I posted this in another post, but didn;t want it to get “lost” amongst the posts. I’m interested in people’s [perspectives on this :o)) I’ve also reposted a couple of responses to it so far. All other responses will be most eagerly read by moi!
kay henry
Why buy “firesale” places and profit from OPM? (other people’s misery).
Property investors can always find places at reasonable prices. I for one, will not be waiting until the “carnage” or “bloodletting” or whatever.
Yeah, yeah, i know… buying from someone who’s foreclosed is just “helping them out” right? Well, it is if you pay fair price for it. Bill put up his “selling for top dollar” and everyone wanted a piece of it. Well, we can sell at a fair price and *buy* at a fair price. Bill, btw, I enjoyed that post, but I am just trying to say- what’s good for the goose is good for the gander. It was no personal criticism about your post :o))
And i know the “it’s just business and if it’s legal, I’ll do it” stuff. For me, the business of buying houses is much more than that. If prices increase naturally, well, lucky me… if they then decrease, well, time to keep the property!
Firesale mentality is mean. If we question the ethics of some methods of RE, then why not question others?
Waddya think Bill (and others)? I’m interested in people’s perspectives- how far do out ethics go?
kay henry
PS hope what I’ve said here is clear- if not, i’m happy to clarify
Posted – 26/11/2003 : 08:26:42 AM
HousesOnly
MemberAustralia
86 PostsProfile
Reply
kayIf someone is stupid enough to pay $400K for a place that is only worth $300K then why should a fair price not be $300K? These idiots must pay for their greed!
I personally am prepared to buy whatever is good value and do not consider other peoples misery at all. One must remove all emotion from the deal! You may want to call me a capitalist pig for this but I tend to believe it is just good business. I dont believe in doing bad business just because someone else is suffering because of their greed!
Posted – 26/11/2003 : 11:24:52 AM
brownwombat
MemberAustralia
26 PostsProfile
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Have a look at the http://www.news.com.au/common/story_page/0,4057,7982823%255E421,00.html. I can only hope that just desserts are forthcoming. Is this a similar scenario to Skase ? Taking bets now on – Which country will he end up in ?Posted – 26/11/2003 : 11:33:08 AM
kkowalsk
MemberAustralia
22 PostsProfile
Reply
I definitely agree, HousesOnly.Whether you buy a house as your investment vehicle, or shares, the price is governed by what people are willing to pay.
If you make the mistake of hanging onto shares too long and they dip, you either wait it out (if they dip so low there’s no point selling or theres reason to think they’ll recover), or cut your losses. Why should RE be any different???
All investments carry risk, that is why there is potential reward. If a buyer was silly enough to buy without weighing up the risks, and locked themsekves into a loan they couldnt deal with when rates went up, and they had to sell, that’s THEIR problem. They should have done their homework – just like all *serious* investors already do.
As a result of all the investors piling into the market, seeing so-called easy money, we’ve seen supply dwindle, prices sky-rocket, and sadly first-home buyers are the ones that really suffer.
No offence to anyone, but I hope a lot of such investors get burned, because they jacked up the prices when they had no business getting into the market in the first place.
Posted – 26/11/2003 : 12:30:57 PM
G’day Kay…
I will respond in detail late tonight or Friday.
Have not had time as yet.Cheers
Bill
Bill O’Mara
Real Estate,Mortgages, Option Writing & Forex. [email protected]Fair value of property is something I ‘ve had a little bit to do with in the past couple of years.
Last year I bought a house for less than the owner paid for it only 12 months before, which was less than the previous owners had paid 7 years before that.
The person I purchased from came from out of town and paid above what I believed the place was worth, which is why I didn’t purchase it then. He was forced to sell due to a marriage break down.
The people he bought it from had bought at the peak of the previous cycle, and had committed themselves to upgrading. They got the best price they could.
Now only 16 months latter the house has increased in value 50%, putting it well above all previous purchase prices.
I do not feel guilty at all. I believe both previous owners purchased at above current value. That was their choice.
I purchased at the low end, but it really was the absolute maximum of what I could afford, and at what I considered to be a reasonable price anyway.
I certainly didn’t predict that prices would jump 50% in a year.
