Whilst there is a lot of uncertainty now, one thing we can be certain about is that there is going to be a decline in the housing market in 2020, as we battle with the biggest recession in hundreds of years.
With this in mind, at this time it is essential you start to plan how you can work your current business model around the current market uncertainty.
2020 is going to be a bumpy year for refinancing property whilst there is so much uncertainty around finance and what the market value is going to be in a few months’ time. This means over the next six to nine months, it is going to be difficult to do short-term capital plays; as we don’t know where the market will be.
Valuers will on a best case be including “material market uncertainty” warnings on reports, and actually down-valuing as a worst case as the data starts to reflect this change.
We also need to take the time lag into consideration at this point. The bottom of the property market is going to come before we know it is there due to how the data is recorded - so keep this in mind when agreeing purchase prices on deals.
If you currently use high cost finance, bridging loans for example, what is your exit strategy going to be? We need to look at how we can move away from finance like this in the short-term or find alternative ways to mitigate the risk of getting “stuck” on them if the refinance doesn’t pan out as expected.
Time spent planning RIGHT NOW will mitigate a lot of the risks inherent in the market at the moment, and save you a lot of potential future pain.
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