Housing market situation

Buying, Selling, Building, Tax issues, anything regarding real estate or properties in Chile.
Forum rules
NO DISCUSSION OF SPECIFIC REAL ESTATE AGENTS BY NAME, LINK, OR RECOMMENDATION ANYWHERE ON THE CHILE FORUM.
User avatar
admin
Site Admin
Posts: 17669
Joined: Sat Aug 26, 2006 11:02 pm
Location: Frutillar, Chile
Contact:

Re: Housing market situation

Post by admin » Tue Apr 09, 2019 6:12 pm

41southchile wrote:
Tue Apr 09, 2019 4:23 pm
Yeah agree with all above, one thing that I did want to mention or ask in this thread , is does anyone think 35 to 40 UF per square metre is expensive to build ? Because to me it seems outrageous for Chile? Those are nearly similar prices to what we pay in NZ for building, and the carpenters and tradies such as electricians , painters and plasterers, plumbers are probably on three times as much as here.

I wonder how much someone with a fancy diploma is screwing over the new rich who sèem to associate price with quality ? when often there appears to be very little relation from what I have seen . A house for 18 UF per sqm has just as many issues as one with 35 most of the time .
At 35 UFThats 927000clp per metre or $1395 usd or $129USD per square foot.
Here is the thing. For x amount per square meter / foot, in the United States or whatever country, there are minimum building standards.

I use this book, as it is a nice abbreviated easy to understand compilation of much more complex building codes: https://www.amazon.com/Residential-Ligh ... 0876290128

No matter what you pay in those countries, you are at least getting that (mas or menos); or, something close to that for your money as you simply can not pass the building inspection stages (even if the rest of the house sucks) without following those guidelines.

In Chile, not so much.

Show that to any "architect" or "engineer" in Chile, and their heads would explode with the overwhelming logic and standardization of the codes it contains.

I once asked an "architect" in Chile, that had handed me a set of drawings, for the "detail sheet" for the drawings. Which are super standardized (like there is a standardized catalog of those details they just copy and paste in the rest of the world in to the plans using autocad or whatever), unless there is something very special for that building the architect needs to draw out. I just got a blank stair back. They had no frigen clue what I was talking about, and I immediately changed the subject.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

User avatar
admin
Site Admin
Posts: 17669
Joined: Sat Aug 26, 2006 11:02 pm
Location: Frutillar, Chile
Contact:

Re: Housing market situation

Post by admin » Tue Apr 09, 2019 6:22 pm

One thing I love about that book, is it has the building standard boiled down to what you need to build, and little asides that explain the most common building faults and lawsuits that result if you do it wrong. Bathrooms are a prime example of things you can do really wrong. So, like it says when doing 'so and so', watch out for 'bla, bla, bla, as this is a big problem later that results in 80% more lawsuits or complaints from customers'. I don't have the problem building for myself, but it alerts me to something I am doing now that I should pay particular attention to because it might be a problem later if I do it wrong.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

User avatar
admin
Site Admin
Posts: 17669
Joined: Sat Aug 26, 2006 11:02 pm
Location: Frutillar, Chile
Contact:

Re: Housing market situation

Post by admin » Tue Apr 09, 2019 6:30 pm

FYI, it also has some great sections about "eco" building to go beyond say U.S., canadian, or other international standards, for saving materials or enhancing insulation, etc. All in a very quick reference.

If you look around, you can probably even find a Spanish version.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

User avatar
admin
Site Admin
Posts: 17669
Joined: Sat Aug 26, 2006 11:02 pm
Location: Frutillar, Chile
Contact:

Re: Housing market situation

Post by admin » Wed Apr 10, 2019 7:41 pm

So, I was thinking about risks in investment, when I came across this article about stock market risk / declines, and how people's psychology is the problem more than the declines. I think this true of a lot of things, and stock market is simply a good example.

https://www.bloomberg.com/opinion/artic ... nd=premium

Once I managed to train myself to not freak out about stock market declines or crashes, but instead look at them as opportunities, I started making real money investing in the stock market.

In fact, I found two things that were hurting my stock investments. One was fear of volatility, and my own tendency to get bored with a stock and sell.

So, the freaking out about market volatility I solved with setting up my own rule. I learned to force myself to apply the 'don't worry, be happy' and start buying approach. If the market declines 10%, I start shopping for deals. Something probably got thrown out with the bath water and is down even more than 10%, or at least I start making my wish list if they go down more. If the market goes down 15-20% I start nibbling. If It goes down past 20% I double down. 30% double down again. Just keep on doubling down, all the way down. Basically it is like counting cards in black jack. I might not be able to make up all my losses for the stocks I am holding, but if I keep buying I can find some bargains and sure take the sting out of the rest of my portfolio, eventually.

