Our team still remembers the call we got when our bank told us that some of our loans were due earlier than usual. Back at the time we didn’t think much of it – we had been late on some of our loans but it wasn’t a big deal – we had a good relationship with our bank and paying late on some of our receivables helped with cash flow. We also felt entitled to these credit terms because we were big customers of our bank – however that all changed on that fateful day.
A new member of that team had come in and made a formal statement that from now on every bill that was late – not only would it not be acceptable but there would be a 3% monthly interest for every month that a loan repayment was late.
This is the story that we heard from one of our real estate agents – and let me tell you – this was difficult to bear. The property developer in question knew that his time was coming – he could see the forests from the trees much better than we could – and so he hitched his wagon and started a desperate sell off.
This was the story around the country – we had empty houses and rents being raised on our tenants that were simply impossible to pay off. But more importantly there were not many tenants because many tenants began purchasing their own homes. It was a free for all for everybody.
The truth is – is that free money is great if you know what to do with it – but if you don’t it just sits on your conscience and goes nowhere. So many people simply didn’t know how to handle money – they bought homes that were devaluing and in many cases were overvalued by zealous landlords that wanted to rack the price up knowing there would be a great demand for homes in their areas after speaking to lenders in the area.
And so we can say that this is a learning time for everyone – what we have learnt is the importance of frugality and how to ensure that this does not happen again is to understand that there is no such thing as free money and at some point it will have to be repaid.
Our real estate agents are planning on working together – along with the lenders to ensure that the information gets to the right people about not only the people looking to borrow funds but also – our team building sydney erskineville is helping us to also push this into the lending offices in the bank – who missed the big picture and left us with the bill.
Let us not forget the bust of 2008.