Friday, Jul 27, 2007
The credit crunch starts to bite
MoneyWeek: When 'buy and hold' simply doesn't work
Recent entrants into the BTL market say they don’t mind subsidising their tenant’s rental payments, because they’re “in it for the long-term.” But buy and hold is a flawed strategy if the asset you’re holding isn’t worth the price you paid for it. And it’s worse still if you are holding it using borrowed money. If you just sit on an overvalued asset, it’s only a matter of time before the market realises that it’s actually not worth what you paid for it, and marks it down accordingly. Then all you’re left with is a huge debt to service...
Posted by damien @ 11:37 AM (138 views) Add Comment
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