What To Do With Spare Cash and Your Investment Properties
I have just been reading an article regarding finance and some very interesting points came to my attention. Essentially the article was about financing and refinancing properties for investment but the point that I would like to bring up is the one regarding ’spare cash’.
Strategies used to build equity in investment properties are many and varied but where there is excess cash (not necessarily from the investment property income) in the total scheme of things there are several suggestions made so that the property investor can benefit from using this cash. Here are several possible uses of spare cash:
- pay off the mortgage faster in the home so that more equity is being accumulated
- pay off the mortgage faster in the investment property but this may not necessarily fit in with your tax planning so it would be best to run this theory past your accountant
- set up a line of credit so that extra cash can reduce your interest repayments when there is excess in the account
One point that an investor needs to be aware of is that there will most likely be times when there is no income coming in due the fact that the investment property is not let. This can be quite disastrous for an investor who does not have excess funds to cover a shortfall for loan repayments.
To help with this situation an account can be set up to store money ready for such an occurance. If a line of credit is not boing to be used then there are three other alternatives:
- a redraw account
- an offset acount
- savings account
Is is time for you to check your finances and see that you have set yourself up to benefit from any of these situations?
Filed Under: Property Investment Tips
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