I realised that mom and pop buy to let, property investing is increasingly frowned upon by governments worldwide. Borrowing on a personal capacity is curtailed. Small time investors are blamed in many countries, from Singapore to UK, from Australia to New Zealand, for skyrocketing property prices.
However, corporate borrowing is encouraged. It is seen as "productive" as the SME boss uses funds to build a business and create employment. However, due to the record low interest rates in the last 8 years, many of these corporate loans were channeled into hardly profitable projects. I believe that the global economy cannot withstand more than two Fed rate hikes. Bubbles will burst and default rates will climb. We already see Deutsche Bank and Standard Chartered in trouble. More will come.
The solution for property investors is to either venture into commercial properties, hold it under company structures, or to become a small time developer.
I've recently come across a project in zone 4 London. Extremely cheap site, with profit margin of around 30%. With gearing, the IRR rises to well over 40%. It is an office conversion to residential and the turnaround time is 15 months. The end products are apartments catering to the locals.
Construction loans and bridging loans are bountiful. I'm glad to say that heading in this direction is the next step of being a property investor. I aim to have a portfolio of houses, apartments, development projects to value add all over the developed world.