Under no circumstances will I sell just because the market is going down, because I have another rule that says "if I am not happy holding it for 5-10 years, don't buy it, even if I bought it expecting a short-term gain". I always like a long and short-term investment thesis to go with any particular investment. How can I make money quickly; and, if I get that wrong, how to make money on it in the long-term?

My other problem, that lost me a lot of money early on, until I realized what the problem was, was selling otherwise perfectly good stocks that were soooo dull. For instance, in a moment weakness, I once bought Disney. It was like watching paint dry, and I sold it at a small loss after a few months. It was a perfectly fine stock, for grandma to buy for her grandkids.

I realized I did that a lot to my portfolio. What everyone was saying were "safe" investments, were not safe for me. I need something with some action. I want my investments to entertain me, not just sit there and earn 2%. I seen a hedgefund manager once say, "I don't invest in anything unless I see a 25% upside". I realized, that is what I need to do. Too much of the bla, bla, that is written about stock investments is written by brokers and hedge fund managers just trying to not get fired, protect their end of the year bonus, or keep grandma coming back with her retirement fund. I don't have that problem, and I don't want to have the problem. Ever since, I been able to consistently nail 9 out of 10 of my stock picks, and make a steady 20-30% a year on my portfolio. Probably more importantly, I am enthusiastic about hanging on to most of my stocks sufficiently long to let them make money.

Looking back, I realized I had done that repeatedly to more than a few businesses I have owned. I would have a perfectly good business. Making money. Very little for me to do. So, I sold them or closed them. They put me to sleep. For instance, I once had a copier rental business. I bought used industrial copiers from Xerox being traded in from companies every year, and then bought an extended service warranty, and placed them in small businesses like call centers, mailbox etc type places, in the midwest United States that could not afford to own one outright. The copiers would have say 100,000 copies on the dial, but were rated for over a million copies. I rented it out on a per copy basis, splitting the fee with the owners of the establishment. All I had to do was go collect the money once a week. Really, about as risk free as it gets in business. I totally hated it. Sold it six months later, and moved on to something more fun.

So, in real estate, I have found the same thing. Strangely, any time I get itching to sell a particular property, the best thing I can do, is go visit the property. I look around, see the potential, enjoy a walk with my dogs, admire how the trees have grown, spook a rabbit or two, and 30 mins later I realize why I bought it in the first place, and sort of fall in love with it again. Same thing as the stocks. It needs to entertain me a bit, if I am going to hang on to it. If I can not fall in love with it again, then I will sell it.

Point is, it is all about risk management. In particular, what is "your risk tolerance", and not what everyone else considers "risk". Trading stocks teaches you that at an accelerated pace, but if you apply say good risk management to a lot of things, life gets easier; or, at least, a little less stressful. Most the risk in life, is in your head. Not out in the World.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

Baltimore
Rank: Chile Forum Tourist
Posts: 24
Joined: Tue Oct 02, 2018 3:13 pm

Re: Housing market situation

Post by Baltimore » Thu Apr 11, 2019 12:13 am

Wise words... here is my favorite quote by Warren Buffet:

"Don't ask the barber whether you need a haircut" ...Have you ever heard someone that works on real estate saying that a particular purchase is a bad decision? I haven't, at least not in public.

The way I interpret the results from that NBER paper is that, on average, good investments in real estate can beat portfolios of stocks and bonds, particularly against big turns in the economy (a war!). But that doesn't mean that any investment in real estate is going to turn out well.

For example, this plot was made with data from collected by Robert Schiller, 2013 Nobel Memorial Prize in Economic Sciences.
RealHousingPrices_1890_2010_log-650x464.png
That plot does not mean that people have not made money on real estate, it only says that on average, home prices in real terms have not grown as much as people believe so (most people think about returns in nominal terms). Of course, that plot is for the US and the situation in Chile might be very different.

