How to protect yourself from a property crash.

 

As an investor, it is essential to minimise risk at every step of the way by having a well-thought out strategy and contingency plan.

 

This is the best way to protect yourself from a property crash.

 

But as Nathan reveals, the current crash isn’t confined to just property.

 

The whole financial system is in jeopardy.

There has been a lot of misinformation out there in the media about the latest property downturn.

 

And, a lot of disagreement about how far prices will drop – or if they will drop further.

 

But the real issue, says Nathan, lies in the financial system rather than the property market.

 

Falling prices are really just a symptom of something else that has built-up in time.

 

He says, there is a lot of volatility and systemic risk in the financial markets at the moment.

 

Will prices fall further?

Nathan doesn’t think so. In fact, he believes we have just passed the bottom of the market – but he doesn’t think prices will start booming yet. He says there is a window of 12-24 months where you can still pick up properties for cheap.

 

During this time, he expects to see rates drop to zero before heading negative.

 

He also expects policy makers to make lending easier as well as quantitative easing to bring more credit into the market.

 

This will filter through the economy and prices will start their upwards climb once again.

 

Watch this space – the derivatives market.

Nathan also thinks the derivatives market will implode, prompting investors to search for a safe haven to park their money in.

 

Throughout history, property has been the safe haven that investors have turned to when the stock market becomes too volatile.

 

So, this too may cause the next upward phase of the property market.

 

How to protect yourself from a property crash.

Building risk management into your investing strategy is the best way to protect yourself from a property crash.

 

It is essential to cover all bases by buying below market value, with a good upside for growth and a self-sustaining cashflow.

 

In addition to this, Nathan says you should do everything you can to position yourself well in a recession-based market.

 

Here are some things to consider:

  • Don’t overleverage yourself
  • Don’t underleverage yourself
  • Have a strong cashflow
  • Don’t be too exposed – if you are, then remove some leverage from your position
  • Have a good, strong budget
  • Constantly work to improve your cashflow – whether by pushing up rents or getting an extra job
  • Remove some expenses and clear some debt
  • Look for opportunities and position yourself to take advantage of opportunities when they arise
  • Remove some mortgage costs through lower interest rates
  • Get Nathan to review your position

 

Do you feel protected from the recession? Please share your experiences in the comments section below.  

 

Property Crash? I Need To Be Prepared!