Why do Brits buy instead of rent?
Jun 2nd 2010, 9:47 am
#91
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Re: Why do Brits buy instead of rent?
I really don't see where you are going with this. Assets and readies are two completely different things. The only time the value of assets is important is if you want to use them as security or to convert them into cash. For me, my assets are my house, my cars, my motorbike, my tools, my furniture, etc, all of which change value day to day but the value of which has no bearing on my day to day life. For the bank the assets are a load of properties, and other bonds and investments. If I have a bill to pay I need readies, not assets, so I either need to collect from one of my debtors (clients) or convert some of my assets to readies. The problem though with converting assets into readies is that it takes time and this is why certain banks needed "a bail out". For me (and the bank) the day to day value of my assets is not important as I am not using them for security and not trying to convert them into the common denominator (money). For the banks the assets are even less important because after all it's not the bank that owns them, but the shareholders.
In your opinion you think the banks problems are down to liquidity i.e. cash flow, rather than the overall state of their business.
I dont agree, one class of the banks assets i.e. the value of the properties it's clients have mortgages with AND the incredibly large collection of properties repossesed from individuals and construction companies are massively overvalued. A bank can post an attractive profit and say it is in good shape because it includes the value of these assets on their books, these may never sell and may be worth only 50% (or less) of what they've estimated.
The UK banks got into trouble because another class of assets, the sub-prime junk bonds purchased from the USA, were terribly overvalued and worth nowhere near what the banks paid for them. Once these became worthless, many banks found themselves to be effectively bankrupt/insolvent.
Where banks DO make a profit is on their operating day-to-day costs, but these amounts are tiny compared to all their investments.
Jun 2nd 2010, 11:35 am
#92
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Re: Why do Brits buy instead of rent?
one class of the banks assets i.e. the value of the properties it's clients have mortgages with AND the incredibly large collection of properties repossesed from individuals and construction companies are massively overvalued. A bank can post an attractive profit and say it is in good shape because it includes the value of these assets on their books, these may never sell and may be worth only 50% (or less) of what they've estimated.
And by the way I have a couple of friends who are property agents and they are selling like crazy at the minute. Why? Because they only take on properties at the real market value. All this about a stagnant market is nonsense made up by people who are still trying to offload their bad investments onto others at far greater than the current market value. Put the right value on it and it will sell in a week, a month at the outside.
Jun 2nd 2010, 11:39 am
#93
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Re: Why do Brits buy instead of rent?
My house has dropped in value, let's say 80% of its value 2 years ago, because I didn't pay an over inflated price for it in the first place. But what does it matter to me if I'm not cashing it in. As long as I carry on paying my bills, however precarious my situation, no one on the outside can touch me or make me bankrupt, just the same as no one can topple a bank that is paying its bills irrespective of whatever value it puts on its assets on a balance sheet. And anyway why would the bank post high profits if it were making none? Hold on, don't tell me, is it so it can pay extra taxes?
And by the way I have a couple of friends who are property agents and they are selling like crazy at the minute. Why? Because they only take on properties at the real market value. All this about a stagnant market is nonsense made up by people who are still trying to offload their bad investments onto others at far greater than the current market value. Put the right value on it and it will sell in a week, a month at the outside.
And by the way I have a couple of friends who are property agents and they are selling like crazy at the minute. Why? Because they only take on properties at the real market value. All this about a stagnant market is nonsense made up by people who are still trying to offload their bad investments onto others at far greater than the current market value. Put the right value on it and it will sell in a week, a month at the outside.
You live in a parallel universe
Ask yourself, why did Greece fabricate its balance sheets and was advised to do so by US accountants? To make it appear they they are a triple A rated business/country so they can secure cheap loans!
Exactly the same for the banks.
And if you think the property market isnt stagnant, just look at the official figures. Sales in Spain are at about one quarter of the 2007 levels (just use google.es, its easy).
Jun 2nd 2010, 11:47 am
#94
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Re: Why do Brits buy instead of rent?
