Before I get to my question I just want to say what a fantastic forum this is, such a wealth of information! and thank you for taking the time to read my thread.
Regarding my post, I am trying to plan my plunge into the property investment market. To help set the scene, I am turning 22 this year, work full time within a real estate agency, have $30,000 of savings in the bank, no other properties and no debt.
I plan on using the $30k in savings to start my portfolio but am a little overwhelmed with the direction I should go. I was planing on using about $15 - $20k as a deposit and having the other $10k to cover the associated sale costs and be a buffer for emergencies. I live on the Mid North Coast of NSW and am looking at units in my area which range around $140,000 - $150,000 and return from $190 - $210 per week.
From what I've read the best course of action would be to pay as little deposit as possible and obtain an Interest Only (IO) loan with an offset account (putting my savings into the offset account to reduce interest and possibly go towards the principal later?). This is what I'm not certain on, if you only pay the interest on a property, once the IO period runs out you are required to pay the P&I correct? So what do you do in this situation, do you sell before this occurs and reinvest elsewhere or do you bite the bullet and pay it off to own the property? Is there any advantage towards working towards owning an investment property at all or is it always best to owe money on it.
My confusion probably arises from always being told to pay off your debts to own what you bought but I'm guessing investing in property is a little different. Whats the best course of action for a starter?
Thank you kindly.
Regarding my post, I am trying to plan my plunge into the property investment market. To help set the scene, I am turning 22 this year, work full time within a real estate agency, have $30,000 of savings in the bank, no other properties and no debt.
I plan on using the $30k in savings to start my portfolio but am a little overwhelmed with the direction I should go. I was planing on using about $15 - $20k as a deposit and having the other $10k to cover the associated sale costs and be a buffer for emergencies. I live on the Mid North Coast of NSW and am looking at units in my area which range around $140,000 - $150,000 and return from $190 - $210 per week.
From what I've read the best course of action would be to pay as little deposit as possible and obtain an Interest Only (IO) loan with an offset account (putting my savings into the offset account to reduce interest and possibly go towards the principal later?). This is what I'm not certain on, if you only pay the interest on a property, once the IO period runs out you are required to pay the P&I correct? So what do you do in this situation, do you sell before this occurs and reinvest elsewhere or do you bite the bullet and pay it off to own the property? Is there any advantage towards working towards owning an investment property at all or is it always best to owe money on it.
My confusion probably arises from always being told to pay off your debts to own what you bought but I'm guessing investing in property is a little different. Whats the best course of action for a starter?
Thank you kindly.