Invest now or wait for the crash?

by Mark Alexander

17:44 PM, 6th September 2020
About 4 weeks ago

Invest now or wait for the crash?

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Invest now or wait for the crash?

This is a hot topic on Social Media, especially for “gurus”.

My long held view, having been in property finance and tax law and a portfolio landlord for over 30 years, is that the best time to buy is when the general consensus is that property values will crash, not when the crash happens.

The reason I say this is because “the crash” is rarely as bad as people expect it to be.

The stats during a crash are always rubbish anyway.

When property market crash statistics begin to appear in the media, the market has usually slowed to such an extent that the number of deals done are virtually none existent. Funding has often dried up by that time so the few deals that are done are completed with cash. On that basis the statistics are relatively meaningless.

The best time to invest, in my opinion, is when the people who are selling are worried. That time is right now!

I would start a negotiation today by asking a vendor what they think their property will be worth by the end of this year. They will then give you a whole load of waffle which they will not believe any more than the journalists writing all the scary headlines. Therefore, when you say you are buying as an investment and cannot afford to take the risk of overpaying, they are far more likely to consider your ‘low ball’ offer than at any other time. If they accept, you will still stand a decent chance of being able to arrange finance too.

If you are in the market to take advantage of this phenomenon, please, Please, PLEASE make sure you pay more attention to the ownership structure you use to buy your properties. This is more important now than ever before, for the reasons I explain in this video interview with Ranjan Bhattacharya.

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Comments

Binks

12:22 PM, 7th September 2020
About 3 weeks ago

Good points Mark and I agree that the time to buy is when everyone else is running for the hills, but I would disagree that the time is now. From personal experience over the past couple of months and especially after the stamp duty holiday announcement, there is no other way to describe what I’ve seen happening other than a bizarre feeding frenzy. Properties are overpriced and still sellers get asking or close to. None of the sellers were in the mood for offers, even when an offer is cash and quick completion on a property that will struggle to get a lender lend on it. Auction properties selling for silly money. This is in the SE so perhaps it’s different regionally, I’m curious to hear what other people’s experiences are, but I think we are still a couple of months away from the time where there may be deals available.

Janet Carnochan

12:39 PM, 7th September 2020
About 3 weeks ago

Reply to the comment left by Binks at 07/09/2020 - 12:22
I am in SW Scotland. It is absolutely manic here as well. We have so far had one of the lowest rates at Corona virus, these statistics have highlighted the area, people have seen how it has been up till now a very beautiful but unforgotten area. Incomers are flocking to buy here. Houses that have been on the market for years are selling and new properties are selling within days, in some cases much higher than the asking price.

Denise G

15:46 PM, 7th September 2020
About 3 weeks ago

any advice for those of us considering selling a (currently BTL) property?

silversurfer2017

16:59 PM, 7th September 2020
About 3 weeks ago

Having recently sold an unwanted buy to let at the full asking price just before the stamp duty holiday I disagree that the time to buy is now. Perhaps wait for 9 months when the SD holiday is finished, we still have Covid and when there is still no effective vaccine imminent.

Christopher Marsden

19:46 PM, 7th September 2020
About 3 weeks ago

Reply to the comment left by Binks at 07/09/2020 - 12:22I agree with you re around Tunbridge Wells area. There's a lot of people moving down from London who want to get out of the city. Building inspector told me (we are just finishing phase 2 of extending our home) that people are buying in 2 weeks and commissioning architects prior to completion to extend properties. Very difficult to get builders you have to wait 2 years for the good ones. Also people already moving out of Hong Kong some into London and some to surrounding areas. This is a sellers market and we are thinking of testing the market. I stamp duty is a big factor but not the only one. If the City is successful post brexit and alot of Hong Kong expertise is added then the move out will continue. Some fund management companies are saying working from home is a permanent option. If you have a family where would you rather live and work in the sticks or in the city. This will not be the last virus and like it or not cities are higher risk places to live for all sorts of reasons.

Graham Davidson

7:40 AM, 12th September 2020
About 3 weeks ago

All agents are complaining that they cannot get enough properties on the market to satisfy the feeding frenzy at the moment so good luck to anyone trying to scare a seller into taking a mega low offer. Don’t disagree with the theory behind your post but that time is not now.
If anything, for anyone wanting to exit the market, I would say do it now.


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