My house has dropped in value, let's say 80% of its value 2 years ago, because I didn't pay an over inflated price for it in the first place. But what does it matter to me if I'm not cashing it in. As long as I carry on paying my bills, however precarious my situation, no one on the outside can touch me or make me bankrupt, just the same as no one can topple a bank that is paying its bills irrespective of whatever value it puts on its assets on a balance sheet. And anyway why would the bank post high profits if it were making none? Hold on, don't tell me, is it so it can pay extra taxes?
And by the way I have a couple of friends who are property agents and they are selling like crazy at the minute. Why? Because they only take on properties at the real market value. All this about a stagnant market is nonsense made up by people who are still trying to offload their bad investments onto others at far greater than the current market value. Put the right value on it and it will sell in a week, a month at the outside.
And by the way I have a couple of friends who are property agents and they are selling like crazy at the minute. Why? Because they only take on properties at the real market value. All this about a stagnant market is nonsense made up by people who are still trying to offload their bad investments onto others at far greater than the current market value. Put the right value on it and it will sell in a week, a month at the outside.
I simply don't agree - would they like to sell my property for me? It's been on the market for about a year - we only want offers. That is, we don't quote a price.
By-the-way, how does one find the 'current market value' in Spain? No agent I've spoken to will give you one - they all ask 'what do you want for it?'
Jun 2nd 2010, 12:00 pm
#95
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Re: Why do Brits buy instead of rent?
... As long as I carry on paying my bills, however precarious my situation, no one on the outside can touch me or make me bankrupt, just the same as no one can topple a bank that is paying its bills irrespective of whatever value it puts on its assets on a balance sheet.
ask for their money back and then it's up to the borrower to arrange another loan, to cover their debts. If you don't pay up they just apply for a winding up order - not the same as being declared (voluntarily or involuntarily) bankrupt, but you still end up losing your business and getting nowehere near what you thought it was worth.
Last edited by pete_l; Jun 2nd 2010 at 12:05 pm.
Jun 2nd 2010, 1:25 pm
#96
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Re: Why do Brits buy instead of rent?
That's exactly the sort of thing I steer well clear of. Can you imagine if Carrefour did the same? Sorry but that's just not transparent business. Put a price on it and if the price is realistic it will sell. If it's rustic land in south Valencia I'd say a realistic price would be up to 15€ per square meter of land and up to 125€ per square metre of legal construction.
Jun 2nd 2010, 1:40 pm
#97
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Re: Why do Brits buy instead of rent?
That's exactly the sort of thing I steer well clear of. Can you imagine if Carrefour did the same? Sorry but that's just not transparent business. Put a price on it and if the price is realistic it will sell. If it's rustic land in south Valencia I'd say a realistic price would be up to 15€ per square meter of land and up to 125€ per square metre of legal construction.
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If only life was so simple
Jun 2nd 2010, 2:21 pm
#98
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Re: Why do Brits buy instead of rent?
I think it depends so much on the property itself and the demand for the type of property. For instance, in my street there are several for sale but they don't have a proper terrace, are north facing and have no real "draw", whereas there were several people interested in buying ours as it is south/southeast facing, is a bajos with good terrace, etc. and the price was good. When we were looking for a place, a couple of the places we were interested in were bought under our noses while we were sorting out the mortgage, which turned out for the best as it happens but that's another story. I also think that although the number of properties being sold has fallen dramatically, perhaps it is now at a slightly more "normal" rate for buying and selling? Just a thought, don't know figures on this. So many sold during the "boom" that in comparison it looks bad. There were way too many estate agents a couple of years ago cashing in on the boom, and now only the fittest have survived, not such a bad thing perhaps?! Not to underplay the impact of all this, but people were consumer crazy, perhaps now they will appreciate the value of the free things in life instead of spend, buy, consume....
Jun 2nd 2010, 4:49 pm
#99
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Re: Why do Brits buy instead of rent?
What loan are you talking about? I was talking about assets, not loans. Obviously if someone needs a loan to start a business they don't have the assets. I was saying however badly someone mismanages their assets there is nothing anyone can do as long as they pay their bills. Same with a bank, but of course the shareholders could fire the directors.
