Mark Twain famously quipped that he never recognised an opportunity until it passed him by, although the great American author still managed to waste most of his money on a string of dubious inventions and get rich quick schemes. Had Mr Twain been alive today, I can imagine him squandering his money on technology startups just before the dot com bust, on properties at the very top of inflated markets or on banking stocks just before the current financial crisis.

Going against the grain

It is often said that some of the most successful investments have been made by going against the grain, by buying when others are selling, and vice versa. We can’t all be a Michael O’Leary placing Ryanairs biggest ever aeroplane orders just 12 weeks after 9/11 or a PV Doyle selling a range of high profile Dublin hotel sites at the peak of a property boom. However we could all find some time to analyse when would be the best time to dispose of assets we already own (preferably when everybody wants to buy and will pay over the odds for them) and when would be the best time to purchase more (when everybody wants to sell, preferably at a heavy loss).

From a property point of view, now is probably not the time to try and sell anything purchased in the last 3 years, but if you have the money - it is definitely a great time to purchase from other people at huge discounts.

Where are the most distressed sellers?

After many months of research, Central Orlando was one area identified by my colleagues and myself as an area offering a particularly high number of distressed buyers. There is no shortage of places containing distressed buyers, but for us, Orlando stood above the crowd for the following reasons:
- Florida is diverse, wealthy and resilient economy
- Orlando is still a city with a fast growing population and home to a diverse range of industries
- Young hard working people like living there, as do older and wealthier people on the verge of retirement
- There is little or no mortgage financing available which ensures very strong long term lettings to the local market
- Bank owned properties in affluent neighbourhoods are available at 25-30% of their former purchase prices

These are all great reasons to look at the opportunities in this city, but you need to drill down much further to figure out how long you’ve got to buy the best properties. Every month I become more convinced that the window for purchasing these types of investments will close a lot sooner than I originally thought.

Consider the following:

1. The volume of home sales in Orlando in January 2009 was 17.7% higher than January 2008. Home builders in the UK and Ireland would give their right arms (and more) to be able to say that.

2. For the fifth month in a row (as predicted in Issue 36) the numbers of properties sold increased in Orlando, due in no small part to the relentless lowering of prices in early to mid 2008.

3. The number of properties available for sale in January 2009 was 12% lower than the number of properties available for sale in January 2008.

4. The number of properties foreclosed in Florida in January 2009 was 22% lower than the number foreclosed in December 2008. Is this a blip or a trend reversal? How much longer will foreign investors have to purchase these amazing properties?

Getting the timing right

The market for purchasing high quality distressed properties is both competitive and fast paced. It isn’t a market for people who are just looking but it can be an extremely rewarding experience for those who have the speed and ability to study and act on the information provided by specialist agents like ourselves.

A good friend and very wealthy Standard Oil executive called Henry Rogers eventually saved Mark Twain from financial ruin and taught him how to invest wisely. I wonder what he would have advised him to invest in today?

Posted in USA Property |

Good afternoon and welcome

At the end of a very harsh week, both in terms of snowfall and political fallouts, it is very easy to forget how flexible and adaptable the US economy is compared to our own. When I was in Florida a couple of weeks ago, I was immediately struck by the no nonsense approach individuals, banks and companies were taking in response to their property crisis. These were clearly people who had identified their problems and accepted the severity of the solutions needed to solve them.

Let me illustrate by way of examples I found on the ground:

- Property prices are considered overvalued? Keep reducing them weekly until people start buying. Those who reduce quickest will sell quickest.

- A huge property developer is struggling to sell the remaining 20% of a project? Reduce the prices by 40%, offer financing, pay the taxes for a year and offer free furniture.

- An investor defaults on a mortgage? Foreclose the property and sell it at a 55% discount. If that doesn’t work, try 75%. It sounds brutal, and it is, but it looks like it is working.

Consider the following figures just released by the Orlando Regional Realtors Association:

1. After more than a year of monthly falls, December 2008 was the 4th month in a row that sales volumes increased, with January likely to be the 5th month.

2. There was 21% more properties sold in December 2008 than December 2007 and the average time a property spent on the market before being sold also fell in December 08.

3. The median price of a property sold in Orlando in December 08 was $169,900. This is 2.3% higher than the median price in November. Has the bottom of the market been reached?

4. The median price of the foreclosed properties sold to Someplace Else Investors to date is $70,300 - over 60% lower than the average price of all Orlando properties being sold. This very clearly demonstrates the value of the investments we are sourcing (which are all located in affluent neighbourhoods).

Because of the drastic measures taken to attract new buyers, it is starting to look like supply is finally starting to decrease again. This is a market that deserves to be taken very seriously. Once you’ve done your homework and purchased in the right areas, it is becoming increasingly clear that Orlando’s economic strength will deliver both stable rental income and capital appreciation for you.

A Landlords Point of View

Let’s take another look at this from a landlords point of view - even though prices have taken an absolute beating over the last 18 months, rental rates have remained remarkably stable. Why is this? The answer is simple: people need to live somewhere. Orlando’s population continues to increase (it is the 2nd fastest growing city in the whole country), and as the numbers of foreclosures increased, mortgage lending standards tightened, forcing sales volumes down.

Regular people just can’t get a mortgage right now. Most young professionals have to choose between living with their parents and renting a nice property.

How can Torcana help me make a profit from this?

We have a local team of professional and licensed experts on the ground in Orlando, who continuously research and carry out due diligence on well regarded and affluent local neighbourhoods with strong local amenities. We only list properties which have a high rental demand and are offered in excellent condition.

Absolutely everything we sell in conjunction with our local partners is 100% turnkey.

• We source properties
• We organise viewing trips (Aer Lingus have a great sale at the moment),
• We process paperwork
• We open bank accounts
• We apply for non resident tax numbers
• We find tenants
• We offer rental guarantees
• We file annual tax returns.

If this is something you want to get involved in, please contact us and request a brochure.
Kind Regards

Colin Murphy

Posted in USA Property |