Does anyone pay off principal in IPs?

Not even buying another IP? Markets are moving now and if not will move very soon.

just bought number 9 will be buying number 10 in january and then that's it for us.

It makes more sense to pay off the debt than to put money in an account earning interest in our position as we don't work anymore and if we pay the debt down it increases our cashflow. I am talking about spare money here.
 
I don't see any reason whatsoever to choose pay off any investment loans. It's inefficient.
Depends on what stage of investing you are at (IMHO).

If you have done your sums and are happy with your 'accumulated assets' and choose not to LOE, then no harm in reducing debt to eventually get all the rent to line your pockets.

Horses for courses and I suppose you could just park the cash in offsets over the same amount of time instead of actually paying off/out loans with the same effect ans keep the loans open

Regards
Marty
 
I don't see any reason whatsoever to choose pay off any investment loans. It's inefficient.


I agree with Marty, it depends on what stage of investing you are at.


At the start, where awesome wells obviously is, one could not see any reason.


As one matures and progresses down the track somewhat, a whole raft of reasons, too numerous to mention, become apparent.


Having free title deeds in your drawer to use as bargaining chips for bigger and dare I mention better properties can have its advantages.


Just last week, we used our 40K fully paid title deed to upgrade to a 75K property which actually had a proper bathroom.
 
just bought number 9 will be buying number 10 in january and then that's it for us.

It makes more sense to pay off the debt than to put money in an account earning interest in our position as we don't work anymore and if we pay the debt down it increases our cashflow. I am talking about spare money here.

I agree. It all comes down to the stage you're at in the investment journey and the desired outcome or end game.
10 is a nice, even mumber. I'm planning on stopping there, too. While I'm still young enough to enjoy the harvest phase.
 
Just last week, we used our 40K fully paid title deed to upgrade to a 75K property which actually had a proper bathroom.
*snigger* last year we upgraded from a $25k property without a proper bathroom to a $65k property with one (give or take a thick layer of blue paint). We've since renovated the dodgy bathroom though and it is very pretty now :D

The stupid thing? The $500 we spent on the bathroom, in the eyes of the real estate agent, took the value of the house from "$75k to high $90s". Gotta love bathrooms and real estate agents who are easily pleased ...

I was suggested a good way to reduce the loan owing today by a stoner. I was commenting I had an annoying fireplace that is large enough to stand in. He said I should put in a door on it and lights in there and grow "tomatoes". Have the place paid off in no time. However, I'm sticking to my original plan of putting shelves in there ...
 
Depends on what stage of investing you are at (IMHO).
Nope. it depends on:

If you have done your sums and are happy with your 'accumulated assets' and choose not to LOE, then no harm in reducing debt to eventually get all the rent to line your pockets.
what strategy you choose. LOE is more efficient, but if you like rental income or rental income suits your circumstance better, each their own.
 
hi awesome
LOE and IO will get you to retirement faster but once you are there and if you have enough money to live your lifestyle and then some, paying off some of the debt will only increase your returns. I am well aware that investment gurus have been pushing the never pay down your debt stratgy for the last few years and I was going to do it myself (probably still will to some extent if I stop trading) but my accountant has shown me some figures on what we can achieve by using the money we have now to pay down debt. It is quite simple maths.
 
But you'd be better off parking those funds in an offset. If you need to access the funds again for private purposes, you lose deductibility if you've paid down the loan. When talking about $20K, not a big deal, but if the numbers get big and you want to buy a bigger PPOR (for example), it can hurt.

Your quite right but I wouldn't trust myself parking the funds...Would only buy a bigger boat:D
And we have a very large PPOR in which we will live most of our lives with equity available so it quite suits us to pay off some debt. Like I said I dont even notice the cash gone and its suprising how much difference paying a small amount makes over the years. To each their own.

Cheers
 
hi awesome
LOE and IO will get you to retirement faster but once you are there and if you have enough money to live your lifestyle and then some, paying off some of the debt will only increase your returns. I am well aware that investment gurus have been pushing the never pay down your debt stratgy for the last few years and I was going to do it myself (probably still will to some extent if I stop trading) but my accountant has shown me some figures on what we can achieve by using the money we have now to pay down debt. It is quite simple maths.
Cheers. I will keep this in mind when i'm ready to pull up stumps. That maybe 10 years until LOE and another 10 before a full wind down.
 
We usually (for ourselves and our clients) go I/O with an offset account. Accumulate cash (effectively paying the place down) and utilise cash when the situation arises that you can make a good return. Best of both worlds really.
 
Thats exactly what we are doing with our first place at the moment, putting cash into the offset account to reduce the interest but still have direct and easy access to the money!

Just started in IP's aswell so most of our's will be IO loans I should think.
 
For what it’s worth.
I have 3 IP’s with P & I loans, and 1 IP (newest) with a IO loan that has a fixed rate of 3 years. Grabbed the latest when rates were at there lowest. :)
I believe it is a good thing to own the IP’s, sure, I pay a little more and could easily make better use of the money I have, but it is the goal I have in mind.
The % of today’s value I own in these IP’s are:
1st IP = 80%
2nd IP = 65%
3rd IP = 45%
4th is nil.
The reason is simply this, I think ownership is a good thing, and that is what got me started. I had the 1st IP for over 12 years before I discovered the idea of gaining knowledge about buying more IP’s and then found this forum.

I have felt like the odd one out for my thinking till I recently found someone else post that they do the same thing here on SS.
MY bright light in my head moment then occurred.
I have a plan to move forward with another on a IO loan, and pay down the 1st one at an accelerated rate, I'm way ahead on the payments at this time.
Then when it is paid off, there is a spare weekly rent to go onto the 2nd IP.
If I plot this on a chart, the speed which I pay these off at is shown as a curve, curving in my favour, if you follow what I mean.

Anyone else following this kind of thinking? I kind of hope so, hate to be the only one. :eek:
 
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