I'm in a similar situation and decided not to buy a place yet, at least not in the neighborhoods I like. I can give a pretty big down payment and all banks offer me loans to buy almost anything I want, but price-to-rent ratios are way too skewed against purchase. The only folks that I know of that have entered that market and that are happy about it made down payments of nearly 70%-80% of the property value using money they inherited (maybe there was a better use for that money?). The other ones that are happy are those who bought 7-8 years ago, of course, before prices went up.PXYC wrote: ↑Mon Apr 01, 2019 2:31 pmOh hey, really appreciate all your feedback, and "remates" is off-limits for me then!
I'm not in a rush to buy, I'm just interested, I really think that Chile will repeat the history that I already lived back in Europe, I'm just trying to learn the grey areas specific to Chile.
So far families trying to sell their parents appartments to subsidize medically assisted retirement were the only deals I tried to bid in Providencia, these kind of businesses usually comes with 30% dicount price but they obviously prefer "diñero contado" and I still need 40% of a loan so I was never able to make a deal. Also, its not easy to find so many opportunities like this - which is a good sign for the old folks I guess..
For the other user who recommended me buying two or three appartments with credit, that is exactly what I won't do. I'm very careful with those kind of moves. Let me tell you what I know:
1. Jose buys 200k apartment at the top of the market with the confidence that market will always goes up. Jose can pay dividend but he barely makes it, in fact, his parents are his "fiador".
2. Some bank sneezes in USA. Economy drops. Pheriperical countries ate dragged into it.
3. Jose cannot pay his dividend. He tries to sell for 210k. He tries to sell for 200k. He tries to sell for 190k. The bank goes for his parents house and Jose finally is forced to sell for 150k because it is best to pay a 50k debt of nothing than the bank taking Jose's parents home.
4. After a 5 year correction, economy is better again and the housing market reaches a new top, but Jose is in deep sh*t forever.
I know people in my homecountry that lived this.
Look here another story closer to home, I have a Chilean friend, she is a doctor and she probably has a better salary than me, she bought a 300 palos appartment in 2017 in Providencia, it's very nice but i think "gee a little more and you could buy a pied a terre in Brooklyn, is it really this good here in Providencia?". In 2018 she has an amazing opportunity for a 2 year fellowship (with no salary, just a little housing help from governmenment program) abroad so she needs money and she cannot afford to pay her 1 palo dividend every month. Here what happened: she cannot sell her appartment for the same price and she is now renting it for 750 lucas a month. Ok so banks here give good credit score to doctors and she was able to refinance her debt, and she will probably return for an even better salary, but honestly i have known too many good people whose life were ruined by too much debt and never recovered. I'm good with what I have, I will not risk it, I am bidding tops 150 palos appartment.
I have a couple of friends that work for investment banks and financial companies in Chile in similar situations and they decided to do the same, they all rent very nice houses or apartments for pennies w.r.t. the current "market value" of those properties. This is not because they cannot afford them, it is because on paper it looks like a bad business. Obviously, you can always ignore current price-to-rent indices and just bet on appreciation, which might be a good option if you have an appetite for risk, but that is not my type of game. I have a couple of those nice brand new 6-floor apartment buildings developed by Moller & Pérez-Cotapos (fancy ones) next to where I live and, dude, good luck trying to sell one of those things for more than what you paid for. It was quite interesting to see how rental prices for those properties posted on Portalinmobiliario.com dropped from 1.6M a month right after they finished the building to 800K or less per month now.
As others say, if you want a good investment, you might want to look at cheaper properties/neighbourhoods where you can just put 20% down, rent the property, and wait until it pays for itself. You might still be able to find some of these options in Santiago, but I believe that today the buy-to-let market is pretty competitive. You might also want to look at options outside of Santiago, where you are not competing against firms using computer algorithms to soak up the last bits of profitable options left on the table.