Hi All,
Need some investing advice on what to do with the extra funds we have saved.
This IP is part of a family investment and due to monthly contributions from everyone we have been able to save $8000 now.
Given the low interest rate at the moment, the rental basically covers the interest only repayments. The funds we have saved are there as a safety measure in the case the IP becomes vacated for a long period of time, if major repairs are needed or if the tenants do not pay rent on time.
Give that the rental is covering the interest only repayments now, some members want to stop the monthly contributions - and I'm fine with this. But my question is - should we use some of the extra funds to pay off the principal and leave a bit in the account for a rainy day - is this a good strategy because basically the extra funds is sitting in an account not doing much for us? I guess if we do pay off some of the principal it would mean that our interest only repayment would be a little less as well because the principal has come down a bit.
Any help would be greatly appreciated.
Thanks.
Andy
Need some investing advice on what to do with the extra funds we have saved.
This IP is part of a family investment and due to monthly contributions from everyone we have been able to save $8000 now.
Given the low interest rate at the moment, the rental basically covers the interest only repayments. The funds we have saved are there as a safety measure in the case the IP becomes vacated for a long period of time, if major repairs are needed or if the tenants do not pay rent on time.
Give that the rental is covering the interest only repayments now, some members want to stop the monthly contributions - and I'm fine with this. But my question is - should we use some of the extra funds to pay off the principal and leave a bit in the account for a rainy day - is this a good strategy because basically the extra funds is sitting in an account not doing much for us? I guess if we do pay off some of the principal it would mean that our interest only repayment would be a little less as well because the principal has come down a bit.
Any help would be greatly appreciated.
Thanks.
Andy