Following my recent extensive trip covering the four corners of Florida looking for the best property investments I felt it would be useful to take some time to give you an update of the property market from the ground. This will be the first of three blog posts concerning Florida.

Firstly there are many amazing investment and lifestyle opportunities in the State of Florida, it is the 4th most populous US state, with an incredible infrastructure, hugely diverse economy and an abundance of natural beauty, unspoiled beaches and wildlife. The people are very proud of their state and I can see why.

There has been a lot of contradictory media attention about the US housing market, one day you might hear property prices are rising, the next that they are falling.

The reality is that just like the UK or Ireland, the property market in Florida is local and should be looked at on a micro level rather than taking investment decisions on a macro, state wide information.

Torcana work in the distressed market, which is quite distinct from the regular market. Within this market we concentrate on taking advantage of distressed sellers and developers who have relatively small amounts of unsold properties within very well run and well built resorts. These properties can be purchased for less than their construction cost. It is a very active and aggressive market and this type of distressed inventory is down nearly 50% year on year.

Kind Regards

David Shaw

Torcana Sales Manager

I hear this question daily, all that shines is not gold so please let me outline my view of the Florida property market.

A new build 900 sq ft 1 bedroom sea view condo in Miami cannot be measured against a 15 year old timber frame 550 sq ft  1 bedroom/studio in Ft Myers. It is essential to measure apples against apples. 

It seems obvious when phrased like that, but it isn’t stopping both amateur and professional investors of falling into the trap. Whether property prices are increasing, stagnant or falling – you still tend to get what you pay for.

Picture the town / city / village where you currently live and imagine there are many distressed sellers. Would your first reaction be to hunt down the very cheapest property available just because it is cheap and tenanted?  I’d imagine the answer for most of you is no, and that many would prefer to pay a little extra to get a discounted property in a nicer part of town, where the tenants are solid and a resale market can be clearly visualized.  This is how we feel about Florida.

Not everybody takes this approach. Over the last few months I have seen UK and Irish agents engage in what I can only describe as a “race to the bottom”. There is real pressure in this business to source the very cheapest distressed deals possible with scant regard to the ABC’s of smart investing.

It’s a pretty risky strategy for an agent to engage in, and it is not one that would be of interest to Torcana. No doubt the commission will come rolling in for a few months, but these agents will quickly reach a point where they either have to ignore large numbers of client complaints or they will have to dedicate ruinous amounts of company resources to solving messy aftersales issues.

It is our view that investors should not be satisfied with an agent who just sources property. A good agent is an essential service for a non professional as they help him/her (a) find the smartest long term investments available, (b) ensure the pitfalls of buying in a distressed market are avoided and (c) assist with a smooth transfer of ownership. 

Looking forward to your thoughts.

Kind Regards

David Shaw

Torcana Sales Manager

I’ve been making quite a big effort over the past six months to emphasize the speed at which the Florida market has been recovering from the credit crunch and property slowdown. Yesterday morning I received two graphs from one of my main contacts on the ground that will illustrate this far more clearly than my words have ever done. 

Graph 1: Supply in Florida has been falling dramatically for almost a year. This is because developers are not starting new construction projects and prices of existing stock have been slashed by up to 75%, thereby boosting consumer and investor demand (with a little help from US subsidies for first time buyers).

 

 

 

Graph 2: The market bottomed out in December 2007 and it took another 15 months before activity reverted back to late 2006 levels. Over the past six months, it has been quite frantic, which huge volumes of new contracts being issued to a wide variety of buyers.

 

 

 

Breaking through the pain barrier 

In short - developers, banks, agents, investors and homeowners all had to go through a world of pain between September 2006 and September 2009. Their counterparts in Ireland, Britain and mainland Europe have had it easy in comparison. 

Prices are still low, but they are not going lower, of that I am quite sure. There will always be good deals out there for the shrewd and well connected buyer, but the days of snapping up a high quality unit for $50-60k that used to cost $200-$230k are numbered.