Real estate investments can be fantastic if you have the skills and are lucky to find the good deals. Plus you can use tons of leverage at very low rates if needed, something that is much difficult to do with stocks. However, thanks to that leverage, you can also shoot yourself in the foot by overpaying for something. There is no need for a bubble for things to go bad, you just need 1) an overpriced property, 2) an excited young family of professionals, and 3) access to credit for someone to make a bad investment decision.

at46
Rank: Chile Forum Citizen
Posts: 893
Joined: Fri Sep 20, 2013 6:13 pm
Location: Vancouver/Santiago

Re: Housing market situation

Post by at46 » Thu Apr 11, 2019 1:07 pm

US and Chilean property markets are probably as different as it gets. Every conceivable metric you can come up with gets completely reversed in Chile (because it's the other end of the globe): geography, demographics, economy, geopolitics, you name it. It's like investing on Mars. Which makes it kinda fun when you get it right :)

User avatar
admin
Site Admin
Posts: 17669
Joined: Sat Aug 26, 2006 11:02 pm
Location: Frutillar, Chile
Contact:

Re: Housing market situation

Post by admin » Thu Apr 11, 2019 7:28 pm

at46 wrote:
Thu Apr 11, 2019 1:07 pm
US and Chilean property markets are probably as different as it gets. Every conceivable metric you can come up with gets completely reversed in Chile (because it's the other end of the globe): geography, demographics, economy, geopolitics, you name it. It's like investing on Mars. Which makes it kinda fun when you get it right :)
Not at all. I can tell you what land on Mars is worth. :lol: :lol: :lol:
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

User avatar
admin
Site Admin
Posts: 17669
Joined: Sat Aug 26, 2006 11:02 pm
Location: Frutillar, Chile
Contact:

Re: Housing market situation

Post by admin » Thu Apr 11, 2019 7:34 pm

at46 wrote:
Thu Apr 11, 2019 1:07 pm
US and Chilean property markets are probably as different as it gets. Every conceivable metric you can come up with gets completely reversed in Chile (because it's the other end of the globe): geography, demographics, economy, geopolitics, you name it. It's like investing on Mars. Which makes it kinda fun when you get it right :)
Seriously though, I get your point. It takes some practice to get the feel for it. Most of it is getting a handle on the culture first. What is it that Chileans view as "valuable"?

From that perspective flows everything else like the Chilean real estate "force". Things like demographics, population shifts, politics, economy, etc, all need to be viewed through that cultural lens of real estate "value".
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

Baltimore
Rank: Chile Forum Tourist
Posts: 24
Joined: Tue Oct 02, 2018 3:13 pm

Re: Housing market situation

Post by Baltimore » Thu Apr 11, 2019 8:12 pm

admin wrote:
Thu Apr 11, 2019 7:34 pm
at46 wrote:
Thu Apr 11, 2019 1:07 pm
US and Chilean property markets are probably as different as it gets. Every conceivable metric you can come up with gets completely reversed in Chile (because it's the other end of the globe): geography, demographics, economy, geopolitics, you name it. It's like investing on Mars. Which makes it kinda fun when you get it right :)
Seriously though, I get your point. It takes some practice to get the feel for it. Most of it is getting a handle on the culture first. What is it that Chileans view as "valuable"?

From that perspective flows everything else like the Chilean real estate "force". Things like demographics, population shifts, politics, economy, etc, all need to be viewed through that cultural lens of real estate "value".
....so not every property that is on sale in Chile (particularly in some areas in Santiago) is necessarily a good investment, that is the only point I make. It takes all the skills you mention to really see where the good deals are and what is going to give you a good ROI. The fact that the driving forces behind property values in the US are different than those in Chile does not imply that any purchase in Chile is a good deal. Just as anywhere in the world, some properties are just overpriced, but not all of them.

at46
Rank: Chile Forum Citizen
Posts: 893
Joined: Fri Sep 20, 2013 6:13 pm
Location: Vancouver/Santiago

Re: Housing market situation

Post by at46 » Thu Apr 11, 2019 11:40 pm

Santiago is actually pretty easy. Buy anything within 5 min walk of a metro station and you're golden. The Metro people have done all the research for you.

Baltimore
Rank: Chile Forum Tourist
Posts: 24
Joined: Tue Oct 02, 2018 3:13 pm

Re: Housing market situation

Post by Baltimore » Fri Apr 12, 2019 3:20 pm

at46 wrote:
Thu Apr 11, 2019 11:40 pm
Santiago is actually pretty easy. Buy anything within 5 min walk of a metro station and you're golden. The Metro people have done all the research for you.
Buy anything within 5 min walk of a metro station....at any price? :shock:

at46
Rank: Chile Forum Citizen
Posts: 893
Joined: Fri Sep 20, 2013 6:13 pm
Location: Vancouver/Santiago

Re: Housing market situation

Post by at46 » Fri Apr 12, 2019 7:26 pm

Baltimore wrote:
Fri Apr 12, 2019 3:20 pm
at46 wrote:
Thu Apr 11, 2019 11:40 pm
Santiago is actually pretty easy. Buy anything within 5 min walk of a metro station and you're golden. The Metro people have done all the research for you.
Buy anything within 5 min walk of a metro station....at any price? :shock:
Probe them. If they're firm, to me it's actually a good sign.

Post Reply