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Supply and demand. Sorry to repeat myself.
Topic Started: 4 Aug 2013, 11:13 AM (17,690 Views)
Shadow
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Evil Mouzealot Specufestor

Sober
10 Aug 2013, 11:31 AM
I called you on your lazy assertion of "easy credit" for purchase of Detroit housing, challenging you to back it up.

You still haven't.
I backed it up with a link showing cheap and easy credit specifically available in Detroit. If that's not good enough for you... fine, I don't really care. You seem very reluctant to state your own position on this. Obviously because you know cheap and easy credit is available in Detroit, but you've painted yourself into a corner now and can't admit it. Pretty much the same way Wisebear painted himself into a corner and had to go to great lengths torturing the English language to pretend he doesn't agree with me, when really he does.
Edited by Shadow, 10 Aug 2013, 12:24 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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Sober
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Shadow
10 Aug 2013, 12:21 PM
I backed it up with a link showing cheap and easy credit specifically available in Detroit.
Please do explain how a listing of "available" interest rates equates to "easy credit".

Are nearly all potential buyers approved at those rates?

Is nearly any Detroit property considered suitable security?

Do entertain us in your further contortions to avoid answering such questions in any plausible way...

:pop:
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Mike
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Sober
10 Aug 2013, 12:44 PM
Please do explain how a listing of "available" interest rates equates to "easy credit".

Are nearly all potential buyers approved at those rates?

Is nearly any Detroit property considered suitable security?

Do entertain us in your further contortions to avoid answering such questions in any plausible way...

:pop:
You have just answered you're own question. Easy credit is available as banks are prepared to lend, otherwise they would not offer the rates for that location. Shadow cannot possible answer what each individual application of credit will be as each is different. The rates are advertised if people do not take up the loans and buy with the easy credit then that is due to there being little demand for that product regardless of the easy credit.

Shadow has proved the banks have easy credit available, the onus is now on you to prove why this easy credit is not being used to sustain a price boom in Detroit despite very low prices and easy credit from banks at historical lows.
http://mike-globaleconomy.blogspot.com.au/
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genX
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Mike
10 Aug 2013, 11:43 AM
My net assets have a present value of $3,120,356.00 based on the latest valuation. How many houses do I own, depends I can move money from one offset account to another and typically own another houses in 1 minute then flip money back and own the other again. It also depends on what properties I want to own, I have some properties worth $350,000 and my most expensive is over $2 million. My present LVR for the portfolio is about 60% excluding the residence I live in, which is where I always try to keep it. Any lower is not tax effective and any higher and banks won't lend me money for my larger developments. It is the sweet spot as I call it.
Present value? To be clear, by present value, do you mean current market value, or the sum of discounted cashflows from your portfolio from some foreseeable point in the future?
If the latter, do you mean discounted at the risk free rate or at inflation?
If the former, does that mean that if the market value of your portfolio dropped 40%, your nett assets would be zero?
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Mike
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genX
10 Aug 2013, 01:04 PM
Present value? To be clear, by present value, do you mean current market value, or the sum of discounted cashflows from your portfolio from some foreseeable point in the future?
If the latter, do you mean discounted at the risk free rate or at inflation?
If the former, does that mean that if the market value of your portfolio dropped 40%, your nett assets would be zero?
The value is the banks valuation, it is not present market value. So by 60% LVR I mean, I have lending to 60% of the lenders valuation of the portfolio. Some of those valuations done by banks are a few years old and current market prices are significantly higher. If I was to use current market prices as guide to LVR then I would be around 50% or under. The method though is pointless unless you sell and lock the price and materialise your gains or losses. So the lender valuation is the only one that matters.

In previous years when Perth property was down 10% no lender revalue any properties despite large price declines. Same thing in Melbourne for my properties, despite price falls over recent years of up to 10% no lender revalue properties. It was the same when prices in Melbourne increased by 56% in 2 years, the bank did not revalue the property unless I requested it. Banks do not care unless you stop making payments, then they take notice.

