Developers...scum or poor losers?

[Winston001]

A mate of mine has had "issues" in the past with developers. He states (in writing) at the beginning of the contract, that items that he has made will remain HIS property until full and final payment has been received (regardless of whether the item/s are fixed in place on-site).

Other times he has a very simple method...
A long-bar chainsaw with an old, but very sharp, blade...
Leaving the site with his property back on his ute and the developer with a fucking big ragged hole in his building, studs and lintels all chopped through.

Quite simple and also quite effective. Dunno why?

Its unlawful if the goods are fixed to the building. Once fixed they become attached to the land and the property of the owner and the mortgagee (bank/finance company). There is a case where Westpac obtained a High Court order requiring a builder to replace all the joinery he ripped out. Bloody tough on him but thats the law.

Having said that I've known people to do this and get paid so all power to them. There are some dishonest types out there.

The 'reservation of title" clause is called a Romalpa clause. Its common, it can be effective, and if in business you should use it. The goods remain yours until you are paid in full.

Ok, but nothings easy. Today if you want an effective = lawful and enforceable Romalpa clause, you have to get the buyer to sign a General Security Interest document which you then register with the Personal Property Security Register. Bike dealers have to do this to get stock from their suppliers. Pubs do it to get supplies from the breweries.

Normally large businesses require General Security Interests but the typical small business doesn't. Looks like too much paperwork, they don't really understand it, and if times are good, why bother.....

[Boob Johnson]

No, speculation provides no economic value.

Building houses in the hope that somebody will, in future, want to buy them and live in them is speculation.

Speculating in the stock market in the hope stocks will rise or fall & spec building a home or two are two radically different things, to even put them side by side is laughable.

We HAVE to have spec builders in NZ because the Govt. doesn't have the $$$ to provide all the housing needed, so to say it provides NO economic value is so ludicrous its laughable, hence why I said stick to tinkering with PC's.

Hmm. You're so entranced with the spine-tinglingly exciting idea of being 'wealthy' that you forget the importance of things like honesty and decency.

Nope, never advocated dishonesty in business nor do I practice it, I absolutely despise it hence why I left my previous profession. I do however have my eyes wide open to how many business people/industries operate dishonestly/unethically. If you operate without this knowledge then you are doomed to be on the wrong end of it.

Im entranced with the spine-tinglingly exciting idea of doing the best you can with what you earn, its not about having the flashiest car/bike/home etc its about being smart & making life easier. People are soooo hedonistic these days, if they can't make themselves feel better by spending money or whatever they feel bad. Well who the hell is really in control of you if thats the case, the body or the brain?


The difference between the wealthy & the not so is simple, its attitude. I find people people who live hand to mouth have very poor attitudes towards money & usually life in general. Coincidence?

Don't call me if your PC's broken; I'm no 'IT guy'. I wouldn't know a cronjob from a corncob.

Yes I know what you do for a living Dan, you told me already, twas a very broad sweeping generalisation. The point was stick to what you do best because it quite obviously isn't anything to do with this subject.

Regardless of what my actual profession is, though, the internet is so full of people with mediocre intellects who don't quite grasp the essence of various matters?

Yes it is isn't it

[Finn]

Where is Finn when we need him most..?

Sorry. I've been distracted by the financial crisis. Damn well lost the shirt off my back. Lucky I had a few more in the wardrobe eh.

So what do you need my unbiased and completely logical opinion on? Developers? They're all cunts. I've got 2 as friends so it's confirmed.

[jrandom]

Speculating in the stock market in the hope stocks will rise or fall & spec building a home or two are two radically different things...

Perhaps you could explain how this is so.

[Boob Johnson]

Perhaps you could explain how this is so.

Tis already answered above Dan, but something tells me you already knew that

[jrandom]

Tis already answered above Dan, but something tells me you already knew that

Perhaps the problem here is that 'economic value' hasn't been properly defined.

