The Rise of Buy-to-Let Investors
The rise of buy-to-let investors has done much to bring stability to the property market. To some extent, they have replaced the first time buyer as a primary driver of property sales and they have accounted for 10% of new mortgages in 2006 /7 in the UK.
Buy to let has been seen by many as an easy way to make money from property as the number of property clubs have multiplied and more creative ways of financing investment property has arisen.
After all buy to let is an industry as
well as an investment vehicle for investors. With Property clubs providing lucrative deals for investors as well as themselves, it is little wonder that everyone has been able to make money on the way up.
However with the recent turn of events re the credit crunch, it will be interesting to see how the small investors cope with what could be a protracted down turn, if that comes to be. Most small investors would tend to be zero geared ie where they make no monthly income but will be looking for a capital gain after a couple of years. Those with negative gearing, ie where they have to contribute to the monthly outgoings, will need to sustain their losses.
Those buy to let investors who have positive gearing, ie who make a profit on a monthly basis, can expect to be able to ride out any financial storm on the basis that are 'in' the money.
This particular economic period of the winter of 2007 will test the mettle of many buy to let investors. The current credit crunch will be the first test for many new buy to let investors - if they've done their sums, they'll come out stronger and in good shape for the next cycle.
Return from Rise of Buy-to-Let Investors to House Prices