‘Interest Only’ Rule of Thumb
In most cases we refer to ‘interest only’ as a rule of thumb. It depends on the council, it depends on how much rates you pay. It depends on whether it is a high security area, whether it floods, how much your management agents are going to charge you to manage the property. It depends on many things.
But just as a general rule of thumb it gives you an indication as to whether something is going to be positive-cash flowed or not. After tax, if it is something that is going to be depreciated and you get a lot of depreciation benefits or tax benefits coming in on the property, then the ratio can be lower.
We always recommend that you seek professional advice as this blog is for general information only