Home Buying – Could It Offer A Safe Way Through The Credit Crunch?

Now may be just the right time to invest in property, either by home buying as Cash House Buyers or by investing in a home buying or similar property company that has a watertight survival plan to carry it through the credit crunch

It’s ironic that tumbling property prices have at least partially led to the present credit crunch. This is in turn giving rise to a crisis in confidence amongst Bank Shareholders, because they know that if they hang on to those shares too long when others flee, the share value will inevitably dip below the critical value which renders the bank’s capital inadequate for loans and deposits on its books.

At this time a rescue solution has to be put in place, and that means either nationalisation or takeover by a competitor. At this point the unfortunate shareholders have forfeited all bargaining rights. The rescue must go through, and the government or the buying Bank will not pay over the then current distress value of the shares.

So, where can you safely put your hard earned savings to work for you in these troubled times?

Well if you ensure you have more than sufficient ready money to get you through anything the next 2 years may throw at you; why not use some of the remainder in becoming or investing in home buying either as Cash House Buyers or by investing in a home buying or similar property company that has a sensible survival plan to take it through the credit crunch

If this looks like folly, think about this; in the UK, just to keep the Market stable over the next 10 years; three million new homes will be needed. At the present rate of construction, we’re unlikely to see more than a third of those put up. This shows that the medium and long term prospects are excellent for investing in property, because it’s much more probable that demand will outstrip supply than the reverse happening.

Cash House Buyers and Home Buying Companies normally buy houses at 80% of market valuation, because the vendors are more than happy merely to find somebody to “sell my house”. This ensures that they have a healthy margin to pay for all their own costs, insulate them from the market falling a few more percent in the short time they own the property, and allowing a discount to make the sale happen quickly.

If you don’t incline towards the Cash House Buyers role for yourself; you’ll see lots of good opportunities coming up to invest in Home Buying Companies. Many Home Buying Companies have used loans to enable them to maximise their property portfolio, and so hugely improve their Return On Capital Employed. Now they need to cut down borrowings, and they need an injection of cash to do that and to ensure they can service their remaining debts until the market stabilises and begins to rise again.

If you’re considering such a move for your savings; do all the due diligence, and in particular make sure that your investment will be enough to ensure the company’s survival, and will give you enough of a voice to make sure that it does just that.