Thread: BA apartments - how are prices kept so high?
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11-07-08 09:53 #5
Posts: 366Originally Posted by Sham Bo
The secret is of course the black economy a thick skin, and a disregard for normal western business ethics. And no enforcible law. Money talks very, very loudly here. And as Warren Buffet has proved, the power of compound returns with few outgoings is a very powerful tool.
Argento
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11-07-08 00:04 #4
Posts: 39Muchas gracias, Argento! Very informative, if depressing.
Originally Posted by Argento
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11-06-08 19:51 #3
Posts: 2808Another reason for high prices
A lot of the owners don't pay their taxes, sometimes for years and years. In order to transfer title to the property those taxes have to be brought up to date. In true Argentine fashion, they didn't pay them and expect the buyer to do so.
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11-06-08 18:59 #2
Posts: 366It's a question of what other options they perceive.
Originally Posted by Sham Bo
Since a lot of the more successful business people here have hundreds and some thousands of rental properties, when the economy is good, they sweat their tenants so badly they eventually go broke or leave. But that's when the landlords make money. Rarely trade and even rarer maintain them. Just accumulate. I have one aquaintance whose monthly taxes and charges are in excess of U$100,000. I don't know how many properties he has but it is a shitload. Not buying at the moment though. Other investments? Nil! They look at the return on cost price not current capital worth. And they have powerful businesses supplying the cashflow without being taxed on the primary income, a situation not possible in the 1st world economies. And they buy when the economy and prices of property collapse. The great advantage of a corrupt and black economy to those who have the means.
Not sophisticated but works very well for them.
Argento
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11-06-08 15:11 #1
Posts: 39BA apartments - how are prices kept so high?
Here I make my grovelling apology for starting a new thread. I did a search but didn't find anything that was specific to this matter, so if I have accidentally resposted something, don't kill my dog, please!
I saw an interesting report somewhere claiming that the Argentine gov't and the banks were and are conspiring to keep real estate prices artificially high.
Now, I'm no genius when it comes to this, but real estate is supposed to reflect a certain multiple of monthly rents, historically 100 to 120.
Elsewhere BundaLover said that a 2 or 3 bed apartment can be had for US$500 of BA. More for the really desirable areas, I suppose, but you could probably get one for less.
Assuming that's true, how come so many places, in boring or downright dangerous areas of BA, like the southern barrios, are asking for such high multiples? Like US$90,000 for a 2 bed walk-up in Boca that I looked at last year (just for ha-has, I asked him if heŽd accept and offer of 80K and the guy refused).
As Argentine (real, not official) inflation is still rising much faster than income, surely prices should be falling, not rising. Is the market being tampered with?
How can BA apartment landlords manage to keep solvent when the monthly return is so low compared to what they paid for it? Or am I misinformed?