Where Is A Safe Place For My Spare Cash In This Economic Situation?

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Where Is A Safe Place For My Spare Cash In This Economic Situation?

Thursday, October 2nd, 2008 by www Subscribe To My Feed

Now may be just the time to invest in property, either by home buying as Cash House Buyers or by investing in a home buying or analogous property company that has a sensible survival plan to carry it through the credit crunch

It’s ironic that tumbling property prices have at least partly led to the current credit crunch. This is in turn giving rise to a crisis in confidence amongst Bank Shareholders, because they know that if they hang on to those shares too long when others flee, the share value will inevitably dip below the critical value which renders the bank’s capital inadequate for loans and deposits on its books.

At this moment a rescue solution has to be put in place, and that means either nationalisation or takeover by a competitor. At this point the unlucky shareholders have forfeited all negotiating rights. The sale has to go forward, and the government or the purchasing Bank can’t pay more than the then current distress value of the shares.

So, where can you safely put your hard earned money to work for you in these troubled times?

Well providing you make sure you have more than enough ready cash to get you through anything the next 2 years may throw at you; why not use some of the remainder in becoming or investing in home buying either as Cash House Buyers or by investing in a home buying or analogous property company that has a sound survival plan to take it through the credit crunch

If this looks like folly, think about this; in the UK, just to keep the Market stable over the next 10 years; three million new houses will be required. At the current rate of building, we’re not likely to see more than a third of those put up. This shows that the medium and long term prospects are excellent for investing in property, because it’s much more probable that demand will outstrip supply than the reverse happening.

Cash House Buyers and Home Buying Companies normally buy houses at 80% of market valuation, because the sellers are more than happy simply to find someone to “sell my house”. This means that they have a sensible margin to pay for all their own costs, insulate them from the market falling a few more percent in the short time they own the property, and allowing a discount to make the sale happen quickly.

If you don’t incline towards the Cash House Buyers function for yourself; you’ll see lots of good opportunities turning up to invest in Home Buying Companies. Many Home Buying Companies have used borrowings to allow them to maximise their property portfolio, and so significantly improve their Return On Capital Employed. Now they need to cut borrowings, and they need an introduction of cash to do that and to ensure they can service their remaining debts until the market stabilises and begins to grow again.

If you’re considering such a move for your money; do all the due diligence, and especially make sure that your investment will be enough to ensure the company’s survival, and will give you enough of a voice to make sure that it does just that.

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