FLORIDA PROPERTY FUNDOctober 2011 BY BECOME AMERICAN INVESTOR
Florida Real Estate crisisThe 2007 real Estate crisis took Florida Real Estate by storm; everyone and anyone were building Real EstateProjects all over the state riding a bubble that exploded without warning.Everybody bailed out and the banks ended up with half finished inventories as well as residential propertiesthe owners could not afford anymore. The gap is still very present and many American are still losing theirproperties every day.But it is our opinion that the state of Florida will get back to par at a faster pace than other States for anumber of reasons:F)25 to 30% of incoming US immigrants end up in the State of Florida.G)Florida is becoming the worldwide destination; Latin American are investing in Florida like never before;Europeans can’t wait to get their money out of Europe and Florida is a destination of choice for them.H)While the rest of the world is licking the wounds, Miami is launching mega projects one after the other fora total of close to 10 Billions in 2011 alone.I)Canadians are investing in Florida supported by solid economy back home; in fact the strong CanadianReal Estate situation does not offer investment opportunities locally and Canadians are moving their interesttowards the opportunities offered by Floridas week market.J)The baby boom effect is knocking on the door; Florida is the retirement destination by excellence.
The Opportunity‘’The depleted value of the properties and the strong renting demandcreated a situation that we will probably see ounce in our lifetime.’’The combination of buying at 40% to 60% of the original value and renting out ata normal rate per Square Foot translate into some over 10% return cash on cash.And the upscale perspective on the value of the property is fantasticOur Business PlanOur business plan consist in finding these properties directly ON THE BANK STOCK; rehab those in needand offer them with a tenant in place or a short term rental agreement to the individual buyers from aroundthe world; a turnkey proposition to an effervescent demand.In fact, we buy opportunities in bulk from the American Financiers.The growth of our investment capacity will translate into better deals; American Banks are looking tounload properties without the trouble of dealing with each individual situation and our capacity to buy onthe spot at Court Houses Auctions is an evident asset as well.As the reader will read from the spreadsheets, the key to this proposition is the timetable between the dateof purchase of each property and the date of selling to the individual investors. The ongoing marketing planwill provide us with a bank of potential buyers; it is essential that this marketing effort is in full gear at alltime.Where else in the world will we find such an investment proposal?
Investors from around the worldOur business plan is not limited to North American investors; France, England and Germany investors areturning to the same type of properties; our goal is to expose these opportunities to to the entire market placewith a special attention to Latin America.We actually have physical offices and management staff in Uruguay, Brazil, Canada, Venezuela, andEcuador.The philosophyWe are proposing a format where the investor has all the advantages of a major partner but at the same time,enjoys the limited capital risk of the position of a Banker.The investment takes place under the format of a mortgage on the property.This mortgage registered against the titles of the property will keep the capital including the return of theinvestors in a safe place.Capital RiskOur proposal limits the capital risk as well; the investor’s capital is invested as a mortgage on each propertyor is in escrow.Our investors will enjoy the same position as any lender would have but will also enjoy the return of a majorpartner. As a general rule we also propose not to construct fractional mortgages; each investor will enjoy a‘’solo’’ promissory note with a mortgage lean registered to the property’s titles avoiding any contractualconflicts as the investor has 100% control over his assets at all time.
Return on investmentWe have calculated profit sharing as follows:First, a 8% yearly return is calculated in monthly payments and considered as a direct cost on each property aslong as the property is in our hands.In order to avoid involving the investor in the operation and most of all avoid affecting the return on theinvestment because of variances in profit , we are proposing to turn the 65% share of the profits into a hard 10%fee of selling prices.Based on our calculation the 65% profit share is about equal to 10% of the average selling price. With thisformula, the investors is not affected by any day to day decisions and profit variances; the investors enjoy avery simple and accurate control of each loan including the expected return.At this point in time we want to establish that signing the agreement with the 5% deposit, the investor willreserve his spot on an upcoming startup date on which the 95% of the funds will be transferred to the escrowaccount.The pace of investment is limited by the capacity of the company to absorb the flow of properties.It is useless to have funds sitting in the escrow account.The signing dates on the agreements will keep the order of startup dates for each cell.
