You are correct i have had people tell me, what on earth am i doing, why am i paying P&I on it and not just I, why didn't i spread the money over a few IPs, stop making bulk mortgage repyaments on it and the list goes on. I have thought long and hard about all of this and yes i could go out and purcahse x amount of properties if i wanted too but at the end of the day i don't wan't to own the banks millions of dollars. I would perfer to be a 30yo whom owns 5 IPs outright or close to it rather then own 15 + properties and millions of dollars to the bank.
Im looking forward to owing 5 IPs outright or close to it in the future and being debt free. Here is just an senario.
5 IPs returning $400 rent p/w.
5 x $400.00 = $2000.00 p/w and debt free. That's choice to me.
Each to their own though, this is just my strategy everyone is entitled to their own.
take the above example- (understand it was just senario)-
$400 weekly rent
assuming 7% yield= $300,000 pp
x 5 properties
1.5 million.
How on an average income does one pay off 1.5 mill of debt in the near future?
im on an average wage - .
In 20 years that is paying 75k cash per year, that would mean an income of over 100k per annum, and saving the whole lot.
(This assumes the property is cashflow postive from day 1 and covers all stamp duty etc, buying costs etc.)- yield could also be higher but these usually come with larger holding costs- ie damage , rent arrears costs etc.
Also doesn't take into account that while you are paying one property off the others that you havent yet brought are increasing- over time anyway- in value/ cost.