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 The internet is crammed with old, out of date and random opinions.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

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

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

www.torcana.com