Property investment is great when everything is chugging along nicely…but what happens when the economy takes a turn for the worse? A crash may not happen soon, but we know it will come at some point – so what can we do to prepare ourselves?
In this episode we cover:
- Looking to history to see what the next crash might look like…what must we prepare for
- How the 18 year property cycle can help you anticipate what’s coming
- 5 ways to prepare…none of which require drastic de-leveraging
Although we try to be measured and sound a note of caution whenever we get excited about investment, leverage and growth, we thought it was well worth dedicating a whole episode to protecting your downside. This is a real must-listen…and although the subject matter sounds grim, we think you’ll go away realising that you have a lot more control over the situation than you might have thought.
To get the most out of this episode, there are other resources you can draw on:
- Episode 69 on the 18 year property cycle
- Episode 71 on long-term property predictions
- Property cycle commentator Akhil Patel interviewed on The Property Geek Podcast
- Property Geek Podcast episode 45 on cash reserves and contingency funds
- Discussion on the cycle in this Property Hub thread
Resource of the week
In this episode we drew heavily on the ideas of listener and property investor Ed Atkinson, who put together a fascinating report with recommendations for investors based on his analysis of the previous five major UK recessions.
Along with his report, Ed put together a spreadsheet which you can use to model how your portfolio would have fared under each of the last five recessions – would you have been forced to sell properties, or come out stronger? By manipulating the variables you can see how you might be able to make your portfolio more shock-resistant by bolstering your cash reserves, reducing loan-to-value or even re-distributing the equity within your portfolio.
It’s a truly remarkable piece of work, and we’re grateful to Ed for letting us give it its debut on the podcast.
Plus…a meetup in St Albans tonight!
The next St Albans Property Hub meeting is happening TONIGHT (Thursday 14th May) at 7pm at The Cock Inn, 48 St Peter’s St, St Albans, Hertfordshire AL1 3NF.
Everyone welcome, whatever your level of experience! More information here.
News this week
Well, election results were being read out literally while we were recording this episode, so we figured that whatever news story we picked out would somewhat pale into insignificance after the result! In next week’s episode we’ll be able to talk properly about what the outcome of the election is likely to mean for investors.
Join the conversation
We’d love to hear your views on this one. What do you think of our suggestions about how to survive a crash, and do you have any of your own to add?
After playing with the spreadsheet, how would your portfolio fare?
We’d love to know, so join the discussion in The Property Hub!
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