The spreadsheetsThe herein spreadsheet demonstrate a conservative operation schedule considering the company’s tools andnetwork already in place.Based on a USD 200,000 initial investment cell.Selling properties at an average of USD 80,600 with an average cost of USD 62,000.The concept applies to bigger or smaller properties as well.The range price of properties will be determined by the potential buyer’s profile our marketing will bring tothe table.Our strike price for purchase including rehab must permit a 1.3 margin.It is possible to have a faster turnover of properties as potential purchasers are qualified and interested in ourproperties as we speak.The reader will find 2 spreadsheets:Demonstrating3) 6 months turnover producing 39% yearly return. (Doc 1)4) 12 months turnover producing close to 17% yearly return (Doc 2)This last spreadsheet shows 2 important factors about this proposalA) The investor’s money is never at risk (with the mortgage) no matter how long the program is extendedand still earn 8% until prior to sell out.B) The yearly return is still close to 17% on a conservative 12 months turnover due to the sale out on a 12months period after invested.
PERSPECTIVE BUYERSThe Canadians (See doc 6)The entire Real Estate Industry recognizes that Canada is one of the biggest investors market out there. Infact the American council is stating that Canadians are now buying 25% of all properties sold to foreignersand 10% of the total Florida Real Estate Market.Canadians are rightfully buying smaller properties under the 200k range.The general consensus is to invest into a property which will pay for itself until retirement time or toeventually sell when the market permits a capital gain.And we push as well our investors towards properties under USD 200,000; these properties can offer a goodmonthly return with a simple USD 1,000 /month renter.A more expensive property will ask for higher rent ratio in order to show a decent return and the number ofpotential tenants at a higher level is limited.It is our opinion that the investor remains in a safe zone by purchasing multiple less expensive propertiesthan fewer more expensive properties.Canadian Banks expanding in FloridaCanadians enjoy finance from Canadian banks; these banks are now branching out in Florida dedicated tofinance Canadians investors.TD Bank and Desjardins Bank are opening Retail Stores all over Florida.Canadians are enjoying 70 to 75% finance, which is a rarity in Florida.
PERSPECTIVE BUYERSThe Brazilians and Latin-AmericansAccording to the New York Times the Brazilians are one of the reasons why the product inventory on real estateproperty went from a 70 years supply to almost gone !!!In Miami, foreigners account for more than 65 percent of all condo and home sales, according to the MiamiAssociation of Realtors.Brazilian buyers have steadily surpassed other nationalities. At the end of 2011, Miami Association of Realtorsstatistics listed Brazilians as the second most active foreigners, at 12 percent of all buyers, sandwiched betweenVenezuelans (15 percent) and Argentines (11 percent). While observers expect Brazilians to take the lead nextyear, Brazilian ownership already is reportedly as high as 70 percent at some luxury towers.“They are taking Miami by storm, more than just buying one apartment, they are also getting their friends andfamilies to buy. When one buys in a project, the rest follow. They want to be around friends and people theyknow.”“The Brazilians just come to spend money, paradise exists and it’s Miami. Everything is half the price andeverything works,” Arturo says.Thru our principals offices located in Argentina, Brazil, Venezuela and Ecuador we will promote the properties,Sud-American markets are buying now over 50 % of properties sold to foreigners
Current long term rental marketDuring 2008 the foreclosure rate in the State of Florida represented 1 foreclosure out of 42 existinghouses !!! Still in 2012 new foreclosure in some counties of Florida are in the rate of 1 per each 200 houses.South Floridas rental housing market is booming as foreclosures and price declines have many residentsleery of homeownership or unable to qualify for mortgages.There are fewer empty rental apartments in South Floridas counties this year over last year and rental ratesare higher. Some new renters are former homeowners who have lost their properties to lenders, while otherssimple cannot qualify for a mortgage.This is the perfect time to buy and rent.
