It is human nature for one to gear their lifestyle according to the environment at the time. When the economy is good people tend to spend more. When it is not, most people tighten their belts. Often the spending that takes place may not be done in the most beneficial manner. People tend to over invest or over buy property because they feel financially secure.
A better approach is to use the good times to prepare for the bad times. When there is some extra money a lot of people think about ways they can invest it. For many, they don’t have enough extra to become involved in stocks. Plus, it is too risky for them. Their next train of thought is investing in property. But, in the back of their minds is what happens when the economy sours. Will they be struck with a second property that will now become a financial burden? The answer to that could be yes or no.
Property Becomes a Burden
If one invests in an investment property that is already high priced then there are some risks. What kind of rate of return will it bring in a poor economy? If the mortgage is high but can be managed now, it may not be in the future. As a rental property it will be tougher to rent in a poor economy. It may mean that it has now become a financial burden. Read More on LandHub Website