So what's worth buying?

[zt3000]

So say you have a loan with a bank ... and the bank collapses ... what happens to your loan?

Surely they cant recall the loan and obviously if you cant pay it then they take the asset which leaves you up sh*t creak without a paddle??

 

[wayneL]

So say you have a loan with a bank ... and the bank collapses ... what happens to your loan?

Surely they cant recall the loan and obviously if you cant pay it then they take the asset which leaves you up sh*t creak without a paddle??

Another institution will simply purchase the debt and instead of monthly paymemnts going to XYZ bank, it will go to ABC bank. Your terms will not change.

 

[TheRage]

Wayne is spot on. Institutions purchase the debt which in the industry is known as distressed debt. The creditors are usually paid off but the deposit holders lose out. Banks can and will go bust and while I conceed it is unlikely the whole reason this country has prudential regulation through APRA is to minimise the chance of this happening.

 

[PortfolioPlus]

As a contrarian view how can you avoid adding select Property shares? Sure, they're out of favour, and have been "boxed around the ears" big time this fin year.

For instance, Prime Trust (PTN) currently at 74 cents and paying a dividend (in quarterly tranches of 2.1 cents each) is showing a yield of 11.6% fully tax deferred. With gearing at just 20% and a NTA represented by bricks and mortar of $1.02 and this, in an industry that is GROWING (retirement). Plus, Prime are largely property owners with close on 75% of their revenue stream in the form of rent with CPI additions and also a share of the DMF income.

Tricom have written a brilliant summary on this company with great comparisons to the competitors (don't associate the present woes of Tricom with the value of the research). T's estimate is a value of $1.03 by Dec 2008.

There is one "spot" on the PTN Xray...the manager has a long contract that doesn't have too many performance clauses in place. Plus the fees are higher than industry norm.

So, do your own research...I've always been a property enthusiast and history has traditionally been very kind to property.

In the meantime with PNT you get a 11.6% yield...and a three year outlook will see the share price well beyond its July listing of $1.

 

[CFD]

So say you have a loan with a bank ... and the bank collapses ... what happens to your loan?

Surely they cant recall the loan and obviously if you cant pay it then they take the asset which leaves you up sh*t creak without a paddle??

I reckon they can. Others have stated what is more likely to happen, but yes they can. Now you know why people shouldn't winge about banks' profits.

 

[cordelia]

I reckon they can. Others have stated what is more likely to happen, but yes they can. Now you know why people shouldn't winge about banks' profits.

yes they can but realistically it would cause pandamonium....imagine all the housing loans that Bankwest finance. If they suddenly called them in and people had to sell thier homes wouldn't it flood the market and leave thousands of homeless people looking for rentals......


I think the sub-prime thing has been factored into the price of shares now. I think that there is such a sense of instability at the moment that people are reluctant to stick their toes in the water ...so to speak. A dramatic fall such as just has been experienced is a reality check for many....particularly those with super nearing retirement.

I know some people are keen to jump back in get shares at cheap prices but I just think it can go either way at the moment....so sitting back watching

 

[Rainmaker2000]

Portfolio, I like your contrarian bent.....property is a good asset when its not excessively geared like the recent horror stories......it's funny how listed and unlisted property in now firmly in the dog house but Aussies, it seems, still can't get enough of residential property....I think time will tell on that one.....

Meanwhile, I've been doing a bit of scouting on ASX property stocks.....it appears there are a few gems, but lots of disasters as well

 

[wayneL]

A years supply of food and a .357 magnum?



(Just joking)

Well I was joking, but this guy isn't:

http://www.bloomberg.com/apps/news?pid=20601088&sid=aImBVle3OMyo

Holy Crap! What a horrible contemplation.