one thing that is absolutely unavoidable with property investment is the fact that most people who do it get in with debt
so say you have a $500,000
and you pay cash and it drops 5% then that house is worth $476,190 - a lose of $23,810
5% is nothing really But it starts to mean something though when you realise most people have gone into debt to buy that house
With 50% debt the return on the original $250,000 is around minus 9.5% So for every 1% drop in house prices, an investor loses 2%
A drop in house prices of 10% will result in a 20% lose for the investor A drop of 20% leaves the investor with a lose of 40%.
Trouble is most property investors have more than 50% debt, particularly those that got sucked in by the likes of Henry Kaye and other property spruikers.
