November 2002

Long-term readers of my column will recall receiving photographic evidence that ‘banks want to give you money to buy real estate’. Typically these photos were of massive bill-boards put up by banks and other money lenders attempting to lure property investors with low interest rates, reduced application fees, special incentives, or a combination of all of these.

The photos spanned the globe, and included shots from New York (a huge bill-board with a slice of a house stuck on the side) to Sydney, Australia (a bus-shelter poster expressing regret for breaking some driving regulation but not for taking out a mortgage with the advertised bank). These columns are still available for viewing on our website www.dolfderoos.com under “monthly columns”.

Since these columns were written, I have come across many other bill-boards on the same theme.

On the side of the freeway between San Diego and Los Angeles is a bill-board advertising Ditech.com’s mortgages. Nothing too unusual about that, except that Ditech puts the current interest rate on an electronic board that changes in real time as the actual interest rate fluctuates. Talk about wanting to keep potential clients informed!

In Brisbane, Australia, a bank was using alliteration to highlight the fact that it charged no application fees at all.

And in Wellington, New Zealand, I was being driven from the airport to my hotel when I told the driver to ‘stop the car’. He asked what was the matter, and I told him, ‘nothing, but I just spotted a bill-board that I need to photograph’. And there it was, a huge poster advertising the fact that the AMP, a well-known insurance company, was now offering mortgages to buy real estate. Everyone is wanting to get in on the act!

In Phoenix, Arizona, I came across a company similar to Ditech, with electronic numbers detailing current interest rates. With most bill-boards, once you have seen them once, there is generally no need or desire to read them again. But with these electronic interest rate boards, you tend to read them everyday to see what has been happening to interest rates.

Since my theory that banks want to lend you money to buy real estate was so well supported by photographic evidence from around the world, I started to get complacent and concluded that everyone thinks buying real estate is the way to go.

It was to my complete surprise and shock, while I was driving along minding my own business, that I spotted a monstrous bill-board with the words “Renting is better than buying”. I did a double take! Did I read it correctly?

Of course by now I had completely passed the offending bill-board, so I stopped the car, got out, took my camera, and walked back to the offending sign, ready to pick whatever holes I could find in their inevitably facile arguments. And, sure enough, when I got back to the bill-board, I realized that I had read it correctly – it did state that renting was better than buying. But my bewilderment was soon alleviated when I saw the remainder of the bill-board.

It was for Block Buster, the franchise video rental company, that was extolling the virtues of renting DVDs as opposed to buying them outright (“Will you really watch that DVD more than once?”).

While there may be opposing views as to whether you will really want to watch a DVD for a second time, my belief in owning real estate was, on this occasion, not challenged.

Successful investing!

Dolf de Roos 2002