Real Estate, Run or buy?

Madpaddy · Expert Joined: Jun 25, 2004 Posts: 1983

I'm in the military here. I was infantry but qualified as acivil engineer in 1997. Was going to leave the army until I found out about peak oil. Now I'm glad I didn't. All the above points about teamwork, access to weapons and salary until the absolute collapse of society are true.

I am busy trying to buy some land in the country but its just too expensive. Selling my own house and sitting on the cash until the recession. Hoping to pick up something then. Not sure if this is a good plan or not. Any ideas folks?
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gg3 · Posted: Thu Sep 02, 2004 7:33 am Post subject:

Madpaddy, I'd be **very careful** about the "sell house, sit on cash until recession (drives down real estate costs)" scenario. Instead you might end up with the opposite: real estate prices keep going up, and then you're screwed.

If you're going to sell your house, I'd say it's best to buy land immediately rather than waiting.

If there was any way I could encourage you to emmigrate to the US and join our planning group, I'd do it in a flat second.

Felix · Guest

pea-jay · Posted: Thu Sep 02, 2004 11:58 pm Post subject:

Ireland sounds fine...unless that warm Atlantic shuts off (due to global warming melting Greenland) leaving you guys as cold as your eastern Canadian counterparts.

Yikes. Frigid weather AND a declining energy source. Not a winning combo
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Permanently_Baffled · Posted: Fri Sep 03, 2004 4:00 am Post subject: Re: Best Job

Madpaddy · Expert Joined: Jun 25, 2004 Posts: 1983

I think the worst thing is to do nothing. Renting is fine but I want to get a house where I can put in solar panels, wood stove etc.

We are definitely selling our house. It on www.globalvision.ie/61lissadell . Isn't is lovely. If we can't get anything for now we will rent for a while. To buy a site here and build tkes about 18 months from planning application to moving in. This seems too long a scale for me. I reckon a house on an acre that leaves me with enough money to put in solar, extra insulation etc. is the best plan. I cycle to work at the moment on my bike. If I move out further from the base, I will buy a Citroen AX diesel or other piece of s..t that does about 70mpg.

Carpe diem folks.
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Madpaddy · Expert Joined: Jun 25, 2004 Posts: 1983

Actually Felix, pre 1845-1849 population of Ireland was approx. 8 million. Current is 4.5million approx. It could be argued that the dependence on the easily grown potato led to overshoot (Peak Potato hahaha). The potatoes got blight and rotted in the fields. Other food that was grown was taken by the landlords as rental payment on the land. It was greedy individuals (landlords) as opposed to the British government that really led to the problem becoming as bad as it did. Population dropped to less than 3 million. (1.5-2 million died and the rest emigrated and became policemen in Chicago and firemen in New York)
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mikela · Posted: Fri Sep 03, 2004 1:45 pm Post subject:

Timing a house sale for inflation, or selling now and putting your money in inflation-resistant assests like precious metals so you can buy land later, seems like a reasonably good bet, but I think you might do better by buying sooner. I'm not sure what would be a better place to put your money than gold & silver, as stocks & bonds are mostly still tied to your country's currency, which could devalue compared to other currencies (especially worrisome for Americans like me.) Unless your government steps in to prevent it, foreign nationals could start buying up the choice land at the lower prices.

The way I'm hedging my bets is to keep some stocks (esp. energy-related), keep buying gold, and buy land soon instead of waiting, which I can afford if I look in remote enough areas. There is only a limited amount of choice homesteading land available for cheap, and it will no longer be cheap if people start starving in the cities. The remaining rich will quickly buy up all the orchard/ranches with year-round streams, and you'll be stuck fighting for smaller parcels of rocky ground without good water sources.

Right now you have first pick of land, but once the realization of Peak Oil hits the masses--the time you might have thought to buy land--the value of choice land will have increased and possibly balance out whatever gains you might have made by inflation-proofing your equity and waiting.

twxabfn · Coal Joined: Aug 18, 2004 Posts: 15

Confused · Guest

Madpaddy, I'm in a similar situation and like you, I really wished I knew how much time there was? If I knew an appox. time frame, I could plan with some sense of relief.

My story:

I own a house in the suburbs of Canberra (capital city) Australia and 150k AUD liquidity, some shares too and a business. I was planning, prior becoming aware of oil peak, to buy a 2nd property (city, be it Canberra or else where). That idea has been axed and I'm in a limbo on what to do? At this time, I have no debts. My loans (and there were a few) have been paid off. I can say without a shadow of doubt that Canberra is unsustainable without cheap oil.

