X-Message-Number: 20664
From: "John de Rivaz" <>
References: <>
Subject: Re: CryoNet #20654 - #20661
Date: Fri, 20 Dec 2002 17:45:41 -0000

----- Original Message -----
> Message #20657
> From: 
>  Assume you buy a flat and rent
> it. you get what you think is a fair return on investment. If there was a
> crash similar to the stock market, your capital would go down by 3/4. Your
> rent return on capital would have a interest rate x4. Anybody with a dime
> would invest here and nobody would sell. So that price is not realistic.
Such
> a burst is impossible.  A real estate burst is limited to something as 10-
15
> percent loss. Something you can evaporate on the stock market in less than
a
> week.

All I can say is, is that that doesn't tie in with my experiences in the UK.
In bad times, you can buy a tenanted property on a 3 or 4 years rental
basis, in good times such as the present it is ten or even maybe twenty
years. ("year rental basis" is to say the rental return over X years = your
purchase price) The trouble is, that in bad times money is tight elsewhere
(ie borrowing is expensive) and you don't have it with which to buy
properties at the bargain prices that yield 25% gross return. Which is
exactly why interest rates are then high and rental return is even higher.
Although  rental it is still higher than loan interest, you can't easily
borrow money, and you can be caught with your pants down if your property
bought on borrowed money suddenly needs major maintenance.

I would agree that property markets are less volatile, that is simply
because it is a long and expensive and uncertain process to buy and sell.
There is not a straight forward register of prices as with stock
quotations - each deal has its unique characteristics. If it took months of
uncertainties to complete a transaction of stocks, then stock markets would
be less volatile. You are not comparing like with like.

--
Sincerely, John de Rivaz:  http://John.deRivaz.com for websites including
Cryonics Europe, Longevity Report, The Venturists, Porthtowan, Alec Harley
Reeves - inventor, Arthur Bowker - potter, Holistics, de Rivaz genealogy,
Nomad .. and more

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