Tuesday , 23 May 2017
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Mortgage Loans Down, Time for Landlords to reap the benefits

It has been reported that home loans have fallen to their lowest since January 2015 as the WPP share prices rise and the FTSE 100 Drops. It is a common misconception that a slump in the housing market is bad news for property investors, but can also be the best thing to happen.

Let me explain

There are two types of property investors, the “Sellers” and the “Letters”. If you’re a “Seller” then bad news for you, no one is going to be able to buy your property and you now have thousands of pounds of real estate sitting around doing nothing. The huge flip-side is that those that buy-to-let now have a larger customer basis as the average joe is unable to buy, therefore only have one choice, rent or let.

The mortgage and rent markets are like two ends of a see-saw, one will rise as one drops. At any given time, there are a given number of people needing to move into a new home, in an ideal world they will all be buying their own homes, and when mortgage loans are high and property prices are low then the “Sellers” have their day in the sun. The “letters” take advantage of unaffordable homes but find themselves struggling to find tenants when houses are affordable.

seesaw

Once you understand the mechanics of property then it is possible to catch every single wave and make the right call, this can be done by anyone with capital to support the structure of buying, selling and letting. If you happen to have a large sum sitting in the bank and wish to be smart when investing in property, then perhaps have a look at the procedures I have set out…

  • Buy your first property when houses are cheap.
  • Only rent or Let during this same period of uncertainty (finding tenants will be easy at this time).
  • Sell your property when the market is strong.

You have now made a profit on your original purchase price, as well as a steady income during the period of uncertainty. This whole process may take years or it could happen in within a year, it all depends on recessions, markets, referendums etc.…

One sure thing that you can rely on is that all markets, especially property have trends, and will always rise and fall in dramatic style, but hold the course and ride these trends like waves and large profits are made at both ends. In many ways it is exactly the same as the Stock Market, whichever way the line goes someone will always win depending if they went Short or Bought. With one huge benefit being that a company’s stock can crash and dye completely, where-as property will always be around (It is impossible for say the UK property market to stop trading and go into admission – obviously).

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One comment

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