Like so many others in Lam Dong Province and other rural areas of southern Vietnam, Toan saw the value of his agricultural land skyrocket in 2020-2021. He took it as an opportunity to start flipping properties for profit. But the market froze last year and short-term loans at high interest rates have now sunk him and many other farmers-turned-inexperienced-traders in impossible debt instead.
The veteran coffee grower sold his land 7 km from the center of Di Linh District for several billions of dong in profit during a property price bubble in 2021.
He then took out short-term, high-interest loans and used them plus money he made from his land sale to by several more plots he planned to resell for profit in what he thought would be at most 1-2 months. He said he thought he'd be able to sell some of the land back in even just a couple of weeks.
But the properties still haven't sold.
In early 2022, Toan poured another VND15 billion ($635,600), including VND6 billion from another short-term loan at a monthly interest rate of 6%, into the purchase of a large tract of land near a big road, hoping to also resell it after a few months.
However, Toan has yet to find a buyer for any of his land and hasn't been able to pay the interest on his loans since October last year. Now he's trying to sell the land for less than he bought it, only VND12 billion. But he has yet to receive an offer.
After paying a total in interest of VND2.5 billion, he has yet to even touch the principle of VND6 billion and has fled his hometown to avoid facing his creditor. An acquaintance of his is now trying to sell the land for him. But it's all been in vain so far.
“The land's offering price has dropped dramatically, but there's still been no buyers,” said the acquaintance. “The creditor has taken possession of the deed to the land, and he often visits Toan's family to pressure them to repay. The total principle and interest owed is now VND8 billion, and it's continuing to increase.”
Toan's situation is unfortunately not uncommon.
VnExpress records show that in the last quarter of 2022, debt defaults buy quick-fix agricultural land speculators hoping to flip properties for easy money became a regular problem in rural areas.
Thuy, a land trader in Bao Loc District, who made big profits flipping cultivation land in 2021, is now surrounded on all sides by the consequences of buying on credit land she hasn't been able resell. On one hand she's hounded personally by her creditors, and on the other she's even being sued in court.
She and some other traders spent VND30 billion, including VND15 billion in loans, on a large plot of land they hoped to resell quickly.
However, the real estate market fell still and silent in 2022 and interest rates increased. As Tet (the Lunar New Year holiday festival) began approaching, creditors started to stopping by Thuy's home to collect their debts owed. Thuy defaulted and now has to face the local court system holding her accountable for the loans she took.
A construction contractor named Hong said that in 2020 and 2021, Di Linh and neighboring Bao Loc Province land traders were able to buy and resell coffee-growing land plots for profits of VND2-3 billion per sale in just a couple of weeks' time.
However, the land market in the two districts went into sudden and deep hibernation last year.
For example, on particular piece of land's value peaked at VND4 billion after 5-6 transactions in 2020-2021, but then quickly plummeted to below VND2 billion in early 2022.
Pham Lam, vice chairman of the Vietnam Association of Realtors, said decreased liquidity in the real estate market in the second half of 2022 had been a migraine for many inexperienced land traders who overleveraged and overextended themselves financially.
Lam said during the 2020-2021 “land fever” that gripped farmland owners in many areas with dreams that became nightmares – on Phu Quoc island (off the coast of southern Kien Giang province), Phan Thiet (in the central coastal Binh Thuan province), the Ho Chi Minh City-adjacent Binh Phuoc province, Bao Loc, Di Linh and other hot spots – he observed many new farmer-turned-investors regularly make two main mistakes.
Their first mistake was regarding inflated bubble land prices, which he called “virtual prices,” as real values that the inexperienced investors believed would continuously increase for a long period of time. Their second mistake was to resort to short-term loans with high interest rates, he said.
Hong said: “This Lunar New Year (which started in late January), I've witnessed many land dealers defaulting on billions of dong in debt because of short-term loans at high interest rates.”
“If investors can't sell their land in just few months after they buy it, they'll 'die' on their new real estate,” he continued.
*Names of some characters have been changed.
- Empty Homes and Protests: China’s Property Market Strains the World
- First came the trade war, then the shutdown, but Iowa farmers still back Trump
- American Farmers Confront Mental Health Crisis
- Fredericka Wagner: A look at her property and assets
- How to Live With Student Debt Without Losing Your Mind
- Court: Farmers don't need to sell crops to get tax break
- Farm market near Lansing still popular after decades
- 12 Life-Changing Things To Try In September
- Toys ‘R’ Us Tries to Rise From the Ashes. Wary Partners Try Not to Get Burned.
- (LEAD) Financial watchdog vows to keep household debt under control | Yonhap News Agency
- Why CBL & Associates Properties, At Home Group, and Aberdeen Standard Physical Palladium Slumped Today
- Here's Why Senior Housing Properties Trust Is Sinking Today
- 10 years after the financial crisis, is the housing market still at risk?
- Months after Hurricane Michael, farmers still trying to recover from billions in crop damage
- Former East Village home of Two Boots founders is getting flipped
- Farmer patience on tariffs comes with caution flag for Trump
- DealBook Briefing: Slow Growth Weighs on the Markets
- Reopening government not as easy as flipping a light switch or unlocking a park gate
- When will federal workers get paid? Reopening the government not as easy as flipping a light switch
- The bizarre and inspiring story of Iowa's fish farmers
Debt buries farmers trying to flip property in frozen market have 1068 words, post on e.vnexpress.net at January 30, 2023. This is cached page on Talk Vietnam. If you want remove this page, please contact us.