Credit Crunch: Will the market in the US & the UK continue to collapse? Property Buying is much easier in a downward market:

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Everything is not necessarily as it seems with the whole 'credit crunch crisis'

The Fed have cut the rates twice by a whopping 1.25% as of late to try and give the illusion of control. Are they on control, well you can make your own judgement, but it seems that their intention is to continue to cut rates to avoid a complete collapse in the economy

Currently rates are at 3% in the US and could even be down at 2% in an attempt to gives banks a lifeline

This has implications on inflation. The reduction in interest rates will cause a rise in inflation, which in turn causes its own problem, how are the government going to keep a handle on that? It's almost like delaying an inevitable d-day, but as long as things are ok in the short-term, and that they are perceived to be doing the right thing, then everything is all ok. Hmmmmmm…

In this situation, those people and businesses with plenty of cash [when all the 'sheeople' are in turmoil and running around headless and in disarray] will profit. It's all about being liquid when others' cash is all tied up in failing investments

Just look at Northern Rock for a good example of this. Someone is going to benefit big off the back of one of the biggest cock-ups in banking history

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The real question here of course is: what does this all mean for You and for Property buying and the Market Now:

To be honest, nothing has really changed that much. In the kind of properties that we buy, the lenders are still happy to lend [because it is not as high risk as many of the new build, bridging strategies etc]

Lenders still need to make money and are always going to find a way to lend money; a good example of this is the recent low interest rate high fee model that takes the heat out of interest rate rises [although they end up costing the same]…

If [or when] the rates fall again, your cash-flow situation will improve, although the lenders may not pass on all the rate cuts as they may want a larger piece of the pie…

…And because the economy is not in as good shape as it is made out to be it's actually as good a time as we have experienced in Property; the market is heavily buyer focused and cheap deal and good revals are out there in abundance because of public opinion and actual state of the economy

So Now is a great time to buy Property, but of course Now is always the best time, isn't it…

A few things to remember: if the market is 'falling' you want your money in and out pronto. You want to be sure of your purchase price, that it really is well BMV, and doubly sure of your reval figure, otherwise you'll be leaving far more cah in a deal that you want to

Remember at this time, cash is king and being liquid is important, so don't tie up too much cash in deals that you can't get back quickly

All you can do is buy well NOW. Buy well now and you'll be good for the next 30 years. We're in a long term game, so keep thinking long term…

The biggest investors have built their wealth steadily over time. Many have portfolios generations old and continue to use strategies that have worked for them. 40% of the Times Rich List have done just that

Be well and enjoy

  

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