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Author Topic: Possible to buy foreclosed houses with bitcoin?  (Read 1831 times)
caston
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November 09, 2011, 01:56:06 AM
 #1

Hello,

I live in Australia and have very little chance of ever being able to buy a house. I earn about 20k AUD a year if I am lucky and houses start at about 350k AUD here. Flats and town houses aren't that much cheaper either. Sure it may be a bubble and I should just wait etc but I don't think prices will come down to meet my income even if it is a bubble.

I would however, like to get started with some kind of property and i'm fascinated about how there are cheap houses in the US such as in Detroit sometimes going for as cheap as a dollar.

I am wondering if someone who lives in the US would be willing to buy or help broker houses so that people outside the US such as me could buy them for BTC.

This is just a half baked idea for now. I know those suburbs are dangerous but perhaps this kind of thing could encourage investment and help restore some of these neighbourhoods. As well as help show that
BTC can be exchanged for things other than USD.

best regards,

Chris

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DeathAndTaxes
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November 09, 2011, 03:37:33 AM
 #2

You don't want those $1000 homes.  Remember you will owe real estate taxes for life on the property.  While you may bought the house for $1000 the city will "determine" the house is worth $80,000 and bill you thousand dollars in property taxes.  Then you will be paying thousands of dollars a year on your worthless house.

Trust me those homes are worthless because they are worthless.
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November 09, 2011, 07:02:04 AM
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I would however, like to get started with some kind of property

Seems you want to speculate on property assets.

My recommendation: simply buy bitcoins and save them. Speculating on Bitcoins will be a far better bet. FAR better. And much more liquid. And much less liable to governments and taxes and theft and all the liabilities of property.

Don't be seduced by "owning a home."  Own Bitcoins if you want a speculative investment/gamble.

And yeah Detroit sucks lol
caston
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November 09, 2011, 07:35:46 AM
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Yeah you are right about there being a lot of traps. Shame I can't get a house in Perth for the same price as one in Detroit. Although at one point everyone will be saying that its crazy to buy a house but a few people actually do and then when things finally do recover they have some solid assets. If not houses what about other things such as farmland?

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November 09, 2011, 08:10:47 AM
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Yeah you are right about there being a lot of traps. Shame I can't get a house in Perth for the same price as one in Detroit. Although at one point everyone will be saying that its crazy to buy a house but a few people actually do and then when things finally do recover they have some solid assets. If not houses what about other things such as farmland?

Farmland might be a somewhat better bet, if only because food prices are going to go through the roof. Hopefully you would buy the land with the intention of actually growing crops, rather than speculating and just planning to sell the land later. There are numerous variables that could make that a bad gamble too.

Really, real estate hasn't hit its bottom yet (well, I guess I can only speak of U.S. markets, but I believe most of the Western world is in the same boat.) If you believe this is likely true, then its throwing money away to speculate on real estate now.

If I had a lot of bitcoins and were looking to speculate with them, I would first determine how long I'd want to hold my speculatory asset. If it were 2+ years, I'd go with precious metals. I'm convinced that's the best bet.

For 1-2 years, I'd either look around for other commodities to play with, invest in bitcoin businesses, or just hold onto my bitcoins as a speculation.

For less than a year, well, there's always shorting commodities or day trading. Or just betting on black in roulette. Tongue

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caston
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November 09, 2011, 10:17:35 AM
 #6

Well in Australia you can buy land and then rent it out to farmers. That is more profitable than buying houses and renting them out to people which is usually at a loss; taken as a tax deduction called negative gearing.

You can get an idea of how expensive houses are in Australia by looking at these new house and land packages here:

http://www.wowhomes.com.au/packages

These are in Suburbs really far from the CBD sometimes almost an hours drive and Perth is only a small city e.g. about 1.4 million people.

Sometimes you can buy a house on a mortgage and rent out each room and just break even but you are taking all the risk.

