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Applying Buffetts' Logic to the Property Market
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| Torcana Ltd Investment Newsletter |
April 2009 |
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Good afternoon and welcome to Issue 4 of the Torcana Newsletter
As usual, it's been an eventful two weeks since Issue 3.
Let's get the bad news out of the way first shall we? In the UK Alistair Darling delivered a budget describing an eye watering increase in public debt based on some a very unlikely economic growth predictions in 2010.
In Ireland, the levy's and cutbacks announced a few weeks ago are about to take affect amid mounting criticism of the governments handling of the crisis. On top of all that, we've a possible Mexican pandemic on our hands.
It takes a bit of an effort to look beyond all that, but I've been doing it, and thankfully, so have plenty of others.
"Be greedy when others are fearful and be fearful when others are greedy"
Warren Buffett coined that phrase in 2004 and it's truer than ever today. Mr Buffett has been a busy man these last six months, and as usual, he hasn't been afraid to put his money where his mouth is.
He is currently purchasing stocks from large cash rich companies with sound business models and competent managers.
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Torcana.com Interactive Site
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He figures there's a good chance these types of companies will increase their market advantage and squeeze out weaker competitors over the next 5-15 years. Makes sense right?
Torcana and our investors have quietly been applying this same logic to the property market - i.e. we have been sourcing and selling undervalued properties with higher than average rental yields located in fundamentally sound areas. It stands to reason that these will be the best performers over the next 5-15 years doesn't it?
Green Shoots - UK & USA
There is a wealth of useful statistical information out there to assist today's active buyer. Below you'll find a quick summary of some of the main points discussed at a business breakfast seminar we delivered last week (you can view a copy of the presentation here)
United Kingdom
- The number of mortgage loans approved increased in Feb 2009
for the first time in two years (Bank of England)
- Last month estate agents reported their fifth consecutive monthly increase in new buyer enquiries (Royal Institute of Chartered Surveyors)
- The average price of a prime central London properties rose for the first time in over a year (Knight Frank)
Orlando, Florida
- The volume of property sales in March 2009 was 48% higher than March 2008
- The numbers of properties available for sale has fallen 20% in the past year
- The affordability index is a record 192% i.e. the average family has 192% of the income necessary to qualify for a conventional mortgage on an median priced home. (Orlando Realtors Association).
These are the kinds of statistics we base our recommendations on and we spend a lot of time analysing them. Purchasing below market value property is now a very quick process (usually less than 6 weeks) but please bear in mind that it involves effort and close collaboration between the vendor, agent and client.
Who wants to be popular?
I think we can all agree that the days of packed exhibitions, overbooked inspection trips, bulging property supplements, non-stop property chatter in the pubs and coffee tables full of glossy brochures are all long gone.
That's fine by me.
Why? Because most people get interested in stocks when everyone else is. Real wealth is generated by getting interested when no one else is. You can't buy what is popular and do well.
Yet another pearl of wisdom paraphrased from the Sage of Omaha, but he could have easily replaced the word stock with property...
Speaking of which, you might want view this weeks special offers below.
Kind Regards
Colin Murphy
Director
Torcana Ltd
Tel: +353 1 4433 991
Fax: +353 1 2586 016
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| UK - The Stadium, Highbury Square
Highbury, London N5, Ref U130
- Prices from £233,309
- 1 & 2 Bed apartments
- Prestigious development and address
A unique development within Arsenal's old home, Highbury Square. Limited properties at heavily discounted prices.
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| UK - Fulham, London SW6
Fulham, London SW6, Ref U109
- Average price £285,000
- 6.1% Yield
- 20% Below Market Value
This recently completed new build is in located just off the sought after New Kings Road in Fulham.
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USA - Reunion 3 Bed Condo
Reunion, Orlando, Ref 355
- $142,900
- 1,344 sq ft
- 3 Bed, 2 Bath
- 78% Discount, previous sales price $640,000
A beautiful development with stunning golf course views, this condo has potential into smaller units in tandum.
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USA - Vista Cay 2 Bed Condo
Vista Cay Convention Centre, Orlando, Ref352
- $163,500
- 2,097 sq ft
- 2 Bed, 2 Bath
- Exceptional rental returns
Superb unit with upgrades throughout. This property is within a sought after development consistently delivering high returns.
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| Spain - Oropesa 1, 2 & 3 Bed Apartments
Oropesa, Castellon, Ref S127
- €87,000
- Communal pool
- 30% Discount
A selection of 1, 2 and 3 bed apartments with fitted kitchens located just 300m from the seafront.
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| Spain - Torrevieja 2 Bed Apartments
Torrevieja, Costa Blanca, Ref S128
- €110,889
- Town centre location
- 30% Discount
Wonderfully located just a few metres from the sea and the centre of Torrevieja town.
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