Harsh as it may sound, there are several ways those who are still liquid can profitably take advantage of a global downturn which is still causing much suffering to others 3 years after the credit crunch began.

One of these ways, which Torcana identified more than two years ago, is to purchase highly discounted and undervalued properties from distressed sellers. To maximise the return and minimise the risk of these types of properties, they must be purchased
 
- in wealthy, democratic economies
- with a history of renewal and recovery from recessions
- in fundamentally sound cities and neighbourhoods
- where locals rent long term
- where locals have and are currently purchasing these properties

Apart from that, the properties must be fully completed, cashflow positive and in well located and well run buildings or communities.
 
I´m sure there are plenty of other types of properties that can make you a healthy profit, but these are the ones we´ve identified with the best risk/reward ratio. It´s difficult to see how these kinds of properties will give any serious problems over the next 5 years and the potential benefits are huge.

So our criteria is very strict, but we´ve found plenty of properties that tick all these boxes and the latest is Arbor Lakes in Orlando. Here you can buy for 30 cents on the dollar in a beautiful and pre tenanted condo with 7-9% net rental yields.
 
If you haven´t received an information pack, please send an email to investments@torcana.com and request one.

 

Kind Regards

Colin Murphy

We’re now in the final quarter of 2009, traditionally one of the busiest times of the year for businesses.  This year is radically different to most of course, because we’re still trying to get out of a severe recession. Others might call it a slowdown, but I’m not particularly fond of that description - recessions tend to shake things up rather than slow them down.

A recession will expose weak business models, destroy bloated companies and create unemployment – this has been well documented. For stronger and healthier individuals and organizations, a recession will reveal hidden strengths, create new opportunities and release pent up energy. Companies can hire top class people on the cheap. Talented executives in large corporations will find their bosses’ much more willing to listen to ideas for developing new businesses and revenue streams.

Most importantly, at least from my narrow point of view, a recession means that distressed assets can be bought for absolute song.

Kind Regards

Colin Murphy

Director

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

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

 

 

- We either locate buildings with tenants in place (most of Florida product) or we collaborate with local management companies to source new ones quickly (most of UK product).  

- We advise on purchase strategies and negotiate bulk discounts on behalf of high net worth investors

- We liaise with accountancy experts to ensure returns are filed properly and with title and insurance companies to ensure contracts are processed quickly and efficiently

- We help you obtain financing (where applicable), open bank accounts and obtain tax numbers.

In short, we are a very research and service orientated company.

For more information, please see www.torcana.com.

Kind Regards

Colin Murphy

Director

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

Quite a few people have asked me about Spain recently and whether or not it would be wiser to wait a little longer until prices drop further.

The truth is that the Spanish market has not bottomed out yet, and there are many banks and developers who will shortly be joining the ranks of those who are already very distressed. This increase in supply should cause a drop in median house prices.

However, this doesn’t make it any easier to predict how far the markets might fall or when the “best” time to buy might be. At the moment we have highly distressed stock (in great condition) that is reduced 30-50% from peak levels, and I can’t see average foreclosed properties falling much further to be honest, even though the average regular property price still has a long way to drop.

If you want an extreme example of how much property developers are suffering down there, look no further than a small Belgian developer in Marbella who kidnapped a local bank manager at gunpoint in an attempt to secure a 50,000 euro loan a few weeks ago. Thankfully he was arrested and nobody was harmed after the bank manager used coded language in a phone call to his branch who then alerted the police.

I kid you not folks, it was reported in El Pais.

Feel free to view our Spanish property listings.

 

Kind Regards

 

Colin Murphy

Director

www.torcana.com