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November 09, 2011, 10:37:49 AM
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A blockchain is not legal proof of financial payment. There is absolutely nothing the buyer can do to stop the seller cancelling the contract due to non-payment and being able to re-claim the property. Also, if a deal looks too good to be true, it probably is. There is a reason why you can purchase houses for the same price as the monthly rent of a city apartment - either a ton of backtaxes, the fact the the building is near condemned, or the fact that there is no work or services in the area.
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November 09, 2011, 11:45:05 AM
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While you may bought the house for $1000 the city will "determine" the house is worth $80,000 and bill you thousand dollars in property taxes...

Trust me those homes are worthless because they are worthless.
What you mean is that these houses are worthless because the city forces you to pay disproportionate property taxes. Land and a house (no matter how dilapidated) is never intrinsically worthless.
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November 09, 2011, 12:05:21 PM
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Well in Australia you can buy land and then rent it out to farmers. That is more profitable than buying houses and renting them out to people which is usually at a loss; taken as a tax deduction called negative gearing.

You can get an idea of how expensive houses are in Australia by looking at these new house and land packages here:

http://www.wowhomes.com.au/packages

These are in Suburbs really far from the CBD sometimes almost an hours drive and Perth is only a small city e.g. about 1.4 million people.

Sometimes you can buy a house on a mortgage and rent out each room and just break even but you are taking all the risk.

yeah in general to break even in perth you'd need to put in about 50% cash. i.e. for a $500,000 house, you need to put in about $250,000 and borrow the other $250,000 so that your mortgage is approximately the same level as the rent.

negative gearing won't mean much for you caston because i'm guessing your tax bill on $20k isn't much ($500 p.a.?).
caston
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November 09, 2011, 01:14:33 PM
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Well in Australia you can buy land and then rent it out to farmers. That is more profitable than buying houses and renting them out to people which is usually at a loss; taken as a tax deduction called negative gearing.

You can get an idea of how expensive houses are in Australia by looking at these new house and land packages here:

http://www.wowhomes.com.au/packages

These are in Suburbs really far from the CBD sometimes almost an hours drive and Perth is only a small city e.g. about 1.4 million people.

Sometimes you can buy a house on a mortgage and rent out each room and just break even but you are taking all the risk.

yeah in general to break even in perth you'd need to put in about 50% cash. i.e. for a $500,000 house, you need to put in about $250,000 and borrow the other $250,000 so that your mortgage is approximately the same level as the rent.

negative gearing won't mean much for you caston because i'm guessing your tax bill on $20k isn't much ($500 p.a.?).


Well I've never gone up past the lowest tax bracket before and that is even getting moved up now with the carbon tax.

It sounds like a huge waste of cash doesn't it to buy a house. I always wanted to buy a commercial property and rent it out but for that you need 30% deposit plus playing lenders mortgage insurance and that only covers the lender liabilities.

The problem is of course that rents (while lower than the cost of buying a house) are still pretty high. I'm actually self-employed and sometimes I might not get more than a few billable hours in a whole week. I was working for a while in a call centre job but that contract ended. Anyway I digress.

Is there some conceivable way we can use our economy to invest in property?

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November 09, 2011, 02:03:34 PM
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Well in Australia you can buy land and then rent it out to farmers. That is more profitable than buying houses and renting them out to people which is usually at a loss; taken as a tax deduction called negative gearing.

You can get an idea of how expensive houses are in Australia by looking at these new house and land packages here:

http://www.wowhomes.com.au/packages

These are in Suburbs really far from the CBD sometimes almost an hours drive and Perth is only a small city e.g. about 1.4 million people.

Sometimes you can buy a house on a mortgage and rent out each room and just break even but you are taking all the risk.

So what is blocking supply and demand?

If land is relatively cheap and housing relatively expensive why aren't people buying land building houses thus making nice profits increasing supply and lowering price?

Govt interference?

