Can someone explain to me why Interest Only loan structures are more favorable than amortization structures for real estate financing?
I'm a bit confused on this topic. My superiors often say "we'll secure interest only financing for the life of our projects, best case scenario" implying IO is favored. Can someone explain the logic behind this? Please go into as much detail as you want, I want to take in as much as I can! 
[{"id": "ctrxqv6", "text": "I take it that you work in some sort of construction industry? \n\nIO financing offers a lower payment than both residential purchase money loans or commercial loans - even if there is a slightly higher interest rate than an amortizing loan - because no principal must be paid back for a certain period of time. \n\nThis probably allows your project to cost less but be finished and resold (where the actual principal gets paid back) before the end of the interest-only term. \n\nBy having the lower payments, it keeps better cash flow for your employers. \n\n", "replies": [], "depth": 1}, {"id": "cts3sr0", "text": "Computer lab rental Houston is your best option for software training and the likes in Houston. These offer state-of-art computer facilities and offer you customized services to fulfill all your needs and requirements.\nVisit http://www.rachouston.com/services_computer-lab-rental", "replies": [], "depth": 1}, {"id": "cts4fme", "text": "Despite a higher rate, monthly payments will be significantly lower, boosting cash flow. \nInterest rates are so low that it can make sense to let the bank keep as large a debt as possible. Paying down debt, earning equity, likely provides a lower ROI to the owners, than they could earn by reinvesting the extra cash flow into new projects, or other more expensive debt payments they may have. ", "replies": [], "depth": 1}, {"id": "cts8bbk", "text": "Paying into principal effectively captures the developers capital until a refi/sale.  Pretty much every developer is cash poor anyways, and they can earn far more on their funds through developing etc.  Interest only allows them to avoid this as much as possible and keep their leverage where they want it, and typically maximize cash flow.", "replies": [{"id": "ctsftqs", "text": "Spot on, as usual. ", "replies": [], "depth": 2}], "depth": 1}, {"id": "cuny4f7", "text": "In addition to what others are saying about the increased cash flow, keep in mind that interest payments are tax deductions, principal payments are not.", "replies": [], "depth": 1}]