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Updated over 1 year ago on . Most recent reply
Interest only: Good or Bad thing?
Guys, lately I've been catching a lot of flack for my last seller finance deal...
Our seller offered 5% interest only for 7 years...I jumped at it. But, some people think interest only is dangerous.
Pros:
- more cashflow
- lower rate than average rate (~7% now, higher for investors)
Cons:
- No principal paydown (kills one of the main real estate benefits)
- Balloon payment
What are your thoughts?
Most Popular Reply
Robin Simon
#3 Private Lending & Conventional Mortgage Advice Contributor
#3 Private Lending & Conventional Mortgage Advice Contributor
- Lender
- Austin, TX
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Robin Simon
#3 Private Lending & Conventional Mortgage Advice Contributor
#3 Private Lending & Conventional Mortgage Advice Contributor
- Lender
- Austin, TX
Not sure why principal paydown would be one of the main real estate benefits "killed" by IO - you are just keeping the money in your pocket rather than paying it down, not losing it