unified
    Join Date: 2004
    Post Count: 7
    August 29, 2004 - 12:55 pm

    Hi, found res properties in major regional centres returning 8-9% but after doing numbers the only way these can be cf+ is if the repayments are Interest Only. Is there any point in holding these for capital growth and if so how long would you have to hold for?

    Profile photo of yackyack
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    @yack
    Join Date: 2003
    Post Count: 1,206
    August 29, 2004 - 11:07 pm

    For a more balanced view on property investing – go read one of Peter Spann or Jan Somers books to learn a bit more about the growth side of property investing.

    Then you decide whats best. For me, I prefer interest only and growth properties.

    Profile photo of calvin_thirty4calvin_thirty4
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    @calvin_thirty4
    Join Date: 2004
    Post Count: 556
    August 30, 2004 - 1:33 am

    G’Day unified,
    would be nice to have a bit more info on what your talking about, but what deposit are you factoring in?
    When you talk about regional towns, how regional and what is in these towns (minig, fisheries,???) any new developments?
    I live in a regional town and return rates depend on these issues, like anywhere else. Throw us a bone here and more people might actually be able to help or comment.

    Cheers

    C@34

    Profile photo of RonulasRonulas
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    @ronulas
    Join Date: 2003
    Post Count: 96
    August 30, 2004 - 1:41 am

    I have found a few properties like this as well.

    I guess the answer to your question depends on whether you are investing for cashflow or growth?

    As far as I can see if you think cashflow is King then what difference does it make if the property value increases or not? If it does (bonus) then you are still gaining equity even though the property debt is not decreasing.

    If on the other hand you want growth properties then the answer is still the same. A property located well will increase in value no matter whether the loan is IO or P&I.

    It comes down to this! Do you want the extra cash now or later? The extra money you get from say 5… cashflow positive properties with IO loans can be put towards paying the cost of a negatively geard property which is increasing in value.

    Best of both worlds.

    My 2c worth.

    You will always miss 100% of the shots you don’t take!

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213
    August 30, 2004 - 1:49 am

    Major regional centres may still be OK, but watch out for the smaller towns.

    I think you should not be buying based on yield alone, make sure everything else stacks up.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of unifiedunified
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    @unified
    Join Date: 2004
    Post Count: 7
    August 30, 2004 - 11:55 am

    Thanks for you help guys

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