Jun 2nd 2010, 5:03 pm
#100
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Re: Why do Brits buy instead of rent?
What loan are you talking about? I was talking about assets, not loans. Obviously if someone needs a loan to start a business they don't have the assets. I was saying however badly someone mismanages their assets there is nothing anyone can do as long as they pay their bills. Same with a bank, but of course the shareholders could fire the directors.
The banks are loaning to each other all the time, this is called the LIBOR. Banks make profits by making a higher return on their investments than what they pay through the inter-bank loan rate. When the LIBOR increases like it did in the crisis 2 years ago it means banks find it very difficult to operate.
Jun 2nd 2010, 5:10 pm
#101
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Re: Why do Brits buy instead of rent?
Rubbish, almost all businesses have loans
The banks are loaning to each other all the time, this is called the LIBOR. Banks make profits by making a higher return on their investments than what they pay through the inter-bank loan rate. When the LIBOR increases like it did in the crisis 2 years ago it means banks find it very difficult to operate.
The banks are loaning to each other all the time, this is called the LIBOR. Banks make profits by making a higher return on their investments than what they pay through the inter-bank loan rate. When the LIBOR increases like it did in the crisis 2 years ago it means banks find it very difficult to operate.
I must get my 400 dollars back off them one day.
Jun 2nd 2010, 9:25 pm
#102
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Re: Why do Brits buy instead of rent?
Rent or Buy?
We bought our house seven years ago for 50k euros and then the ruin next door for 12k euros and spent about 12k euros doing them up. No mortgage. We still have a house in the UK where our son, girlfriend and lodger live.
There is no way we would have paid out 100s of euros a month to rent a place that you can't decorate or improve in any way. My husband especially would have had a heart attack if he saw our money dwindling away at a rate of knots, especially as we don't have a large income. Up until this year it was even less as I was not getting my State Pension until this January. So we would have had to dig into savings to afford the rent - to us (my husband especially), it would be just like getting the money and throwing it on the fire.
I do understand the many reasons why people do rent and that is fine and I am glad there are rentals available, but it would not have suited us at all.
We bought our house seven years ago for 50k euros and then the ruin next door for 12k euros and spent about 12k euros doing them up. No mortgage. We still have a house in the UK where our son, girlfriend and lodger live.
There is no way we would have paid out 100s of euros a month to rent a place that you can't decorate or improve in any way. My husband especially would have had a heart attack if he saw our money dwindling away at a rate of knots, especially as we don't have a large income. Up until this year it was even less as I was not getting my State Pension until this January. So we would have had to dig into savings to afford the rent - to us (my husband especially), it would be just like getting the money and throwing it on the fire.
I do understand the many reasons why people do rent and that is fine and I am glad there are rentals available, but it would not have suited us at all.
Jun 2nd 2010, 9:39 pm
#103
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Re: Why do Brits buy instead of rent?
Absolutely, what is right for one is not right for another, simples!
Jun 2nd 2010, 10:57 pm
#104
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Re: Why do Brits buy instead of rent?
None of my businesses have ever been started with a loan. And once you've got one business running it's easy to start more because the first one is not throwing money in the dustbin paying loans.
But that's not to the point, I was taking about assets and you have twisted what I was saying to mean loans. Loans are not assets, they are someone else's money. And just because people borrow money to start businesses doesn't mean it is the clever thing to do.
But that's not to the point, I was taking about assets and you have twisted what I was saying to mean loans. Loans are not assets, they are someone else's money. And just because people borrow money to start businesses doesn't mean it is the clever thing to do.
Jun 3rd 2010, 6:35 am
#105
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Re: Why do Brits buy instead of rent?
You are/have been one of the very lucky few. Nearly all suppliers need payment within 30 days, but most invoices take longer to collect. I think that you will find that nearly every business, large or small, both started and continue to operate through credit/loans. Employing people, creating work, paying taxes and making a living is the important thing. If one can achieve these, then it is hardly throwing money in the dustbin paying off a loan. Maybe you need to talk with more people who, for various reasons related to this recession, are unable to secure more credit on their perfectly viable businesses, and as a result will have to make workers redundant.