New Repossession Crisis Looms...

It’s interesting to see how quickly things change over just a few months. The media are pointing out all the negative aspects of investing in this market (I’ll explain in a second why that’s actually a GOOD thing), repossessions are on the rise and the finance situation has shifted dramatically – you’ll be glad to hear little and no money down deals are still very doable (keep reading and I’ll show you how the professionals are doing it).

For the last six years or so I’ve been teaching fellow property investor’s one thing and one thing only – buy well below market value from distressed sellers and make sure you have a positive cashflow from your overall portfolio. If you can do

that on a consistent basis you’ll be fine over the medium to long term in this business.

The people that I see falling over are those that think they purchased below market value but really didn’t (i.e. over inflated new build apartments built in city centres) and those who fail to manage their portfolio properly. An example of the latter is where people have purchased properties well undervalue to pull out a cash back. Often the rental barely covers the mortgage payments. The investor justifies this by explaining the cash back will be used to cover the shortfall – using one loan to prop up the repayments on another.

But the cashback is often

simply spent on a car or lavish holiday and not reinvested!

Then the vicious cycle begins… More cashback deals are required to keep up the mortgage repayments and fund the investors lifestyle. This goes on until the accumulated debt eats the investor alive and he goes under. This has happened to several quite well known people recently.

Considering the fact that sensible property investment is one of the safest long term investments you can make and repossessions are going through the roof then how should you be investing in this market?

Continued ..

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