Well that's why every time I visit this thread I find myself shaking my head in disbelief.
If anyone is seriously involved in property they will be geared to a degree which will mean that rate rises are taken care of by increases in rental.
They will search out opportunities which will leave them geared to an extent where they wont be under pressure from rate rises OR downturns.
Downturns simply don't fit into my own equation.
As my equity ratio is low enough to cover land value.
Cover land value and the rest takes care of itself from an Armageddon stand point.
As mentioned people have to have somewhere to live and if you cover costs of holding then what's the problem?
Its pretty simple.
Fantastic if there is a massive drop.
(1) I'll be able to buy more in-line with land value as I'm looking for pushovers anyway,the dwelling is of little consequence.
(2) Builders will be screaming for work,I'll be able to squeeze better pricing.
(3) Renters will abound,they are falling over themselves now---even out bidding rent offers to get a dwelling!
(4) Most developments I do are 70% geared initially with 25 -30% in them. Normally 4 in a duplex.
(5) Sell 2 and gearing comes back to parity with land price.Equity is increased and rents cover rate increases. 3 even better.
(6) In a few years de to rent rises you have a passive income.
Seriously I don't see what all the fuss is about if your seriously involved.
Market conditions are just a part of business---so take care of business.
You can pompously shake your head ad infinitum. As usual your posts are couched in such a way to de-edify all except yourself (as evidenced by your first sentence), ignoring all previous discussion and logic. When people take this attitude of yours to task, you think it "tall poppy" cutting. (You, obviously the only tall poppy
)
FFS, developing is different to passively investing. Have we not gone through this 1,000,000 times?
Granted, you are combining the two, but please, don't try to pass off the "business" of developing as "investment". It ain't. You are using the instrinsic profit from the development to make an investment viable.
Now please, if you want to talk development, fine, you deserve a reward for your effort, but investing is about buying at value. Not all want to be involved in the business of development, including me. $%^& that! I have other priorities.
In my little corner of the PI landscape, this is starting to happen and I am so glad I didn't join the rest of the Johnny cum lately panic buying muppets who are now in serious financial trouble and stand to lose their entire BTL empire.
It's happening... BTL distress sales and repos all over the place here... and so far, it is happening at a faster pace than 1989.
I had a friend back in the eighties who was a developer (screwed my old man in a deal so no longer a friend) who told me 90% of developers go broke... eventually. He even started a public company called Capital City Properties LTD. Guess what? He went broke in the early 90's. Not saying you will go broke, but to point out that there are risks.
I'll take my risks in something I know a bit more about, thanks.
I wish you good luck, but please treat us with some respect.