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From: Mike .
The 5 year crunch - how do we best avoid it?
From: Les
Date: 10/26/99
Time: 11:18:20 PM
G'day all,
Something that hasn't (yet) affected me, (but the figures screamed out at me while doing forward projections), is the "crunch" that occurs around the end of the fifth year of owning investment properties. The major players are: Depreciation (fittings, etc) is now GONE Borrowing costs, the same (even earlier?) Rents haven't caught up majorly, and, the killer, if using the "5 yr IO, then P&I for 25 years" formula, that is when the mortgage repayments LEAP up by another $50 - $100 per week.
Now, none of this needs to be too drastic, but what if our "start" in Investment Property was to buy 2, or 3, properties right up front !!! That could HURT !!!!!
Possibly, it's simply a matter of timing other purchases to produce a new, positive cash flow to offset (or match?) the sudden negative flow caused by the "crunch".
Who's "been there, done that" and can give us all a bit of good advice (including any associated traps, etc.)
Hoping (or I'm in trouble in a couple of years ;^)
Les
The 5 year crunch - how do we best avoid it?
From: Les
Date: 10/26/99
Time: 11:18:20 PM
G'day all,
Something that hasn't (yet) affected me, (but the figures screamed out at me while doing forward projections), is the "crunch" that occurs around the end of the fifth year of owning investment properties. The major players are: Depreciation (fittings, etc) is now GONE Borrowing costs, the same (even earlier?) Rents haven't caught up majorly, and, the killer, if using the "5 yr IO, then P&I for 25 years" formula, that is when the mortgage repayments LEAP up by another $50 - $100 per week.
Now, none of this needs to be too drastic, but what if our "start" in Investment Property was to buy 2, or 3, properties right up front !!! That could HURT !!!!!
Possibly, it's simply a matter of timing other purchases to produce a new, positive cash flow to offset (or match?) the sudden negative flow caused by the "crunch".
Who's "been there, done that" and can give us all a bit of good advice (including any associated traps, etc.)
Hoping (or I'm in trouble in a couple of years ;^)
Les
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