Читать книгу The 3+1 Plan - Brett Alegre-Wood - Страница 9

Important Note

HOW DOES THE 2008/2009 CREDIT CRUNCH AND RECESSION AFFECT THIS BOOK

I would be lying if I said I forecasted the full extent of the credit crunch and recession. In fact, I have yet to find a single economic commentator who predicted what actually happened. Whether anyone did or didn’t predict the eventual outcome, it actually doesn’t matter. As investors, we must roll with the punches as they come.

The main changes to the mortgage market for property investors during this time were:

•Loan to values dropped from 85% down to 65%, which meant you needed extra deposit to purchase a property.

•The interest rates on buy to let shot up from around 5% to as high as 6.5%-7.5% meaning that your monthly cash flow was affected, and they then dropped again to around 5.5%.

•Most banks offered fixed rates at this higher level which meant investors were locked into cash flow shortages for two or three years.

•Rent coverage which was as low as 100% coverage raced up to 125%. This wasn’t such a big deal because the loan to values had dropped sufficiently to off set this change.

•Finally, the Council for Mortgages Lenders (CML) made a number of changes, meaning that all incentives had to be declared to the lender. This limited cash backs, non-financial incentives and bridged deposit structures.

The most important thing about the lessons in this book is that some of the information may have changed by the time you read it. Interest rates may have changed, the market may have changed, loan to values may have changed, mortgage products may have changed, average prices may have gone up (or gone down). Regardless, the laws, principles, strategies and structures in the book will still apply: these won’t change.

For over fifteen years and in the three different countries that I have built property portfolios, the same lessons apply, despite the criteria having changed between countries and with the different market cycles in each country.

My advice is not to get too bogged down in the current property market. It will change. Focus on the lessons and learn to apply them in any market.

You will be holding your property through a number of different property cycles and each will present different criteria and different opportunities. Becoming educated is your best defence against these changes.