The magical world of the internets provides me with a handy-dandy Adam Smith quote:

There is one sort of labour which adds to the value of the subject upon which it is bestowed; there is another which has no such effect. The former, as it produces a value, may be called productive; the latter, unproductive labour. Thus the labour of a manufacturer adds, generally, to the value of the materials which he works upon, that of his own maintenance, and of his master's profit. The labour of a menial servant, on the contrary, adds to the value of nothing. Though the manufacturer has his wages advanced to him by his master, he, in reality, costs him no expense, the value of those wages being generally restored, together with a profit, in the improved value of the subject upon which his labour is bestowed. But the maintenance of a menial servant never is restored. A man grows rich by employing a multitude of manufacturers; he grows poor by maintaining a multitude of menial servants.

My point here is that one must step back and add another layer of abstraction - even a 'manufacturer' (in this case, a builder) being paid money to do his thing does not create value if nobody wants what is being manufactured.

'Property development' tends to constitute a particularly egregious case of money being flung willy-nilly into activities which may or may not actually be creating anything of real use, in the hopes that the gamble will pay off and the organiser will get to run home giggling with an armful of profits.

I could certainly introduce you to one or two or three gentlemen who are guilty of exactly the same crimes of waste (almost always using the money of over-trusting financiers and/or investors) in the conduct of other businesses. 'Property development' is by no means the sole offender in this regard.

I don't applaud these people when chance and happenstance favours them with profit, and I do not feel sympathy for them when they time their gambles wrong and wind up broke.

[Winston001]

We HAVE to have spec builders in NZ because the Govt. doesn't have the $$$ to provide all the housing needed, so to say it provides NO economic value is so ludicrous its laughable, hence why I said stick to tinkering with PC's.

Yes probably although most builders I know just build houses for owners, not for spec. Spec is an easy way to get burned but I do agree there is no difference between a person building a cluster of houses in the hope they will sell, with another person baking loaves of bread in the hope they will also sell. Its capitalism, small business.

Im entranced with the spine-tinglingly exciting idea of doing the best you can with what you earn, its not about having the flashiest car/bike/home etc its about being smart & making life easier. People are soooo hedonistic these days, if they can't make themselves feel better by spending money or whatever they feel bad. Well who the hell is really in control of you if thats the case, the body or the brain?

Well said.

The difference between the wealthy & the not so is simple, its attitude. I find people people who live hand to mouth have very poor attitudes towards money & usually life in general. Coincidence?

Certainly attitude is all. The poorest people I have met - in the Sudan, were also the most cheerful and generous. That also goes for some Kiwis including a mate who has zilch. But he's got a job, a lovely lady, an old bike he'll restore and he's happy. Bless him.

[jrandom]

Its capitalism...

That doesn't make it useful. Once again, my point is that just doing shit is not adding value. You have to do the right shit.

Blind 'capitalism' simply for its own sake is destructive.

I have nothing but disapproval for would-be 'capitalists' who indulge their foolish greed for profit and thereby waste society's resources building, baking or growing stuff that simply ends up going to waste (the gentleman mentioned in this thread's first post being a prime example).

Ah well. They'll be first against the wall when the revolution comes...

[Hitcher]

Yes probably although most builders I know just build houses for owners, not for spec. Spec is an easy way to get burned but I do agree there is no difference between a person building a cluster of houses in the hope they will sell, with another person baking loaves of bread in the hope they will also sell. Its capitalism, small business.

I think that there is a big difference. A baker sells their loaves at a price that includes the costs of production and a small margin. Their products are a perishable consumable. They rarely have any negotiating leverage regarding price.

Property developers assume that rising property values will provide them with a margin between the time they start a development and the time that they sell the properties. They use their creditors as their bankers, so offsetting their financial exposure, hopefully to a point where they don't have to pay their development costs until after the property is sold. That's canny business practice, if it's done well.

The practice I find reprehensible is where developers get a "mate" to buy the first property in a development for an overly inflated sum, and then use this as the basis to get "valuers" to price up the remaining properties in the development. They get away with this because of the greed inherent in mortgage lenders who are prepared to condone such practices to make a sale and on the basis that property values will always go up. This is all well and good until they no longer do. The the whole house of cards comes crashing down.

[Winston001]

I think that there is a big difference. A baker sells their loaves at a price that includes the costs of production and a small margin. Their products are a perishable consumable. They rarely have any negotiating leverage regarding price.

