I bought an IP in 2008 for $300K and put 5% down i.e. 95% finance. The rent pays the mortgage and the insurance (using P & I) but does not cover the rates of $1,100 per year. So I cover the rates from my own pocket. In other words the property is slightly CF -ve before tax and slightly +ve after.
I have just been reading Steven McKnight's book 0 - 130 Properties in 3 Years and the other threads on this forum. He is a strong advocate of CF +ve buys and expected at least $30-$50 pw +ve CF. I however notice that in all his purchases he put 20% down. In my case I would have had to stump up $60,000 (20%) to make the purchase and I would also have been CF +ve.
You guys are the experts in this is it not better to pay 5% and have the other $45K as a buffer or alternatively use it in other worthwhile ventures where it (according to Chris Ashenden's other thread) would have a higher velocity. It would take a lot of -ve CF months with a 5% down for the 20% deal to be ahead.
Is my thinking flawed? You are the experts. I am considering another 5% down deal that will be CF neutral after rates, insurance and loan.
I have just been reading Steven McKnight's book 0 - 130 Properties in 3 Years and the other threads on this forum. He is a strong advocate of CF +ve buys and expected at least $30-$50 pw +ve CF. I however notice that in all his purchases he put 20% down. In my case I would have had to stump up $60,000 (20%) to make the purchase and I would also have been CF +ve.
You guys are the experts in this is it not better to pay 5% and have the other $45K as a buffer or alternatively use it in other worthwhile ventures where it (according to Chris Ashenden's other thread) would have a higher velocity. It would take a lot of -ve CF months with a 5% down for the 20% deal to be ahead.
Is my thinking flawed? You are the experts. I am considering another 5% down deal that will be CF neutral after rates, insurance and loan.
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