I am now selling my previous home. I have received a price that is at what I consider to currently be fair market value, but definately well below maximum possible price. Market value may drop in the next couple of years, but I have no doubt that the purchaser will never have to sell at a loss, unless their circumsatnces create a need for a “fire” sale.
I am more than happy.
Yes, there are some people that will probably be better off financially than me in the long term, but I will have no doubts about how I acheived anything, and will certainly not feel guilty that I may have taken advantage of some one elses misfortune, or inexperience.
If you are concerned about buying houses at “firesale” prices, offer what you consider to be fair value. It doesn’t have to be full value, but neither does it need to be so low that you feel the seller is being taken advantage of.
I beleive in karma – what goes around, comes around. I may be a bit naive, but I think deal fairly with others, and you will get a feel for when others are dealing fairly with you.
Some people may think that my above reasoning is a little bit contradictory, but I certainly do not. I do not believe that I have taken advantage of any one. The poeple that were taken advantage of were the previous buyers of my current house, when they originally purchased.
If it doesn’t feel right, don’t do it.
Dino
“If you don’t know where you are going, every road will take you there.”
If you were to buy a used car wouldn’t you like to pay as little as possible?
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
As Terry said, wouldn’t you like to buy a car at the cheapest price ?? Investment properties should be bought with the head, not the heart.
If you are willing to pass up a bargain because you feel it’s not fair on the vendor i hope there are more people like you out there !!I personally don’t really want to see anyone suffer as such, (hell, imagine if it was one of your own family members being forced into a fire sale) but someone is always going to benefit from someone elses misfortune. The way to look at is s that if you don’t buy the bargain, someone else will – easy to convince the head, perhaps not so easy to convince the heart… [
]Cheers,
Paul…“I want to be rich, and stupidly happy – so far i’ve only managed to achieve the stupid part…”
hi kay
thats a great post, challenging and thought provoking. i like to think i’m a generous person, giving both in money and time to others. But when it comes to buying property i’m very ruthless and pride myself that i can pick up a bargain, infact i used this quote, as my yardstick for investing, “the profit is made when you buy not when you sell” R. Kiyosaki
your post gives me something to contemplate am i being consistant in the way i do things.
let you know how i resolve it later.
regards westanI’ve been away for a few days, in sunny queensland, and at the Conference I am attending, there are kangaroos all over the place- god, it’s beautiful here (university of southern queensland, at maroochydore, if anyone is interested in getting out of the city and watching roos lay around).
Thanks for your responses all :o))
kay henry
Kay,
I went to an auction recently where the house did not attract one bid, but the vendors were happy to accept their reserve. Had I not had L/C tied up in buying something else I would have offered their reserve price, but also would have been prepared to come up a bit. I’m always after a bargain, but most places purchased this year have been at the advertised price. We purchased this current unit for $16000 less than advertised and did feel a bit mean but it is in real bad condition internally.
But then, property investment isn’t just a hobby for me, it is something where I have done a huge amount of research and reading, few low cost seminars, internet research, setting goals, putting into place my strategies and so I am certainly after the best price at which I can buy.
It is securing our future.Sounds like your studying welfare or something like that? At home every day I watch the wallabies, echnidas, the odd koala, leave out the wild birdseed, that’s rural living – how lucky can you get.
Anna
THis is such a hard topic to dicuss (well for me it is) as I can see two strong contrasts:
No I definitely do not want to take advantage of vendors in a bad financial situation:Love[:X]
Yes I want to pay as little as I can for an IP: greed.[}]This is a very personal topic, What seems OK to one person may feel terrible to another. Although there must be a line somewhere in the middle that I haven’t discovered yet.
I have asked myself, How can I buy a property for as little as possible without ‘ripping’ someone off? Gee kay Henry why do you make us think so hard? It hurts.[:0)]
I haven’t found an answer, but, for me, I think to balance these two contrasts a bit, I would have to really negotiate with myself.
Yes I will feel bad if I cause someone financial misery by paying a very low price. But as Fatboy says, if I don’t buy it someone else will.
