Skip to content

The buy to let debate continues

To buy to let or not, that is the question, as Shakespeare may have put it and it is clear that the buy to let is not for the faint of heart. However, if you believe we are nearing the bottom of the property crisis and speculating and risk taking is in your blood, you could have a world of opportunity lying at your feet.

According to some, one should be investing their currency in shares and not property. However, all things being equal, what goes up must come down, and, conversely, what goes down, will sooner or later rise back up again. Timing is everything.

The way buy to let works is like this: Come up with the funds to put a deposit on one property. Remain devoted and patient, and wait until prices rise. When your property becomes worth significantly more than you paid for it, re-mortgage it and take as much equity from it as possible and put that down as a deposit on a second property. Wait until that property's worth raises, and repeat the process until you have accumulated several properties that are all heavily mortgaged in which you have a small amount of equity invested. This strategy will work in your favour, as long as property prices keep increasing.

If, however, property prices fall, you could find yourself in grave trouble. If prices were to continue to go up, and you could manage to stay on top of the property market, your financial status could certainly increase incrementally to the level of your risk taken with the buy to let market.

With the current problems in the property market, the debate is sure to continue in the weeks and months to come.

Related