Thursday, December 09, 2010

Buy Like Hell?

Mike Slade CEO of Helical Bar is advising people to buy investment property "like hell", as he claims never to have seen such a gap between yields and borrowing costs.

All very well, maybe, if you are a professional property company with many years experience. However, the rest of the country may well be advised not to follow that advice:

1 Borrowing the money from the banks, at a decent rate of interest, is not that easy.

2 Interest rates in the next year will most likely rise.

3 There are buying opportunities (eg distressed sales etc). However, these are most likely to be snapped up by companies such as Helical Bar.

4 Helical Bar doubtless has a greater cash cushion than most, to enable it to ride out a crisis in the event that they are wrong.

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