Is this a good strategy?

No,  it all sounds silly to me..  Pay off your debt and then reinvest your profits for compound investment,  That's all there is to becoming wealthy… Nothing scientific or hard about it…

Who wants loans for decades anyway ? ,  I don't want to have any debt !,  Why do I want a bank telling me what to do ?

I'm going to get scolded by the so called experts on this site,  And yes, no one has to explain to me how people can control more assets through debt blah blah w.e

But Personally I think debts and banks are far overrated,   Debt in my opinion is not the answer to prosperity,  Debt SHOULD be a means to an end.

My family has been around for generations and I can tell you that while others spent and borrowed money to "get ahead" or make big profits our family doctrine was always to spend lasts years Income,  Not next years !

And I can tell you that while everyone else looked wealthy on the surface,  Truly they where not,  And eventually they went broke,  This is the exact time when the people like us would come out and be able to buy assets up with cash while everyone else had there hands tied behind there backs.

Get rid of your loans,  Stuff the banks and save your profits from previous years to seize opportunities of the future,  Don't fall into the same trap as the majority of other investors and paper millionaires

Ok, Remember that Equity is a double edged sword,  It can,  in a inflation market make you rich,  It can also send billionaires bust.  It only takes one thing to go wrong and you can loose everything you ever had.

And why don't you work on increasing your income first ?  Save a much bigger initial deposit,  Start with very small investments and use your very small profits to reinvest

Have you ever bought a car well under price,  Driven it around for 2 years and sold it for more then you paid for ?

Just one example:

Even when my family was on the farm,  They always made a profit on there machinery,  Everything we bought we made a profit on,  I remember a story of one Dozer that was bought for a few thousand pounds,  Was used on the farm for 15 years and then sold for 20k Same with cars,  Our family would always buy cheap but good cars at exceptional deals,  Drive them for a few years and in some cases make 200-300% profit on them.

Now that is just one example of the top of my head,  But the point im trying to make is that you can run your whole life like that,  And its the people who run there business/household or w.e at a surplus that have access to these types of oportunitys… no the debt mongers,  They are to busy refinancing there fancy loans and aquiring more risk.

What im basically trying to say is that its Prudence that will make a man wealthy,  Not elaborate get rich schemes

But hbbehrendorff puts forward a strategy that is worth thinking about at some stage.  For us now, 100% equity in our PPOR, owing about $80K on an IP worth about $165K.  Looking to invest again.  We can jump in and debt up.  Or, we can sell a large portion of our herd of cattle (say $50K), to come close to paying out the other loan, possibly sink business profits into the same loan to reduce it, and reinvest once that house is paid off.  We will pay alot less interest.  It may delay our investment timeline by a year.  That mightn't be a bad thing anyway.  When we DO reinvest, we will have 100% equity in both our home and first IP, and there should be plenty of income to quickly pay off the loan, reducing the interest bill yet again.  I'd love to do some maths to compare the two different snowballing strategies and see which one delivers the outcome I most desire.  Of course, I can't save up front to buy a house but the idea that lots of debt is not necessarily the way to go. Paying off debt quickly and minimising the interest bill, allowing profit to compound rather than interest certainly deserves some exploration, particularly in a market where capital growth is likely to be reserved for some time. 

Plus, good chance, if I had an IO loan and offset account, I'd end up buying a nice boat.  Or a nice horse.  Or something nice.  There is something to be said for not being able to get that money.

Hi

That is a good strategy. Remember you should have the offset account attached to any non-deductible loan first if you still have one. You want to save non-deductible interest first to be more tax effective. Once that is out of the way have the offset on an investment property.

IO loans have an initial period which is IO, and then they revert to PI. So if you chose 5 years IO, then after 5 years it will revert to PI over the remainder of the term.