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November 09, 2011, 03:29:01 PM
 #12

You can buy my house for 100k BTC

http://maps.google.com/maps?hl=en&rlz=1G1GGLQ_ENUS247&q=6744+Seaview+Blvd,+Hudson,+FL&gs_upl=64l4641l0l4920l26l26l0l24l24l0l152l210l1.1l2l0&um=1&ie=UTF-8&hq=&hnear=0x88c29b6e2af1b55d:0x296ff0599969204b,6744+Seaview+Blvd,+Hudson,+FL+34667&gl=us&ei=0pu6Ts3BKejk2QWwlpG4Bw&sa=X&oi=geocode_result&ct=title&resnum=1&ved=0CB0Q8gEwAA

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November 09, 2011, 04:23:14 PM
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Don't know much about Perth, but I helped someone sell a house in Canberra earlier this year, and studied the market there closely.  I came away convinced at the time that the housing market is near the top of a fairly big bubble, and while the economic impact of its collapse will not be as serious as it was for the US collapse, housing prices are going to drop quite a bit.  Steven Keen's debtwatch blog is worth reading in this regard.

This year, Australia's economy has been floating like a cork because of China's voracious appetite for primary resources.  When China's manufacturing sector slows down (which I believe will follow inevitably from the economic malaise in Europe and North America), Australia's going to get it in the teeth, and the speculative housing bubble is not going to survive it.

So, just wait.  You don't want to own a house in Australia right now.  And for goodness' sake, don't buy a house in Detroit at this stage.  At least study the economic health of Michigan (terrible) and consider the likely impact of that on Detroit's livability (already terrible, at least in the areas you're considering.)  This is a good time to just watch and wait.
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November 09, 2011, 05:30:21 PM
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A blockchain is not legal proof of financial payment. There is absolutely nothing the buyer can do to stop the seller cancelling the contract due to non-payment and being able to re-claim the property.

A contract can be written to specify an exchange of a property for a specific amount of bitcoins to be deposited in a specific wallet. If you can prove the bitcoins were deposited, you've proved that you've fulfilled the terms of the contract.

Still around.
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November 09, 2011, 08:25:28 PM
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I live in Australia and have very little chance of ever being able to buy a house. I earn about 20k AUD a year if I am lucky and houses start at about 350k AUD here. Flats and town houses aren't that much cheaper either. Sure it may be a bubble and I should just wait etc but I don't think prices will come down to meet my income even if it is a bubble.

Sometimes you can buy a house on a mortgage and rent out each room and just break even but you are taking all the risk.

I feel like I've taken a trip back in time to Ireland cicra 2006. Back then every 20 something was fretting about getting a foot on the "property ladder" and starting a mini buy to let empire. The population had been hypnotised by the ruling elite and a complicit media into thinking that houses prices would see double digit growth forever and property was a one way bet. Anyone who dared question the cult of property investing was laughed at and branded a sore loser for not being a canny mcsavvy investor.

Fast forward 5 years and 100% price drops are not uncommon. Yes, some properties can't even be given away for free! Even in good city locations many properties have seen 70% drops!

So don't lose hope about owning a home. When the price of an average house is beyond the means of an average person you know that property is overpriced and it WILL fall. And as for anyone in Australia who says that property prices will never fall, tell them to stick their advice up their bollix!! 
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November 09, 2011, 09:40:44 PM
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Well in Australia you can buy land and then rent it out to farmers. That is more profitable than buying houses and renting them out to people which is usually at a loss; taken as a tax deduction called negative gearing.

You can get an idea of how expensive houses are in Australia by looking at these new house and land packages here:

http://www.wowhomes.com.au/packages

These are in Suburbs really far from the CBD sometimes almost an hours drive and Perth is only a small city e.g. about 1.4 million people.

Sometimes you can buy a house on a mortgage and rent out each room and just break even but you are taking all the risk.

So what is blocking supply and demand?

Distance from the CBD.

If land (in the outback) is relatively cheap and housing (near the city) relatively expensive why aren't people buying land in the outback, building houses and commuting to their city jobs for 6 hours per day thus making nice profits increasing supply and lowering price?

Govt interference?


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November 09, 2011, 11:50:23 PM
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In rural NSW there are a shitload of cheap houses for sale in dying towns.  It's probably the same in rural WA.

The reason why some communities have made housing so cheap - both to buy and rent - is because they need a certain population to keep infrastructure such as schools, hospitals and doctors.

If you're wanting to simply own your own home rather than looking to increase your net worth or make a profit, it's something you might want to look into.