The Process and the AgreementA) Investors funds in EscrowUpon signing the 12 Months agreement the investor will deposit 5% of funds with the company and deposit95% of funds in Title lawyers Escrow Account.B) In due time, the company will present a Purchase and rehab Sheet to the investor for approval; suchapproval to be signed and sent to the Title Lawyer with instructions to engage the specifics funds needed forthis transaction.C) The Title lawyer will register a Mortgage against the titles of the designated property with this presentationand the agreement.(See note on next page)D) We will produce a report to the investor showing the rehab performed on the property as well as the leasesituation within 60 days after purchase date.E) We will deposit the 8% yearly return (divided in monthly increments and starting 30 days after date ofclosing) in the investors bank account with a monthly report on the activity on the property.F) When the property is sold to a third party, the Title Lawyer will provide the investor with a copy of theaccepted offer and details of the selling process.G) With the closing on the selling of the property, the funds (including the 10% bonus on selling price) willreturn to the Title Lawyer escrow account and become available for the next purchase.
Note:The mortgage and promissory note will specify a reimbursement to be paid back with an amount equal to thegreater amount between 10% of the selling price and 11% of the total investment.This stipulation is important to the investor:If the property is sold at a superior price than originally expected, the investor will enjoy a better return.If the property is sold at a lower price than expected, it will be the lost of the promoter since the minimum tobe paid back is 11% of the loan.In fact the formula provides peace of mind to the investor for the simple reason that operation costs or anyother operational factors can not affect his return ratio.The yearly turnover of properties is the key to a higher return on investment for both parties and any forecastat this moment is speculation.A yearly turnover of properties is unthinkable for the financial health of our operation but would still bringsome 12% return to the investor.At the other hand of the spectrum, a 90 days turnover of properties could translate into an important earlyreturn on investment for the investor.The math is simple and anyone can speculate on the final outcome but one fact is obvious: this formatprotects the investor’s capital at all time and still propose a great return possibility.
ConclusionThis is a limited offer; in order to keep pace with our business plan we need to limit the number ofinvestors and the amount of money we can invest in proper manner; it is our opinion that we need to paceourselves to keep a win-win situation for all parties.A 5% deposit with the signed agreement herein will keep the place of the investor. This deposit ensuresthe company of the presence of the investor at closing table; this deposit to be considered as a deposit onthe first property purchases (5000$ per property) and to be credited against the disbursements.This 5% deposit will also contribute to the company’s ongoing activities including marketing ourproperties across the planet.In the case of a multiple investors cell, the loans will be made through a company formed by the investorsand represented by one of the investors.DISCLAIMERTHIS PRESENTATION IS NOT AN ADVERTISEMENT AND IS NOT A PROSPECTUS AND SHOULD NOT BE PERCEIVEDAS SUCH; THE READER ACKNOWLEDGE THAT THIS PRESENTATION DOES NOT CREATE ANY CONTRACTUALOBLIGATIONS TO THE READER OR TO ANY ENTITIES THAT MAY ENGAGE IN THE ACTIVITIES DISPLAYEDHEREIN.
Our PartnersThe law firmJohn Paul Arcia, PA8700 West Flagler StreetSuite 355Miami, Florida email@example.com(786) 429-0410 (Office)(786) 477-4341 (Direct)(786) 429-0411 (Fax)The accountants: Deloitte
Our Organization:Tery FuentesHead Client Relationship and Marketing Our Offices:Arturo VentiPrincipal/Argentina and Brazil Florida HeadQuarter: 101 Pineapple Grove Way, Delray Beach,Herman Graziani FL 33444, USAPrincipal/Venezuela and Florida LATAM HeadquarterRobert Dubois Calle San Francisco, Local 1 OPEN MALLPrincipal/Canada and Florida Punta del Este, UruguayJavier Borrero Brazil OfficePrincipal/ Ecuador and Florida Alameda Eduardo Prado, 371 Campos Eliseos, Sao Paulo, SPGretha GrazianiLong term rental director www.BecomeAmericanInvestor.comRichard Vezina info@BecomeAmericanInvestor.comRehab Director +598 95 767 518Danielle BisaillonShort term rental director
Some recent foreclosures acquisitions, rehab, rental and re- sale for our Property Fund Clients