I may, like Fatboy, still take the deal. However, I think I would still feel quite bad.I would however try to make the way out as comfy as possible for the vendor, e.g. give them what they want, long or short settlement, maybe help paying for their moving out, let them rent back the place and be the most wonderful landlord[
] under the sun, or let them take what they want (as long as they leave the walls)There must be more or better things you could think of to do for them.
The question is, doing heaps of good things for these loosing-out vendors seem very lovely and charitable, but is it still done out of selfishness, to make MYSELF feel better about the situation? Maybe a combination.
I do know, being charitable makes me feel good, but then again, first causing misery and THEN being the good Samaritan HHMMMMMM Is it like kicking the @#*$ out of someone and then nursing him?
Although, it’s not the buyer who actually causes the misery, I’m not sure if I’d feel like I was guilty.It is a hard question, Kay, and I just am not sure what I would do.
I need more experience, have only 1 IP so far and I think afterwards, that we paid a little too much for it.[] (But I can sleep![])
I’d love to be in the position one day (soon) to find out what my feelings really are.I also agree with Dinoweb, for me, paying fair value might be the best solution. But then again… I might probably still grab a really good deal. Otherwise Fatboy will grab it! OOOH I dunno people!
As I said, I’d have to experience it to really know how it feels.This is a very interesting topic, Kay Henry! Love to find out what other people have to say about this topic.
Regards Cecilia
Fatboy,
Kay would have seen your post, I edited it after her next post appeared, and yes, you’re right, I overlooked the one that made no sense, so it’s gone too.
Cheers
rThanks Richmond… [
]Celivia: You sound like a person with wonderful integrity and a great nature… So, where’s these bargains you feel guilty about taking ?? [
]Just kidding by the way, i don’t want to take advantage of anyone !! [
]Cheers,
Paul…“I want to be rich, and stupidly happy – so far i’ve only managed to achieve the stupid part…”
“the profit is made when you buy not when you sell” R. KiyosakiHi guys, i also agree with the pride of purchasin a property at a bargain price. When it does come to investing, i dont play with my emotions, i think hard and try to squeeze every dollar out of the vendor.
Another saying that i live by is
“A dollar saved is a Dollar earnt”
You guys might think that its unfair or how can people be like this.
But what seperates a good investor is that they dont let there emotions get involved and they understand the power of money.
Understand money, on how it works, motivates people and changes there way of thinking. Puts you into control.
There have been many prperties that i have squeezed people out every penny i could and i know that they werent happy but they had no choice and yet, i still can go to bed at night and not be worried or even care.
Its the power of money that puts you in control…
cheers
s.i.sSave on a regular basis
“People forget that by saving just $3 per day and investing it sensibly over a working life, you’ll end up with around $1 million.”
annaw2, you said:
“Sounds like your studying welfare or something like that? At home every day I watch the wallabies, echnidas, the odd koala, leave out the wild birdseed, that’s rural living – how lucky can you get.”
No Ma’am, not studying welfare. It’s just that, over 37 years of life, I’ve developed some perspectives, and it’s fun to think about stuff
)In fact, I work at a University and give about 3 conference papers on research I’ve undertaken throughout the year, so I get to go to some lovely locations.
Where you live sounds fantastic, anna! Lucky you! And the people up here in qld are so *naturally* friendly and unpretentious, I swear I’m thinking of moving here!!
kay henry
*pats poor Celivia and promises not to make her think
)
There have been many prperties that i have squeezed people out every penny i could and i know that they werent happy but they had no choice and yet, i still can go to bed at night and not be worried or even care.If I agreed with that, I’d think you were a real b#$%@rd, but the fact is they do have a choice. They can say ‘no thankyou’ and see what their creditors/gang members say to them next week when they can’t make a repayment.
Thank you for this very interesting topic.
Everybody has their own beliefs, and their own idea of what integrity means. There is no right or wrong.
As far as I’m concerned, I like to think that you don’t have to take advantage of others to create wealth. After being ripped off in a few deceiptful deals, I find hard to hang on to that belief. However, so far I choose to hang on to it.
I guess the difficulty is to find a strategy that fits your core belief.
My few cents worth,
Herve.
]
] under the sun, or let them take what they want (as long as they leave the walls)There must be more or better things you could think of to do for them.
] (But I can sleep
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