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P&i pay them off or io

Discussion in 'General Property Chat' started by showtime94, 23rd Jun, 2016.

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  1. showtime94

    showtime94 Well-Known Member

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    Hi I have an idea of getting 3 properties around the 290-320k mark and paying them all off , tell me would this not he a wise idea ? Am I better off accumulating as many as I can on io loans ?
    But I was thinking if I get a p&i loan on say 30 years with a big enough deposit wouldn't it be neutral anyways , or should I get em on io loans but just pay off the loans in the off set account and do it that way , would that be better ?

    Bonus info : got 87k saved up , also I hate working lol and want to escape the rat race asap.
    Do use think 3 properties paid off outright would be enough to live off ? Or should I go another path ? Am I missing something ?
    Thanks
    Ps im a beginner
     
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  2. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Do you have an owner occ property?

    If not - do you plan on purchasing one at some point?

    Do you have any other non-deductible debt? Personal loans, etc?

    Cheers

    Jamie
     
  3. ellejay

    ellejay Well-Known Member

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    Most will say only go IO. I have 6 that cover all costs on p&i, some on 10-20 yr loans. I'm mid 40s and have enough income from rent and equity to give up work. I have a couple of more expensive io ones. I'm not reliant on growth though, tenants are paying down most of my principle.
     
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  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    There are argues for going IO and arguments for PI.

    If you have no non deductible debt then PI can work well. But if you do have non deductible debt you would want to pay this off first before paying off investment debt.
     
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  5. Simon Moore

    Simon Moore Mortgage Broker - Melbourne Business Member

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    Think about going P&I on one at a time, it's much easier to access your equity from one property at 20% than three at 60% :)
     
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  6. showtime94

    showtime94 Well-Known Member

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    Whats occ?
    And no debts what so ever nothing at all
     
  7. showtime94

    showtime94 Well-Known Member

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    What do you mean by deductible debt ?
     
  8. skater

    skater Capitalist Premium Member

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    Non-deductible debt is debt that you can not claim against your tax. The loan on an investment property is deductible, a loan on our PPOR (principle place of residence) is not.
     
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  9. showtime94

    showtime94 Well-Known Member

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    Awesome and what sort of propertys are thoese 6 that are p&i and are paying them selfs off , are they kinda cash flow properties and not capital growth
     
  10. Bran

    Bran Well-Known Member

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    Sounds like you have an immense amount to gain having come across propertychat. Being here is a good start. Buy a few books, read the forums, it will only get more complicated ;)
     
  11. ellejay

    ellejay Well-Known Member

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    They were all 8% yield or better so cash flow + but all having good growth. You need to try to get as close as poss to good growth potential and positive yield ideally. It doesn't have to be one or the other and probably shouldn't.
     
  12. showtime94

    showtime94 Well-Known Member

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    Ok well I dont own a place PPOR , so what should I do ?
     
  13. ellejay

    ellejay Well-Known Member

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    You don't need to consider it in that case, unless you're thinking of buying a ppor.
     
  14. showtime94

    showtime94 Well-Known Member

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    Yeah true , and were they 8% yield when u got em , or became 8% yield after reno ? Also what price range were these properties in ?
     
  15. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    In that case it may be better to go for IO loans and save up in an offset.
     
  16. ellejay

    ellejay Well-Known Member

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    $100-200k 8% + at purchase.
     
  17. Digitalism

    Digitalism Active Member

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    Do you plan on ever buying PPOR? Or rent for the foreseeable future?
     
  18. ellejay

    ellejay Well-Known Member

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    True, probably best option. I probably wouldn't be able to buy many more anyway so no harm in having mine on p&i.
     
  19. showtime94

    showtime94 Well-Known Member

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    What are they worth now
     
  20. ellejay

    ellejay Well-Known Member

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    Approx 20-25% growth increase at last val.
     
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