The Living Dead: How Smart Property Investment Can Keep You Alive
Just been reading the book Whoops!: Why Everyone Owes Everyone and No One Can Pay by John Lanchester which is all about the financial meltdown and the lack of credit available to business and home-buyers.
It has a chapter dealing with ‘zombie banks’ where banks are not killed off but neither are they able to flourish as they are forced to reduce their ratio of capital reserves to lending. They simply exist in a sort of limbo land – the Living Dead. Similarly, the newspapers have been discussing “zombie mortgages” of late, where homeowners cannot refinance but will be in deep trouble when rates rise.
But, there are “zombie landlords” out there as well! One magazine recently reported the case of a landlord who had
One magazine recently reported the case of a landlord who had £4 million worth of buy to let property from which he was making a net income of just £40,000 – presumably, because he was so highly leveraged: not an example of smart property investment! That’s just a 1% return a year. It’s inevitable that rates will increase at some point in the not too distant future, and when (not if) they go up by just 1%, this ‘zombie’ and thousands like him will be in deep doo doo.
The House Crowd’s Advice for Smart Property Investment:
Focus on high yield properties with moderate leveraging (or, better still, none at all) so you are always in a positive cash flow position and so you can cope with interest rate rises when they come.
If you’d like to learn about the smart property investment model offered by property crowdfunding with The House Crowd, register now (you don’t have to invest straight away!) and find out about the vastly better returns you could be getting by investing the smart way….