Property developers assume that rising property values will provide them with a margin between the time they start a development and the time that they sell the properties. They use their creditors as their bankers, so offsetting their financial exposure, hopefully to a point where they don't have to pay their development costs until after the property is sold. That's canny business practice, if it's done well.

Bakers don't go broke taking the banks money down with them?? I never knew that..... In fact I can think of a couple of bread shops which did exactly that.

The practice I find reprehensible is where developers get a "mate" to buy the first property in a development for an overly inflated sum, and then use this as the basis to get "valuers" to price up the remaining properties in the development. They get away with this because of the greed inherent in mortgage lenders who are prepared to condone such practices to make a sale and on the basis that property values will always go up. This is all well and good until they no longer do. The the whole house of cards comes crashing down.

Mmmm......a valuer should be able to look past a single sale, in fact no valuer could reliably assess a house/section simply because a few had been sold at the outset. A jackup by the developer is the first thought he'd have.

As for lenders, the real problem is our banks are peopled by children. A bit of history. After the 1987 crash, we lost a generation of experienced ethical bankers. They were "retired" because the banks lost a lot of money. In their place nice bright-eyed BComs took over, some with MBAs even, and they knew nothing about risk management. Nothing about how to say No to a borrower.

In fact it was/is worse. Salaries depended upon talking people into loans. On top of that, our Labour government wrung its hands and cried about how unaffordable houses were, encouraging the banks to go to 100% lending with Government guarantees.

And here we are today......

[Winston001]

That doesn't make it useful. Once again, my point is that just doing shit is not adding value. You have to do the right shit.

Blind 'capitalism' simply for its own sake is destructive.

I have nothing but disapproval for would-be 'capitalists' who indulge their foolish greed for profit and thereby waste society's resources building, baking or growing stuff that simply ends up going to waste (the gentleman mentioned in this thread's first post being a prime example).

Ah well. They'll be first against the wall when the revolution comes...

I agree that if someone takes a resource and wastes it, that is a net loss to society. But that is unusual.

Capitalism is efficient. It encourages activity for reward. Sometimes there is no reward and the punter loses their effort. However the land/building/ship whatever is generally recycled through sale at a cheap price to another punter so he can have a go. At the "new" price it wasn't possible, but at the second-hand price, he gets a chance. And it might just be the break he needs.

Yes it can be brutal at the individual level but if you take an holistic view, it all works out for society's benefit. If that wasn't true, we'd never have economically survived the great Tulip bubble or the South Seas bubble.

[Boob Johnson]

Perhaps the problem here is that 'economic value' hasn't been properly defined.

The magical world of the internets provides me with a handy-dandy Adam Smith quote:

There is one sort of labour which adds to the value of the subject upon which it is bestowed; there is another which has no such effect. The former, as it produces a value, may be called productive; the latter, unproductive labour. Thus the labour of a manufacturer adds, generally, to the value of the materials which he works upon, that of his own maintenance, and of his master's profit. The labour of a menial servant, on the contrary, adds to the value of nothing. Though the manufacturer has his wages advanced to him by his master, he, in reality, costs him no expense, the value of those wages being generally restored, together with a profit, in the improved value of the subject upon which his labour is bestowed. But the maintenance of a menial servant never is restored. A man grows rich by employing a multitude of manufacturers; he grows poor by maintaining a multitude of menial servants.

My point here is that one must step back and add another layer of abstraction - even a 'manufacturer' (in this case, a builder) being paid money to do his thing does not create value if nobody wants what is being manufactured.

'Property development' tends to constitute a particularly egregious case of money being flung willy-nilly into activities which may or may not actually be creating anything of real use, in the hopes that the gamble will pay off and the organiser will get to run home giggling with an armful of profits.

I could certainly introduce you to one or two or three gentlemen who are guilty of exactly the same crimes of waste (almost always using the money of over-trusting financiers and/or investors) in the conduct of other businesses. 'Property development' is by no means the sole offender in this regard.

I don't applaud these people when chance and happenstance favours them with profit, and I do not feel sympathy for them when they time their gambles wrong and wind up broke.

