Your book was very insight full and eye opening. Thank you very much for sharing your experiences and hard earned knowledge. I fear America is heading down the same road and a similar, if not worse outcome.
I do have a question for you. Is it better to rent or have a mortgage to own your home with the possibility of a collapses looming? Additionally what happened to the ability to get a mortgage after the collapse? How long did it take for normal financing to return or has it?
My situation is that I live in South Florida and real estate prices are really low. We are currently renting and looking to buy. We interested in a 1 acre, 3br 2 bath property in a semi-rural area. The price of 125,000 is low and the payments for the mortgage, taxes, & insurance are about the same as renting.
I tried not to bog you down with too many details as your time is valuable. If you have any questions for me please let me know. I’m very interested in your thoughts and experience.
Hi James, Thanks for your email, I’m glad you liked my book.
About mortgages, there weren’t much available before the crisis. The lack of trust in the country was already there and part of the existing problem, so you just didn’t find any reasonable house loans. The joke in Argentina was and still is, only those that don’t need a loan can get one. Meaning, only people with enough capital and properties so as to pretty much guarantee zero risk get loans worth anything. If that’s not you then the loan you got was small and with a terrible interest rate.
Only in the last couple years did some home mortgages start being offered again, mostly from the state owned banks. These are promoted by the president in public appearances with all the bells as whistles but when you look at them they are small with terrible interest rates, and the ones that are better (or sometimes when they give houses away for free with our tax money) it ends up spread among those in power. I remember one case where houses where being given away to the “poor”, the Mayor’s sister, his nephew, his brother, the guy had like 5 family members given a house to each. When the reporters went to investigate with the cameras they found out these houses (meant for the “poor”) where in fact being rented to the poor, but owned by the politicians friends and family. The Mayor’s explanation? “I come from a poor family myself!”
Regarding your question about renting or getting into a mortgage, it will really depend on your situation and the deal you come by.
If you happen to be very certain of the place you want to live in, and the house is priced right, why not buy? Worse thing that could happen is that the currency devaluates and you pay on dollars that are worth less each passing month. Don’t be surprised if that happens and an “adjustment” is made to save the banksters. In any case it may not be as bad, and even if that happens you’ll just be making a bit less of a deal in the purchase.
Another question you should ask yourself: If inflation goes up 30% in the next couple years, can I still make the payments each month? That’s how people lost their homes here. They were doing fine until everything started going up in price and before they knew they had 50% or 100% inflation to be dealt with, but with the same income.
What you want to avoid during times like these is buying thinking of selling in a year or two if you don’t like the place, or if you already decided to leave in a few years. With the way things are now, it’s too much of a gamble and you’re better off renting. If you nail a two year contract and the contract itself lacks an inflation adjustment note, then you’d be living cheap for as long as the allocation contract lasts. In Argentina even though supposedly not legal most rent contracts have such readjustment.
Keep in mind that while renting, the problems of the property you live in are not yours and that brings peace of mind. So you don’t own the place, but then again that means you don’t have to worry either if the house´s plumbing has to be redone right in the middle of recession when hardly a buck is coming in. Renting does have its advantages.
Of course in your place you can make long term plans, invest in it, grow a garden, plant trees, make safety upgrades. If renting it may be worth the time asking if your landlord is interested in making his place more secure. Maybe splitting costs, or have him pay for some of it would still allow you to make such improvements cheaply, things like better locks, window security films, etc.
Sounds like you have a good house in mind. If you’re sure about not moving and going into the selling market any time soon just go for it. The price sure does sound right.
One thing you may want to keep in mind is one of the previous posts about not living in a place that is too isolated. Not only because of crime, but the general lack of help being accessed within a reasonable amount of time is something to be avoided.
“If I live a gas tank away from anyone I’m much safer than in any town!” Yes, you’re also dead if you need immediate medical attention of any kind, reducing your life expectancy considerably and yet nothing guarantees that criminals won’t show up if the word of your nice setup gets around.
Keep some of these things in mind, but go for it if you are sure.