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Archive for 2009
As many of our regular clients know, here at Torcana we specialize in bringing you high quality, heavily discounted, completed, cash flow positive and tenanted investments.
Strange as it may seem, there are very few companies out there providing investors access to this type of product.
In addition to finding and packaging these products, we also provide a very wide range of aftersales services; including opening bank accounts, obtaining tax numbers, obtaining condo insurance, liaising with your management company and provision of accountancy services.
Please visit www.torcana.com for more information on a very wide range of exciting discounted products in USA, UK and Spain.
Many people (although hopefully not too many readers of these blog posts) can be forgiven for wishing journalists and commentators would simply shut up for a while about the trends in the housing and mortgage markets and concentrate on more important things like reducing unemployment and improving healthcare.
However, and whether we like it or not, the focus on the housing market needs to continue because it has direct links to many other industries and house prices directly affect consumer spending. Simply put, if people know that their house is increasing in value, they will tend to spend more money (and vice versa). In economic jargon, this is referred to as the Wealth Effect and it is very influential. The economic policy models of the Fed Reserve assume that a person whose house appreciates by $100,000 will increase his spending by the same proportion as a person who receives an extra $100,000 in stocks, shares and regular income.
Declining house prices also limit a banks willingness to lend money - not just for houses but also for cars, business start ups, holidays and general investment. Far too many people who should have known better lost sight of these forces.
Colin Murphy
Torcana.com
Next month will mark the 2nd anniversary of the credit crunch believe or not, and as Fiona Redden of the Irish Times has pointed out, this is as good a time as any to reflect on what lessons can be (re)learned. Among other things, she recommends a diverse portfolio, that we know when to cut our losses and take our profits, that we purchase a property based on predicted capital appreciation & rental income rather than add on incentives and that we always maintain a cash reserve.
Warren Buffet himself would be proud of such homespun wisdom Fiona.
Colin Murphy
Torcana.com
After a (very) long winter, spring seems to have brought a touch of sunshine to American house prices. The latest Case Shiller indices were released last week and they showed that average prices continued to fall in April 2009: the ten city index was 0.7% lower the 20 city index was 0.6% lower than the previous month. What’s interesting to me is that these are the lowest falls since June 2008. The case for those declaring the worst is over continues to gain momentum.
Despite continued pessimism in some quarters of the market, the statistics point to similar turning points in the UK; with Nationwide reporting price rises of 0.9% in June and the Bank of England announcing four months in a row of rising mortgage approvals in May.
Colin Murphy
Torcana.com
Most of you know that we’ve been selling foreclosed properties in Orlando since last autumn, and it is an excellent way of purchasing an undervalued buy to let asset. However it can be a frustrating experience as well, as clients are often bidding against several people for the same property, and once an offer is made, you usually have to wait 2-3 weeks to receive an answer. If the bid was unsuccessful we need to start again. Once a successful bid is accepted and processed, the management company process starts, with the lucky landlords finding new tenants within 4-6 weeks.
Torcana.com manages this whole process (and much more) from start to finish and we do our best to minimize the work a client needs to do. However, once we’d processed a lot of these units and established a very robust network of local contacts, it became evident that there was a much better way of doing this, both the agents and the buyer point of view.
As has happened in Ireland & the UK, when the credit crunch was causing misery for local Orlando developers quite a few decided to try and ride out the storm by furnishing and renting out the remaining units themselves while waiting for the market to turn. Makes sense right? But what if we could find a developer who owned and rented high quality units and was about to be foreclosed by a bank? Let’s say we find one who needs to raise $5 million in 30 days or the bank will seize his assets. Would he be willing to sell 100 of his properties to investors with tenants in place at a foreclosed price level (say $50,000) in order to avoid the excruciating foreclosure process? If you can convince him that you’ll be able to sell them, then yes, he certainly will, which is what our Tradewinds development is all about.
This ticks all the boxes in terms of location, quality, price and rental yield. It has all of the benefits of a foreclosed property (highly discounted price, v high rental yield) with none of the headaches (bidding process, red tape, finding tenants). Please contact us directly if you’d like to learn more.
Colin Murphy
Director
The manager of one of the banks we deal with called me last week to let me know they’ve launched a new mortgage product specifically for people purchasing distressed properties.
