It is no big secret.  Rates are going to hit an all time low on Thursday.  I cannot wait and I will have Sky News firmly on at 12pm to see everyone's reactions.

£50,000 borrowing will cost you £200 per month max.  We can buy houses that rent for £425 for £50,000 which will mean a nice profit of £225 per month.  Nice!

2009 will be the year of low interest rates.  I am not sure what 2010 will comprise of but if I am honest I do not care.  Why?  It has to do with the industry I am in.

I am a property investor.  I provide a basic need to my customers (being the tenants) and fortunately my customers cannot live without me.  A bit like why Tesco and Asda will be around for a long long time.  We all need somewhere to live and something to eat.

If I had a top end restaurant or private jet hire business then I would be worried as these are the sort of things that are first to go in a recession as demand dries up.

However property, as a business, is very much definitely here to stay in my life.  My properties and the properties I intend to buy this year are long term safe investments which are there to provide for me and my family for life.

No matter what anyone tells you property prices have nothing to do with the financial condition of an investor.  The equity in a portfolio is just a figure on a spreadsheet.  The most important thing is the cashflow that the property produces.

When you buy a property you should always be aware of the cashflows.  If the cashflow is good and healthy i.e. the rent is well in excess of the mortgage then there is not a lot that can go wrong.

• If it burns down you claim on insurance.
• If the tenant stops paying the rent you evict by sending a section 8 and 21and find another tenant
• If the property needs a repair you simply get it repaired

As time goes by rent rises with inflation (which may really kick in in 2010 which will force rent up and devalue your mortgage debt big time!) and your profit margins increase.

There are no poor professional investors especially if they have been in the game as long as I have (10 years).

If you are interested in property for the long term get in touch!

 

Ajay

Posted on: 5th Jan 2009