Interest Rates

[orion]

Well I'm not a number cruncher, and all I know is if the interest rate hit 8%, I will be $400/wk negative cash.


!

Gary, what term are the loans, i.e. when are they going to be paid off?

[PTILoveYou]

Gary, what term are the loans, i.e. when are they going to be paid off?

Most have 5 years interest free period (ANZ has 10 I think), 30 year terms.

So in 2 years time, I will be starting to pay principal and interest on the earlier properties (the big fat cashflow ones). I may negotiate for longer interest only period and push out the term longer.

[speights boy]

Has anyone fixed for 6.5% for 5 years back in 2009??
How do you feel now that you have lost money during the term?

Lost money ..............?
Turn back the clock to 2009.
Anyone buying sensibly in AKL with money borrowed at 6.5% has absolutely creamed it.

[PTILoveYou]

Lost money ..............?
Turn back the clock to 2009.
Anyone buying sensibly in AKL with money borrowed at 6.5% has absolutely creamed it.

Well I'm talking about money in interest cost, not borrowing money to buy properties.

Yeah if I started in 2009 I would be sitting on more "cream" xD

[Wayne]

Most have 5 years interest free period (ANZ has 10 I think), 30 year terms.

Interest FREE - I'd like a piece of that action.

[speights boy]

Well I'm talking about money in interest cost, not borrowing money to buy properties.

Which is nonsense.....the interest cost is due to the property purchase.

[PTILoveYou]

Interest FREE - I'd like a piece of that action.

Haha you know what I mean, it's interest only.

[PTILoveYou]

Which is nonsense.....the interest cost is due to the property purchase.

Well if someone bought a property pre-2009, and then fixed for 6.5% for 5 years, while during this time the floating/6months/1year rates ranged between 4.85 to 5%, then the investor would have lost money on the interest cost.

[orion]

Most have 5 years interest free period (ANZ has 10 I think), 30 year terms.

So in 2 years time, I will be starting to pay principal and interest on the earlier properties (the big fat cashflow ones). I may negotiate for longer interest only period and push out the term longer.

Okay, so in 2 years time if interest rates are at say 7%p.a. and the bank asks you to pay principal on some of those properties, will you still have a positive cashflow?

[speights boy]

All backwards looking, with benefit of hindsight.
Make a prediction for five years July 2013-2018.
Who will "loose" money on interest cost between Bluekiwi's strategy and yours?

[PTILoveYou]

Okay, so in 2 years time if interest rates are at say 7%p.a. and the bank asks you to pay principal on some of those properties, will you still have a positive cashflow?

I have a $20k net positive cashflow problem with the IRD, so the 7% p.a + principal will probably solve it!

Also why I:
1) raise rents in Feb
2) glad to have a 10% pay rise last week

[PTILoveYou]

All backwards looking, with benefit of hindsight.
Make a prediction for five years July 2013-2018.
Who will "loose" money on interest cost between Bluekiwi's strategy and yours?

BK will loose money for the first 1-2 years, and I loose money beyond that.

So I call it even =D

[Wayne]

then the investor would have lost money on the interest cost.

All illusionary - they haven't 'lost' money.
May have paid more interest than another option but you can't do this in hindsight picking optimum periods to look at.

[Wayne]

BK will loose money for the first 1-2 years, and I loose money beyond that.

So I call it even =D

Unless you lose (not so loose) more beyond that than he loses earlier.
It's a gamble.

[PTILoveYou]

Unless you lose (not so loose) more beyond that than he loses earlier.
It's a gamble.

Yes I agree it is a gamble.

But the good thing about losing money (thanks for the grammar correction, english is my 3rd language), the bigger the loss, the longer the memory lasts.