I knew you had a better attempt in ya than the last


Yep Adam Smith, a man ahead of his time for sure, he advocated a free market economy as more productive and more beneficial to society. Im not sure what you quoted from Adam Smith above has anything to do with matter at hand? Although a doozie of a quote


I applaud the dev. at Orewa who went under recently because he backed himself & softened the blow as much as possible, can't ask for much more than that. Guys like that don't stay down for long, they came back twice as fast & twice as strong. Without people like him willing to take business risks we would be in a sorry state of affairs.

That doesn't make it useful. Once again, my point is that just doing shit is not adding value. You have to do the right shit.

Blind 'capitalism' simply for its own sake is destructive.

I have nothing but disapproval for would-be 'capitalists' who indulge their foolish greed for profit and thereby waste society's resources building, baking or growing stuff that simply ends up going to waste (the gentleman mentioned in this thread's first post being a prime example).

Ah well. They'll be first against the wall when the revolution comes...

But who says it goes to waste? How many buildings in NZ have "gone to waste" half way through dev. that you know of? Struth even that bloody eye sore on Hobson street got finished eventually, not wasted as you suggest. They are actually building a tangible product, not betting how much stocks will rise or fall in a given period, THATS real speculation, as in trading on then air. Building a house employs trades people far & wide, a vast array of materials natural or otherwise which when combined cost less than the finished product, a house & that IS productive. People were employed to build a tangible & useful product that will last for 100+ years give or take.

[Boob Johnson]

I think that there is a big difference. A baker sells their loaves at a price that includes the costs of production and a small margin. Their products are a perishable consumable. They rarely have any negotiating leverage regarding price.

Property developers assume that rising property values will provide them with a margin between the time they start a development and the time that they sell the properties. They use their creditors as their bankers, so offsetting their financial exposure, hopefully to a point where they don't have to pay their development costs until after the property is sold. That's canny business practice, if it's done well.

The practice I find reprehensible is where developers get a "mate" to buy the first property in a development for an overly inflated sum, and then use this as the basis to get "valuers" to price up the remaining properties in the development. They get away with this because of the greed inherent in mortgage lenders who are prepared to condone such practices to make a sale and on the basis that property values will always go up. This is all well and good until they no longer do. The the whole house of cards comes crashing down.

A baker is providing a service no different to a builder/dev. Someone HAS to do it or we have no houses or sticky buns

Property devs. DONT always rely on an upward swing in the market. They build in stages, progress payments is another way or term (not the only one of course). They revalue what they have built at certain stages. This is called progress, ie they are adding value not only to each individual piece of material used as it is now part of a greater object. The banks view each stage as being worth more, no different to a business idea opposed to a business plan, one is now tangible.

And as my good friend Winston has rightly pointed out it can be brutal but thats life as we know it Jim.

[jrandom]

Im not sure what you quoted from Adam Smith above has anything to do with matter at hand?

It was tangentially pointing out that activity undertaken purely for its own sake has no value.

People were employed to build a tangible & useful product that will last for 100+ years give or take.

OK, fair enough. Building houses can add economic value.

The guys who do it are still cunts who often incorporate sharp and dishonest practices in the process, however, tainting whatever theoretical value could be achieved with their greed. Reducing the activities of 'property developers' down to the saintly activity of 'building houses' is a rather disingenuous approach.

[Boob Johnson]

It was tangentially pointing out that activity undertaken purely for its own sake has no value.

Hence why it has nothing to do with building houses

OK, fair enough. Building houses can add economic value.

Sorry just wanted to high light the bit where you agreed with me, it doesn't happen often

The guys who do it are still cunts who often incorporate sharp and dishonest practices in the process, however, tainting whatever theoretical value could be achieved with their greed. Reducing the activities of 'property developers' down to the saintly activity of 'building houses' is a rather disingenuous approach.

Yep some are complete bastards but plenty aren't too, thats life/business, welcome to just about every major business in the western world. Its a cut throat world out there but as long as YOU are aware of it then if you are even semi intelligent you won't get into bed with these people unless it is on your terms.


A bird comes along & MURDERS a bug............................for its dinner.


Brutal?

Yep!

Fair?

Well not for the bug! But that's life. If life were a box of fluffies at every turn you wouldn't appreciate the things you do have as much.


As Donald says "don't take it personally, its just business"