The Villas at LaCita is one such untapped gem, and we’ve only 20 units to sell. They are tenanted, they are cash flow positive and they are in a great location. Some have very high rental yields and some have modest rental yields. 

If you want to take your pick of the very best, please visit http://tinyurl.com/torcana-lacita  and contact our offices for further information. 

Kind Regards

Colin Murphy

Torcana.com

Good afternoon all

We are very excited to be launching a brand new project on Florida’s Space Coast.  

 The development is called Villas at LaCita: the location is stunning, the prices are terrific (from $53,000) and the rental yields on the best units are a rock solid 7-8%.

 Like our previous Madison, Tradewinds, Waterside and Flora Ridge developments, these are high quality tenanted units with long term leases in place & available to investors at up to 75% below previous sales prices. You’ll find full details by visiting http://tinyurl.com/torcana-lacita  

Kind Regards

Colin Murphy

Torcana.com

The bad news is that opportunities for easily purchasing a property at the very bottom of the US market are gone. This isn’t necessarily making front page news in The Times but statisticians and reporters tend to print yesterdays news.

There are two fundamental market forces at play. There is the “real market” which comprises 90% of existing US residential property. This stock may have lost significant value in the last few years but it is neither distressed nor foreclosed and the vast majority of it is not for sale.

The other, temporary market is the “distressed market” which completely undermines all efforts of the real market to sell surplus stock. This is because the “distressed market” as you will guess, is comprised of foreclosed and distressed property from banks and developers.

This market is the only show in town as far as bargain hunters are concerned, and it is our knowledge of the main players in this market and the process by which we help clients purchase, tenant, maintain and resell these assets that makes Torcana.com stand out from the crowd.

 

Kind Regards

David Shaw

Sales & US Sourcing Manager

Torcana.com

One of my main challenges as Torcana.com Director is communicating the furious pace of the distressed USA property market to clients. With property activity moving at a snail’s pace in Ireland and the UK, there is an understandable but hugely misleading feeling on this side of the pond that there is plenty of time to invest in distressed assets and that it is a “buyers market”. As the monthly statistics have been showing, the reality is completely different.

For starters, the blind fear and panic of late 2008 and early 2009 are now distant memories. Regular investors are back and like all smart investors, they are ruthlessly snapping up the best properties in the best locations at the best prices.  

Secondly, regular Americans with good credit ratings have been availing of large housing grants (up to $8000) and high LTV mortgages (up to 97%) to purchase their own homes at 10 year lows. This is having a profound effect on the market.

Thirdly, capital has been flowing back to private equity investors, pension funds and hedge funds. These are the silent whales of the market and they are literally hovering up thousands of foreclosure properties before they even register on a normal investor’s radar.

Total housing inventory is 40% down on last year and real bargains on high end foreclosure properties are like hens teeth. I have seen seasoned operators bidding cash on 5 or 6 deals before getting one of them accepted.

 

Kind Regards

David Shaw

Sales & US Sourcing Manager

Torcana.com

There are a lot of misconceptions out there, and much of it is caused by internet misinformation. The internet is crammed with old, out of date and random opinions. Using the internet as an investment guide makes complete sense but relying completely on the internet can be a little like “self diagnosing”. You start with a pain in your thumb and end up with a terminal disease. This is a complex market and I think it is important to seek advice from people (not necessarily ourselves) who deal with it on a daily basis.  

With so many properties listed on the internet, it can seem that there is no shortage of great deals out there, but it’s quite difficult to find a bargain.

At least once a week a client will call me to say they have spotted a deal on the internet or through a US agent that seems too good to be true and they are either wondering if there is a catch or if I could help them secure it.  Sometimes I’ll have a closer look and within 20 minutes or so it’s usually apparent why it is being advertised at such a low price.

