Thread: Pros-Cons of Apartment Ownership From Experience
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06-06-07 22:28 #87
Posts: 64To date Argentina is the only country ever that has defaulted on its external debt.
Redondo. Argentina is among a few countries that has defaulted, but not the only one. But I agree that is was the most spectacular one.
Saludos M
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06-05-07 04:00 #86
Posts: 439About a secure rental income in Argentina.
It's anything but secure of course. Tourists can leave and that is not unlikely with this high rate of inflation. Furthermore you need to have an ocupation-rate of around 80-90% to get a good ROI (atleast higher then you can get on a bank-account) and that can easily drop to 50-60%.
Second you have to consider that it might be hard to sell your property. The BA housing market is a sellers market and not a buyers market which means it's hard to sell your property (especially a high end one) I would say the average selling-time of a 100k apartment is about a year or even more. The selling process is also time consuming (reservas, which can easily result in your losing 3 months time because the buyer can't finance his buy or can't sell his home.
In 2006 there have been around 60.000 real estate transactions, which is nothing of course in a 4.500.000 people city and this is a time of economic prosperity.
Third you also have to consider that it might be hard if not impossible to bring your dollars out of the country. To date Argentina is the only country ever that has defaulted on its external debt. That should say you something about the way Argentina sees foreign investment. Argentina has also gone through numerous cases of hyperinflation and economic crisis.
If you plan to stay at least 5 to 10 years and / or are married to an Argentine, have a business or a job in Argentina it's different offcourse. If you are willing and can maintain your home you should be fine.
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03-04-07 17:18 #85
Posts: 211Excellent view point and advice Hunt99. We are starting to see more foreclosures in Bay Area too. Mortgages are at a premium over equivalent rents here so from an investment standpoint its cheaper to rent then own. However there are many buyers that have income and growing families that want the their own home or a larger home and even though they admit appreciation potential over the short term (1-5 years) is very low are in the market. Also there are other external factors here a) maturing stock options where to put the money? b) grants from companies to new employees to buy a house with down payment assistence.
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02-27-07 11:44 #84
Posts: 1543Originally Posted by Moore
http://finance.yahoo.com/expert/arch...fe/ben-stein/1
He's a good writer and a shrewd financial mind, and on every other Monday morning his column is one of the first things I read with my coffee.
His column from January 19 made the point not that real estate is a bad investment, but that for the long term, the stock market is better. I certainly agree with him. But let's do a small exercise where we consider buying investment real estate in a market where there is no price appreciation beyond inflation.
Let's say that in 2007 I buy piece of rental real estate for 100,000 dollars. I put 20% down, with an 80K mortgage at 6.5% for 30 years, which is $500 a month. Because I don't overpay, in 2007 I am able to charge rent equal to what my mortgage, taxes, insurance, management, and maintenance would be. Let's say $600 a month. A lot of people who get in trouble in real estate overpay and thus are "upside down."
I raise the rent it in line with 3% inflation over the following 20 years. My mortgage payment always stays at $500 a month, but at the end of 20 years I'm bringing in rent of $1,083 a month. Meanwhile, my mortgage has gone from 80K to 44K. In inflation-adjusted value, I gained 36K, and earn nearly double in rent what my cost is. Not a bad investment over 20 years, to be sure. What was the key to this success, even though I didn't earn one dime in appreciation over 20 years? Not overpaying up front. (Keep in mind we have ignored the depreciation and tax-advantaged capital gains investing elements from this example, as well.)
The second lesson: Investments are for the long-term. "Flipping" is for speculators. In my hometown a lot of these guys who bought condos in late 2005 with the expectation of a quick turn-around are getting killed. One condo complex in particular that I have my eye on. A number of 1BR units were sold in 2005 for 420-30K. There are units on sale in the condo right now for 330K. Rents top out at 1, 400 a month for a one-bedroom. But even at 330K, the units are highly overpriced for me. I will not buy unless or until the price drops back to the 190K range. If I paid more than that I would be "upside down. " There were two bank foreclosures in this facility, and NO buyers at the auction (meaning nobody offered to buy the units for the amount of mortgage on the unit). Which means that the bank owes them. The bank is going to take it in the ass on this deal. Hopefully several units in this place will end up as REOs, potentially. But not guaranteed. Driving the price down to my preferred level.
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02-27-07 02:06 #83
Posts: 1043Originally Posted by Hunt99
Breaking even maybe a great investment in places like Argentina but not USA.
