RE real estate lending and inflation, I have carried only one mortgage on a particular rental within the last 10 years and that was a 15-years package paid off in 3. The loan, something like 10% loan to value, was convenient at the time for a large renovation dictated by fire code. I do not like borrowings even as I understand the rationale of such for especially rental in a high-growth arena such as HK.
The corporatized ‘property club’
Message 24430602
<< i am expecting at the very extreme least a 2x capital value within 5 years, perhaps a 3-4x, and should the hk$ revalue up against us$, all the better. now our property club has 100% debt-free claim on a small building within a rejuvenating zone near the gold & silver exchange in CBD>>
... I cobbled together from resources of family and friends was formed in 2007 has also been debt-free from the get-go. The assets, a collection of industrial properties rented out to baking operations, printing shops, and warehouse operators, are all situated in the midst of various high-density / high-redevelopment potential areas. At the time of purchases, the locations were off of the subway grid, but now all linked into the network. The increase in value is north of 10X. We are now talking to unseemly enthusiastic bankers about prudently leveraging up in order to shop, and only to do so on specific new purchases, and not on portfolio basis.
The lending arena in HK is different from that of USA / Canada, in that the banks will only lend 30-50% against conservatively assessed transaction value, depending on whether for self-use or rental, and on type / location of property. Under such circumstances it is relatively more difficult to have a housing collapse lasting more than a few months.
We have tended to buy on crisis, and I know that holders have been getting less willing to panic sell by each successive financial / disease / political crisis. Right now, after all the street actions, and pandemic, and and and, there are no bargains. We are simply distributing the rental income and I use it to buy gold.
It is funny, that my German Swiss friends now living in Burma, parents of the coconut’s friend Paul, originally joined me at 15% of the company intending to eventually fund Paul’s eventual university education anywhere in the world where such might not be free. They were too conservative, because the same investment now funds both Paul and younger sister’s private school education in England and Switzerland respectively, stands by to fund their college tuitions should there be such, supports their worldwide private health insurance w/ life insurance and savings features, enable their eventual first electric cars and starter homes, and still have enough to grow as retirement eggs. The annual rental flow is ~25%-30% of their original contribution. I told them HK still has some upside, and we might leverage to buy something should bargains appear. I have their attention :0)
I watch HK like a basket of eggs Message 23531435 <<OTOH, I fear that Hong Kong will be destroyed by democracy, unless prevented from such awful dire fate by the Chinese Communist Party, or revived from such dire fate by the Beijing rulers>> circa 2007 - i tend to look ahead
I get excited on bad news Message 24153064 << (5) The bad news is beginning to hit money rock Hong Kong ... and I am getting excited >> circa 2007 - i prefer crisis environments
Not all inflation is bad inflation. We just need to get and work with the right inflation, that which inflates what we have, and keep getting, as opposed to those we need and keep paying for.
I am getting excited, and that may be a bad sign for normality.
When we organized the property club we were preparing for the future :0)
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