The only time I have had a bank call me regarding a loan is due to a Line of Credit. I have small lines of credit attached to each property to take care of yearly costs which I then clear at the end of each financial year. I use this method as It keeps all costs separate and you can easily see holding costs other then interest for all properties easily. Banks will some times call me if I have not taken funds out of the Line of Credit for 6-12 months, they say use some money or we will close the account. All I do is transfer it to an offset account for a month or two and bring it back again.

Does that answer your question?
Edited by Mike, 10 Aug 2013, 01:34 PM.
http://mike-globaleconomy.blogspot.com.au/
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Sober
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Mike
10 Aug 2013, 01:00 PM
You have just answered you're own question. Easy credit is available as banks are prepared to lend, otherwise they would not offer the rates for that location. Shadow cannot possible answer what each individual application of credit will be as each is different. The rates are advertised if people do not take up the loans and buy with the easy credit then that is due to there being little demand for that product regardless of the easy credit.

Shadow has proved the banks have easy credit available, the onus is now on you to prove why this easy credit is not being used to sustain a price boom in Detroit despite very low prices and easy credit from banks at historical lows.
So is "easy credit" available for Emerald, or Dysart, or Moranbah, or any other "mining bust" town, simply because some Google-mediated advert from one of the Big 4 shows a nationally-advertised rate there??? Do you think that the banks involved don't subsequently check on the state of the local economy, and the valuation trends for local property, and look for higher deposits before they approve a loan (i.e. the opposite of "easy credit")???

And do you really think that American banks treat basket-cases like Detroit any differently???

Shadow has proved nothing about "easy credit" with his interest-rate link for Detroit. And if you truly have $3M net worth in investment properties, you'd already know better.
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Veritas
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This thread has lost its way.

We are just splitting pubes at this stage.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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Shadow
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Evil Mouzealot Specufestor

Mike
10 Aug 2013, 01:00 PM
Shadow has proved the banks have easy credit available, the onus is now on you to prove why this easy credit is not being used to sustain a price boom in Detroit despite very low prices and easy credit from banks at historical lows.
Yep, and instead of just stating his own position, Sober is spinning himself around in circles and going to bizarre lengths to try and avoid having to admit that I'm right. It's quite entertaining.
Edited by Shadow, 10 Aug 2013, 01:51 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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Simon
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Sober, do you think there's any easy credit available in Detroit, yes or no???
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genX
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Mike
10 Aug 2013, 01:31 PM
The value is the banks valuation, it is not present market value. So by 60% LVR I mean, I have lending to 60% of the lenders valuation of the portfolio. Some of those valuations done by banks are a few years old and current market prices are significantly higher. If I was to use current market prices as guide to LVR then I would be around 50% or under. The method though is pointless unless you sell and lock the price and materialise your gains or losses. So the lender valuation is the only one that matters.

In previous years when Perth property was down 10% no lender revalue any properties despite large price declines. Same thing in Melbourne for my properties, despite price falls over recent years of up to 10% no lender revalue properties. It was the same when prices in Melbourne increased by 56% in 2 years, the bank did not revalue the property unless I requested it. Banks do not care unless you stop making payments, then they take notice.

The only time I have had a bank call me regarding a loan is due to a Line of Credit. I have small lines of credit attached to each property to take care of yearly costs which I then clear at the end of each financial year. I use this method as It keeps all costs separate and you can easily see holding costs other then interest for all properties easily. Banks will some times call me if I have not taken funds out of the Line of Credit for 6-12 months, they say use some money or we will close the account. All I do is transfer it to an offset account for a month or two and bring it back again.

Does that answer your question?
Yes, that answers my question. Sorry, I have a very specific definition of the term 'present value' so I wanted to clarify if you meant that or current market value. From your reply I see that it is neither, but thanks for going into such detail. If market value were to decline by 40% then your nett position would be ~640K, yes?

In your current position I would encourage you to double the size of your portfolio.

Shadow
10 Aug 2013, 01:49 PM
Yep, and instead of just stating his own position, Sober is spinning himself around in circles and going to bizarre lengths to try and avoid having to admit that I'm right. It's quite entertaining.
Nothing to admit, you are clearly wrong.
Edited by genX, 10 Aug 2013, 01:56 PM.
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