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02-27-07 01:59 #82
Posts: 610Originally Posted by Saint
He doesn't post about how nice the people of BA are or how great the weather is or the food or the great clubs. What he posts is how much money he has (supposedly) made, how many properties he has, how much revenue his company has (supposedly) generated.
Money isn't everything? It's your GOD, Saint!
Boy, that is probably the most hypocritical post ever made onto this forum.
Amazing.
Stowe
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02-26-07 16:29 #81
Posts: 1543Originally Posted by Badboy13
Real estate is a predictable investment inasmuch as you can control the price you pay, have a reasonable expectation of the rental income you earn, and can know going in the tax and accounting benefits you can obtain. Floods, hurricanes, and fires are all insurable - again giving you predictable risks. Risks from wars and coups are controllable if you avoid real estate in localities at risk from these things.
No, you cannot predict what exact prices will be in ten years, but again you can forecast a net gain with reasonable assurance if you exercise due diligence by selecting properties in areas with population growth (i.e. avoid rural Kansas) effective governments (i.e. avoid Caracas) and positive social characteristics (i.e. avoid Baghdad) In addition, real estate tends to hold value in the face of inflation much better than any other investment.
Two factors are paramount - control the price you pay and select the property and locality with discernment. Secondarily, you must have excellent management available to run the property for you.
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02-26-07 15:57
Senior Member
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02-26-07 11:34 #80
Posts: 1543Originally Posted by Badboy13
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02-26-07 00:43 #79
Posts: 1657Originally Posted by Hunt99
Bad
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02-25-07 18:16 #78
Posts: 1543Originally Posted by Badboy13
How's that for proof of my success as an investment advisor, Badboy? Convincing enough? Send me a check and you can be the next millionaire I create.
Originally Posted by Badboy13
Originally Posted by Badboy13
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02-25-07 16:56 #77
Posts: 146Without going into the debate too much, I'll just post my experience of buying an apartment here in BA. The process itself was a little tricky, but if you speak Spanish fluently its not too bad. Consult with as many sources as you can, because there is a lot of conflicting information out there.
I decided to buy a place because:
1) I live here. I would have bought a place if I were living in the States, so to me its just the same thing, only now I live in Argentina. Its better to own than to rent.
2) Apartments are affordable. Instead of taking out a mortgage, I was able to buy the apartment outright, without using all of my savings.
3) The real estate market is still pretty good, so there is a potential for making a profit. There are associated risks, but thats the case anywhere you buy. Here they are a bit higher, but I think, exaggerated by some forum members.
4) Its cheaper to renovate here than in the States. I was able to do some major work on my apartment and make it pretty impressive for only about U$3500.
5) For a learning experience. I've never owned before, so it has been an educational process which I don't regret.
For me it has been a really great experience. I haven't sold the apartment yet, and if I do, I do worry a bit about the legal issues that might arise, but I'm not planning on selling the apartment so its not a big deal for me. I'm hoping to keep the place for many years, even after I can't live in it anymore.
I think trying to "flip" properties here is probably very difficult because there are a lot of people doing it, and being a foreigner puts you at a disadvantage. Plus, the market has cooled off a bit, so the potential gain is limited.
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02-25-07 16:50 #76
Posts: 1657It seems obvious that this guy Saint is doing rather well in the BA real estate business, either through consulting fees, rental income, property appreciation or all of the above. I don't think everyone who invests in BA can hope for the same results. The main point seems to be that you CAN make money in BA real estate and many people do. How much is a different subject, that all depends on many varying factors.
Real estate investment is risky no matter where you do it, some people are willing to take that risk. There is no point in bashing people for choosing to invest.
Bad
Exon, You are correct about long term leases and the more I look into it the more I am liking that option. I do not agree with you on many other things, even if the BA real estate market hits a slump, I am in no hurry to sell, like I said everything that comes up must come down, the trick is to know when to get out, or at least make a profit on a few sales while holding on to other long term investments. Again I appreciate the free advice and the warning.
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02-25-07 16:46 #75
Posts: 2808Hello
Originally Posted by Hunt99
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02-25-07 16:26 #74
Posts: 1543Irony Alert!
Originally Posted by SAINT!
I'm all for you making money, SAINT!. but please don't piss on my leg and try to tell me it's raining. Except for a couple of us here whose brains have been addled by syphillis, we're not stupid.
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02-25-07 16:24 #73
Posts: 1543Originally Posted by Daddy Rulz