A lender explains why he prefers interest-only payments to keep cash on hand rather than locking it into equity. The right choice depends on your portfolio, job stability, and available capital, though sometimes sellers or lenders force principal-plus-interest to close the deal.
So when we talk about principal interest versus interest only, in general, I prefer to do interest only. In general, because I like liquidity. I don't trust the banks as far as I can kick them not to change their criteria and lock up the equity that I want in a property. And I'm happy to pay a premium in interest to be able to have that liquidity. That's not always the case though. So you have to look at every individual deal. I don't like blanket rules when it comes to investing. We want to look at what's in front of us right now. And go, based on my situation, where I am right now in terms of my portfolio, my job, my liquidity, my capital, my lending, based on my situation, is this a good decision or is this not a good decision? Now sometimes you're gonna be forced to do principal interest and that's just how it is 'cause you gotta get the deal done or you don't get the deal done, right? But in general, liquidity is one of the key things that I always look for.