With countless millions of dollars lost to poor investment strategies over the past 15 years, it is more important than ever to consider the fundamentals of property investment before committing. I would never buy a property because it is cheap because value is very relative. I look at the location, the running costs, HOA dues, property taxes, insurance issues, crime statistics and the local rental market. Among other things, I will find out if it is new or recently converted, if it is timber frame or solid concrete build, if the HOA is solvent and the percentage of foreclosures in the community.  

I dedicate a lot of time to locating investments that do not carry these risks.   

 

Kind Regards

David Shaw

Sales & US Sourcing Manager

Torcana.com

I recently read a great quote from Noel Whittaker (Australian financial columnist). It struck me as particularly relevant for those who are unsure of where or how to make their next important financial move.

“Life is full of uncertainties. Future investment earnings and interest and inflation rates are not known to anybody. However, I can guarantee you one thing.. those who put an investment program in place will have a lot more money when they come to retire than those who never get around to it”

Apart from working, investing is the only method of generating long term financial independence. From a personal point of view, I’ve made more money from my investments than I have from the various salaries and dividends I’ve drawn over the past 15 years.

There was a lot of irrational behavior on display in Florida during the boom years. This irrationality forced prices too high and placed unwarranted trust in developers promising they would build luxury resorts that potential renters would flock to.

That property boom has bust, and the prices for certain properties in wealthy locations are completely irrational in the other direction – i.e. they being sold at too large a discount. While the instinct to wait for the macro economy to recover and “normality” to return before investing is understandable, it could turn out to be a counterproductive strategy if your aim is to create wealth for the future. 

There are still quite a few areas within Florida where high rental yields are available and the potential for capital appreciation is huge.

For example, I’m going to be a sizable chunk of this week speaking to clients about the twenty odd units we’ve available Flora Ridge. These three bed properties are tenanted, generate 9% net yields and used to cost more than $350,000 per unit. They are now available for between $114,500 and $115,500. I’m pretty confident these can be sold with a minimum of fuss in 3-4 years time for at least double that. In the meantime you’ll be taking home more than $10,000 per year net of all costs.

You’ll be hard pushed to find something better than that.

Kind Regards

 

Colin Murphy

Torcana.com

 

 

Hundreds of you have asked us about mortgages in Florida and we have been in negotiations with dozens of US based banks over the past year in attempts to secure them. It has proved very difficult to say the least - there were far too many brokers and banks talking the talk and nothing more. However, and at long last, we are delighted to announce that we have finally managed to secure local financing for our clients.

Superior Bank successfully arranged mortgages recently for foreign nationals this summer and I’ve seen the proof with my own eyes. In a nutshell, if you have a job with steady income and you can prove that you have a 30% deposit and no bad credit history your application will be successful.

Request your Mortgage Information Packs on Torcana.com

Think about it - two bed tenanted waterfront properties costing $90,000 can now be financed for just $27,000 (€18,400 / £16,375). Three bed two bath tenanted properties near Disney costing $116,500 can be financed for just $34,950 (€23,800 / £21,150). Details of both these projects are on www.torcana.com

If you’d like to receive a full information pack on financing packages available, simply visit the new US Mortgage Section of our website and we’ll send one right out to you.

 

Kind Regards

 

Colin Murphy

Torcana.com

At the beginning of 2009, Florida seemed to have an unimaginably large supply of property: 23.6 months worth. It is now 8.4 months and because new construction activity is still minimal, it is set to fall further. A market with 6 months supply is considered by economists to be balanced between buyers and sellers.

 

Let’s look at it another way - the last nine months in Florida has been a little bit like one huge Brown Thomas or Selfridges sale. While there’ll still be products discounted at 60-70% in six months time, the best quality merchandise and the best deals will always be snapped up by those queuing to get in at the start. We know this because Torcana.com have been right in the thick of it all year and can see it happening everyday.

 

Kind Regards

 

Colin Murphy

Torcana.com