This is an excellent product: loan to value of up to 90% available for anybody resident in an OECD country, low application fees (0.35%), low interest rates (around 3%) and loan terms up to 40 years.
It’s a big deal that a Spanish bank has launched a 90% mortgage product specifically for these properties, as most of them have their heads completely in the sand. For example, myself and my (Spanish) wife can’t even get 90% for a regular property in Madrid!
This is perfect to use with our Granada product, which will achieve net rental yields of up to 8%. If you would like full details, please visit the Torcana website.
Kind Regards
Colin Murphy
Director
I was in Brazil a couple of weeks ago, not to look at local property developments (although I did do that too) but to deliver a series of presentations to a large real estate conference attended by international property investors. I was the only person there promoting European property and the only person discussing the strategies available to those seeking to purchase highly discounted property from distressed sellers.
Hardened investors who had arrived with the intention of purchasing offplan condo hotel or vacation property in South America were surprised to find themselves very seriously considering purchasing city centre property in Birmingham or vacation homes in Andalucía instead. They simply weren’t expecting an Irishman to stand up and offer them high quality finished properties in these locations at lower prices and higher rental yields than their offplan South American equivalents. It was a great success for Torcana overall, and if any of our regular clients would like to view one of the presentations I delivered please click here.
Regards
Colin Murphy
Torcana Ltd
A new trend seems to be emerging in certain property circles. Several times in the past six months I have seen evidence of hardened investors who have always pursued an offplan investment strategy considering a radical change.
The profitable strategy of the past decade is fairly simple on paper – find a reputable builder, reserve an apartment in a great location which will be built in 2-4 years time, negotiate preferable payment terms and wait for capital appreciate during the construction stage. Definitely not as easy as it sounds, but hundreds of thousands of people have been doing it successfully.
Times are changing though, and these same hardened buyers are now pursuing a new strategy with equal vigor – instead of offplan apartments or condo hotels in emerging markets, they are snapping up completely finished properties in developed markets at discounted prices.
Why? The credit crunch. Developers are struggling to sell excess stock, which means they are under pressure from the banks that financed them. This forces them to drop prices dramatically to stimulate supply and boy are they doing it. I’ve seen prime urban properties in very wealthy cities selling cheaper than an offplan resort in an area with a fraction of the income per capita.
The property section in Torcana.com has plenty of examples for any who have time to look through them.
Kind Regards
Colin Murphy
Torcana Ltd
There is an enormous glut of properties in Spain at the moment, and I’m very picky regarding the types of developments that are chosen for clients. My top tip for those seeking the perfect mix of investment and vacation is our new 288 unit development in Granada. We have negotiated exclusive discounts jointly with the bank and developer and independent research forecasts net rental yields of 8%. It is a beautiful resort in an unbelievable location with access to beaches (10min), golf courses (15 min), ski slopes (35 min), airport (25 min) and the historic town centre of Granada (20 min). You can find further on our website.
Generally speaking, I would advise buyers to stay clear of large developments (I get nervous when they are bigger than 300 units) and high density developments (more than 3 storeys). You should be purchasing units that are least 30% lower than the previous purchase price and that are at least 65% sold (to avoid risk that community fee system will collapse). And of course, don’t even think about purchasing offplan, with hundreds of thousands of unsold finished properties available all over the country at bargain prices, there’s simply no need to take that risk.
Kind Regards
Colin Murphy
Director
Torcana Ltd
Apologies for the longer than usual delay between posts - a very hectic travel schedule over the past 10 days taking in conferences in Brazil, meetings in London and site visits in Granada, Almeria and Birmingham has robbed me of the time I usually set aside to write these newsletters and blog postings.
However, our website www.torcana.com has been updated daily with great new projects and my colleagues have been kept extremely busy from a large influx of enquiries from PR exposure in Business & Finance Magazine, The Sunday Times and Homes Overseas Magazine.
I wasn’t in Fortaleza Brazil earlier this month to look at local property developments (although I did do that too); I was actually there to deliver a series of presentations to a large real estate conference attended by international property investors. It was a great success for Torcana overall, and if any of our regular clients would like to view one of the presentations I delivered please click here.
Regards
Colin Murphy
Torcana Ltd
