Changing debt on 5IP'S to 3IP'S, pros-cons

[Y33]

As IP's go up in value is it better to shift debt to just a few to free up 1 or 2.

For example if you had 5 IP's each worth 200K but each had 100K in debt are you better off increasing the debt on 3 to 166K to make 2 debt free or 1 to 133K to make 1 debt free?

The idea would be to still keep the 3 positively geared.

Any pros or cons of doing this?

 

[Rolf Latham]

Hiya Y

Id guess its like asking how long is that piece of string.

from an income vs outgo point of view assuming all props are held by the same entity then there isnt much point in moving debt around.

certainly from a structured lending point of view its important what debt goes to what lender on what property at a particular time

ta
rolf

 

[Y33]

Hi Rolf,

If something was to go wrong is better to only have 3 properties at risk rather than 5?

 

[Rolf Latham]

Hiya

The only "true" way to get assets locked away is to use a disc trust with a P/L trustee.

While having "titles in ones safe" might make one feel fuzzy, sometimes having them geared to the teeth may actually be better, coz it depends on what the "something going wrong" actually is

ta
rolf