Quote
If land (in the outback) is relatively cheap and housing (near the city) relatively expensive why aren't people buying land in the outback, building houses and commuting to their city jobs for 6 hours per day thus making nice profits increasing supply and lowering price?

The outback's a lot further than six hours away from any of the capital cities.  It's a lot more than six hours away from even the regional centres where there are almost zero employment opportunities.  It would also be cheaper to buy an established house in the bush than to build a new one.  The price of new materials and labour doesn't change with location whereas the price of existing real estate does.

Quote
Don't know much about Perth, but I helped someone sell a house in Canberra earlier this year, and studied the market there closely.  I came away convinced at the time that the housing market is near the top of a fairly big bubble, and while the economic impact of its collapse will not be as serious as it was for the US collapse, housing prices are going to drop quite a bit.

The government was warning people not to get all carried away and buy houses after the first round of mortgage collapse because they were predicting that there would be a second wave of mortgage collapse.  People ignored that warning and I guess they'll continue to do so in pursuit of quick profits (when the housing market actually collapsed here after several years of slow decline starting in 2004, one of the numbers released by the ABS was that the average home purchaser holds onto their home for only three years - so most people weren't buying a house to live in for life, they were hoping that property prices would outpace inflation and interest rate rises, as well as assuming that their incomes would only increase).

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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November 10, 2011, 08:03:32 AM
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Quote
If land (in the outback) is relatively cheap and housing (near the city) relatively expensive why aren't people buying land in the outback, building houses and commuting to their city jobs for 6 hours per day thus making nice profits increasing supply and lowering price?

The outback's a lot further than six hours away from any of the capital cities.  It's a lot more than six hours away from even the regional centres where there are almost zero employment opportunities.  It would also be cheaper to buy an established house in the bush than to build a new one.  The price of new materials and labour doesn't change with location whereas the price of existing real estate does.

the 'outback' is what city-folk like me like to call anything further than 20 mins away from the cbd.
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November 10, 2011, 02:36:10 PM
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Yeah you are right about there being a lot of traps. Shame I can't get a house in Perth for the same price as one in Detroit. Although at one point everyone will be saying that its crazy to buy a house but a few people actually do and then when things finally do recover they have some solid assets. If not houses what about other things such as farmland?

There are certainly great opportunities to invest in properties in America right now in some areas.  The main obstacle I see is trying to manage things remotely.  You will want to do your due diligence and research thoroughly any property before purchasing it.

If you do decide to go that route, my recommendation would be to find property that you can buy, then rent out for more than the cost of mortgage, taxes, and property management fees.  I don't know about Detroit, but I would try looking in Arizona, Las Vegas and Florida which have some decent properties being sold at far below their build cost that still reside in rentable areas.

The idea is to have an asset that you are not only speculating the value of, but also one that generates you passive income in the meantime.  That way you can hold the asset for as long as you need to in case the prices don't come back up for a long time or at all.  This works especially well with multi-family units so that a vacancy won't eliminate all income.

Unfortunately to invest successfully you will most likely need to be picky about which properties you choose to purchase, as such I think it would be very unlikely that you would find a property that is worth investing in AND be purchasable with bitcoins.  Not that you couldn't try, but I wouldn't go into it thinking that will pan out.
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November 10, 2011, 05:35:02 PM
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My brother is a real estate broker her in Texas and he and I had a lengthy discussion yesterday about selling property for bitcoins. Please remember, any information I include here is just my understanding of how such a transaction may be conducted here in the state of Texas. I am not licensed to sell real estate nor am I familiar with the applicable laws or regulations.

First off, he agreed that, legally, "selling" is probably not the appropriate term. It would most likely be considered a trade or exchange.

Secondly, since no banks or lending institutions would be involved, if both the seller and buyer wished to conduct the transaction using bitcoins, the entire value of the property would need to be paid in full unless both parties wished to negotiate a payment plan or lease agreement as well.

All that being said, my brother is offering his services to any one in the bitcoin community who would like to invest in property in Texas. If you can provide specifics regarding the type of property you're looking for, he is more than happy to try and find a seller willing to accept bitcoins.

Anyone interested can PM me for his contact information.

Still around.
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