Here's the problem. In order to buy a rural property ASAP would mean sell the house and move (no debts as a result but obviously loss of money in the upheaval). But what would I do there as an income? Bills never cease *sigh*. The other thing, by being MORE remote you're up for MORE petrol = MORE money and fuel prices are on the rise and they'll never come down in the long haul. All things weighed, it will only balance out deep into the recession when near everyone is in the same boat of unemployment/bankruptcy, not before.

Or the saner financial plan is a bridging loan to buy the rural property and from there service the debt. I wouldn't have to move from my 'turf of earn', so I'd still be earning without the chase of new business interstate. I'm a horticulturalist -- there's a bunch of equipment to move and to boot the business reestablishment *ack*.

Now a bridging loan would be sane under normal circumstances, but these are not normal circumstances on what is the eve of a recession crisis that's coming. I'd hate to be caught in such a debt because I'd lose everything. My income is wholly reliant on the health of the economy (like almost anyone else).

Now the price of rural property with house and fitted in alternative power, including permanent water, glasshouses for propagation, orchards and grazing paddocks, barn, sheds, adjacent forests, lakes, rivers and sea fish, ect is approx. 500k AUD, based on a heap of stuff I've looked at. Obviously the more costly rural properties are closer to large populations, clearly where one shouldn't be for a myriad of reasons. Clearly, to buy what I'm taking about, is quite some distance from Canberra *understatement*.

Now if I had 2 more years it would be a whole lot easier as there'd be some buffer coin in the equation. I'd prefer a calm ordered retreat than some mad dash. To do it correctly requires time, money and planning and ideally one can't abandon the "today world" for tomorrow, because the "today world" makes all future plans possible. In addition, you can't just rush out and grab any rural property, there's a whole heap of site assessment. You can't afford mistakes, because like most people, you only have one financial shot at this and one only -- in what is a race on the clock.

So how much time is there in your opinion/s folks?

Guest · Posted: Sun Sep 05, 2004 9:57 pm Post subject: Re: Best Job

[quote="twxabfnI mean, let's say you have no debt, are renting, and have $100K sitting in the bank. If you lose your job, the bank collapses, and you lose your savings, aren't you just as far up the creek as if you had a couple thou in the bank and 20 years left on your mortgage? As far as I can tell, you're out on the street either way with nothing to show for all your investing.

-twxabfn[/quote]

G'day mate. The problem I see is that if you're still owing on a 20yr mortgage, you'll be beholden to someone, usually a bank (renowned for their sense of compassion and humanity). You can declare bankruptcy, which might help, but this will also depend on the bankruptcy laws in your country and whether the banking industry, desperately trying to stay afloat amidst all these mortgagees going broke, pressures the government to change the laws. Or they might just onsell the debt to a collection agency. Why not, it's just another financial 'asset' to them. Provided you haven't, or can't declare bankruptcy, then you will still owe more than you can possibly pay. Like being a tenant farmer. If I've sold my house, invested with a modicum of intelligence (and pre-knowledge of peak oil will help you make a packet), then come the crash, I can buy what I want from those who chose to ignore what was coming. In a crisis, cash is king.

I don't claim to be a financial expert, but as it makes sense to me to be debt-free in an economic crisis. I don't think that law and order will break down in New Zealand (though it might be strained), so when and if I do lose my job, and I'm still owing six figures on the mortgage, and the house is now worth less than the mortgage (as deflation kicks in, or house prices don't keep up with inflated mortgage rates), then I'm in the crap; I can't just 'shoot my way out', or not worry about a paper debt in a Mad Max world. The courts will still be there to sue me and the police will still be there to enforce the verdict. My wife thinks that so many people here in NZ will be in this situation that the government will have to do something to assist them. I don't think that the govt will have the capacity, or even the will; too many people wanting a bail out, not enough money, and some powerful organisations happy to keep people trapped in debt.

Madpaddy has a point, that buying a house now will allow him to upgrade his house with solar panels etc. But renting and remaining debt-free can give more freedom of action. And while money spent on rent is a waste, so is money spent on interest payments and council rates (property tax in the US I think). For me, here in NZ, interest and rates are about 60-70% of what I'd be paying in rent, so the difference is not all that much.

There are no right answers to what we should do, at least not looking ahead (hindsight will no doubt be perfect). I'm making my plan up as I go along........

Good luck with your plan.