Yeah, the banks certainly don't want all that RE for that very reason. It's why an RE crash is not something they welcome, but in fact a complete disaster for them.
There is no trouble trading Realestate for other goods. It is all upto an agreement between the buyer and seller. It's best to have a good solicitor to handle the transaction due to the different duty/taxes involved. I have seen deals that have involved Aston Martins + art for a property. At the moment I am helping with a deal trading one property for another. If you and the seller can agree that your PM is worth the same as the property then that is a fair trade. It's all in the negotiating. One difficulty for the agent is determining the commission due! Perhaps I'll start asking for payment in silver
A coupe of months ago while in my local CBA banking branch I thought Id ask the teller about gold (just for interest). I asked if I would be able to use gold bullion to payout a home loan or as an asset to acquire a home loan? The poor teller looked at me confused and I had to repeat the question 2-3 times before she understood what I was asking. She then stated that no-one had ever asked her about gold before and she would need to speak with the branch manager to get an answer. About 5 minutes later she returned and advised that the bank would not accept gold, 'they only recognise REAL assets like cash or property', however if I was to sell the gold on ebay first, I could then use the money to acquire or payout a loan. I just thought it was interesting to see what they would say.
i have actually done a deal involving a car. after making an offer on a property & talking with the owner he mentioned he was going to buy a car similar to mine so i suggested we could do a deal if he wanted after a few quick discussions on price & talking to the agent who had sold a few properties for me we came to a deal that sold the house for 32K less on paper & the agent got a little cash for a nice night out & a couple of bottles of dimple [scotch ] for those who dont know it for accepting the lower commission everybody was happy
That's cos they cant create more of it out of thin air as they can with fiat in the pyramid scheme they call fractional reserve banking!
Respectfully I disagree ..... Released today: Over the month of January, M3 rose by 0.9 per cent and broad money increased by 0.7 per cent. Over the year to January, broad money grew by 8.4 per cent. src: http://www.rba.gov.au/statistics/frequency/fin-agg/2011/fin-agg-0111.html
A friend, who is a WBC banker, still looks at me strangely if I go on about gold/silver...certainly not on his radar. But then again, when the gold/silver/state of the economy has been casually mentioned to other people, I usually get the same respose (i.e., what planet is she from...?). At which point will using gold or silver to pay for an asset be possible?
i was once a wbc teller....also worked for colonial first state and several places in between and bankers do not like gold....pays no interest, its shiney and yellow..ect.....i think the main thing is thats banks make profits by selling debt.fund managers make profit by commissions, fees and to keep the whole jig going...they dont want you to take money out of managed funds as this will have affect on share prices....if they cant convince you to buy shares they will push you into bonds/money market....why???as they get interest on the debt sold plus commissions on what they sold and monthly performance fees, trailing commissions... i believe the best way is to take the fiat that you laboured for out of the system and to save in metals. metals are still undervalued and realestate still over valued....so save in one and when you see the balance changing exchange for the other..i plan to swap my metal for land in several years..research what region is best for your circumstances...there are loads of land owners with 1000 plus acres....will not that be that hard to come to a deal. I already have found the region i want and plan to make an offer when time is right....just have to finish of re-training in surveying so can do some of the work myself...get my barrister sister or one of my friends who are lawyers to do the contract and run it by my brother in the tax department to see what the tax man thinks/
I'm not so sure of this plan. I think it could be quite possible with residential property at some stage but I doubt that rural land will come down enough for it to work. In fact I don't think farmland will come down at all despite it experiencing similar growth to residential. A shortage of food is going to be the difference. Yields on rural grazing property have doubled already in the last 12 months or so and will only get better in my opinion. Land prices are high, but unlike residential property, farmland now has the returns to support the current prices. C
the land i want is bushland, not cleared....my plan is to only clear small plots for food...the plots i will spend my energy on rehabilitating to become rich....all is needed is time,... you are right contrarian with highlighting that rural land for farming will continue to command a premium... though think of how much debt some farmers have with pricey equipment or even city people with hobby farms/land that will come under financial burden with higher interest rates.
Hobo - unfortunately we are still directly affected by the moneyprinting going on at the Fed - simply because we accept US dollars... Our central bank will print just as many Australian dollars out of thin air as we receive in US dollars (based on an exchange rate of 1:1) ... so in actual fact the US exports it's inflation to every other country in the world which accepts its monopoly money. Inflation is the main export product of the US in the 21st century
I think you're probably right. The true farmers will be making the best money they've ever made, some are already. But there is a hell of a lot of "lifestyle" type properties that are way overvalued with nothing to support them. Also plenty of people from the city who bought farms to retire on down the track. Most of these aren't producing an income or at least aren't running them to their full potential so the cost of holding them could become prohibitive. Lifestyle bush blocks have already come off quite a bit in my area. C
According to ABARES, the proportion of Australian farms with a negative farm business profit hit a peak in 2004-05 of 61 per cent. Of those making a profit, many in the farm sector have incomes equivalent to welfare. In short, many Australian dairy farmers are losing money and many others are making the equivalent of the dole and we are expecting people to work under these conditions and provide us with a staple food that is the best in the world. The only way many dairy farmers can afford to keep farming is to simply go further into debt or eat into their capital, or both. According to ABARES, in the six years prior to 2008 average farm debt increased from $237,000 to $494,000. At the same time, incomes for dairy farmers have stagnated, averaging over the same period a two per cent return on investment. Who is going to invest for a two per cent return and do the work that is required? Yet we expect them to; we demand that they do. http://www.aph.gov.au/hansard/reps/dailys/dr230211.pdf When that debt goes 'kaboom' the only way farm prices will not collapse is if foreigners come in and buy them up (which is quite easy for them under current laws). BTW - off the top of my head the rate of increase in debt is faster than M0/M3 in that time.
You're looking at the past, I'm looking to the future. Yes things have been hard for farmers, in particular dairy farmers, but these things run in cycles and a lot of rural industry has turned the corner and is set for much better times. I am a farmer and for the many of the last 10 years my property was paying dole payments. Over the same period the value of the land has more than doubled making prices seem unsustainable at the returns that we were getting. Now, with commodity prices the way thay are, my farm has never been more profitable and we've held it for 4 generations. The simple laws of supply and demand indicate that this situation should continue. We've also been in drought for 10 years. The laws of probability suggest that the next 10 should be better. I'm a commodity trader as well as a farmer and everything that I am seeing suggests that are lot of farmers are heading into a golden era. I guess I'm a bit more optimistic than the average farmer. C
I doubt that banks will accept Gold as collateral anytime soon. Even though in theory Gold IS more liquid and maintain its value better than RE. Keep in mind when it comes to collateral, banks want security. At least with RE banks can hold on to the property certificate for the duration of the collateral besides RE is NOT going anywhere, it's not that the owner can move or relocate the property. Gold on the other hand however, make a "bad" collateral because it can be easily relocated and there is no certificate where the bank can hold on to (even if there is, what stopping the owner to sell their "collateral" gold, you don't need certificate to sell gold)... even if the bank decided to take possession of the metal and keep it in the vault for the duration of the loan, storage and security will become a new problem. The bank will then have to provide a proper storage, maintenance and security for the bullions... extra expenses and extra headaches.
I have two grazing properties in north western NSW. Mainly sheep producing wool, mutton and lamb. All at record highs at the moment and one of the best seasons we've had for a long, long , time. Who knows what the weather will do but I'm confident the grazing industries will be robust for some time to come. C
