“Times are a-changin'” My mortgage broker likes to quote this line from a famous Bob Dylan song. In reality, what he is referring to is changes in the ‘always reliable’ UK property market. The problem is that it is not so reliable anymore! Property investment in the UK has become an oversaturated breeding ground for would-be investors looking to build a ‘nest egg’ or simply buy a couple of properties for a little extra income each month. This is, and always will be, a great thing to do; after all, passive income is the key to being financially free.
When I started investing in property about 4 years ago, I was nearing the end of the cycle. The good times were now ‘fine’, but I was still able to make a respectable living doing it, and since the hours I had were less than two work days a week, it was a great lifestyle.
In the last 2 years or so, and more recently, we have all seen how the real estate market has weakened, prices are falling, mortgage companies are tightening, interest rates are high, and it is generally very difficult to obtain financing. Simply put, the entire market has lost its confidence. I have personally witnessed investors like myself dropping like flies in the last six months.
About a year ago I started looking for other possibilities. I have connections in the US, so it was natural for me to do research there. There has been a media circus surrounding the state of the US economy lately, with some saying they are headed for a recession, others saying they are already in one. There is no denying that they have some problems to solve, problems that have a habit of affecting the entire western world and beyond!
The real estate market piqued my interest as there has been a lot of commotion over foreclosed properties. If you’re not sure what that means, we’re basically talking about foreclosed homes. It seems that homeowners no longer feel the stigma associated with losing their home or bankruptcy and getting out of debt is the easiest thing to do. Bad for lenders, great for us! On my last trip to the United States, I found a regular supply of properties, none of them above $15,000 (US). I was literally drooling as they took me from house to house!
Now, let’s take a look at the strength of the dollar. Did I say force? I mean dollar weakness! Right now, trade your pounds and you’ll get 2 for 1! That’s double your money! I can buy a $15,000 property for £7,500! And it’s always good to know that there is a strong sense of ‘renting is good, owning is bad’. This means that as long as you shop in the right area, you will be able to rent your property throughout the day.
Conclusion:
I have been in the thick of real estate investing for quite some time with a decent amount of success. In my opinion, investing in the US offers some of the best opportunities out there; Where else in the Western world can you buy property for less than the price of a second-hand car? And that can only mean one thing, property prices WILL GO UP. The UK market has some ‘corrections’ to make, and I will definitely be keeping a close eye on it. But for now I’m going to convert my pounds to dollars.
