Distressed Property Seminar

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Discounted and distressed properties in UK, Florida and Spain. …

Discounted and distressed properties in UK, Florida and Spain.

Leading property consultancy discusses the methods and strategies used by investors who are buying when everyone around them is selling.

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  • 1. DISCOUNTED PROPERTY SEMINAR The Heritage Hotel, 23rd April 2009 SCHEDULE 8.00 – 8.30 Purchasing Discounted Properties in Prime Locations 8.35 – 9.30 Latest recommendations: USA, UK & Spain 9.35 – 10.00 Q&A / Discussion
  • 2. What is Torcana Ltd ? • Dublin based investment consultancy • Source variety of discounted properties from distressed sellers • Utilise wide variety of global partnerships to provide packaged solutions • Focus on cash flow positive, high quality, undervalued assets
  • 3. Should we really be investing in property? • Global turbulence • Stock markets devastated, demand for goods & services plummeting • Unemployment, taxes, debts, defaults all increasing alarmingly • It’s bleak, but do these conditions unearth new opportunities to be exploited? • Absolutely, unprecedented opportunities • But you must be extremely careful
  • 4. Should we really be investing in property?
  • 5. Before you start.. • No “one size fits all” solution • Important factors to consider • Budget – how much do you want to invest? • Timescales – how long do you want to invest your money for? • Income – do you want income and / or capital growth? Risk factor – how risk averse are you? •
  • 6. What to look for in an area before you invest • Identify solid reasons for capital growth • Look closely at the economy & demographics • GDP growth, infrastructure, population growth • Examine external influences • Supply vs. demand • Building restrictions • Financing • Local & foreign affordability • These are fundamental factors that apply in all economic cycles
  • 7. What types of countries do we see value in? • Every country is suffering, but some will recover quicker than others • Who has the capacity / sophistication to borrow cheaply and implement well thought out reforms? • Which countries have strong domestic markets? • Where are the areas where people will always want to live? • Are there any property developers and banks suffering in these areas? • Can high quality investment properties be purchased at a fraction of their former cost? Are these at or near the bottom of the cycle? • Is there a genuine rental market that will ensure it is cashflow positive while you (patiently) wait for the market to recover? • Will banks provide finance to foreign buyers for these?
  • 8. Where are we looking at right now?
  • 9. DISCOUNTED SPANISH PROPERTIES • One of the worlds most mature second home markets • Excellent infrastructure, great climate, flexible mortgages, robust tourism • Property boom now bust – huge volumes of unsold stock nationwide • Opportunities to purchase distressed stock • Torcana have signed agreements with two major Spanish banks • 80% financing to buyers of these properties • Prices starting at €67,000. Up to 40% discounts
  • 10. DISCOUNTED SPANISH PROPERTIES 2 €80,000 - €120,000 Villamartin, Alicante 1, 2 and 3 bed apartments Swimming pools and spa Golf, beaches and water sports within 10 minutes 30% discounts Circa €200,000 Marbella / Puerto Banus 1 & 2 bed apartments Large swimming pool on site Beaches, marina, golf, shopping all nearby 50% discounts €240,000+ Mojacar Playa, Almeria 1 & 2 bed apartments Properties on a golf course, with sea views Swimming pool, fitness centre, sauna onsite Year round community 25%+ discounts
  • 11. Orlando, Florida
  • 12. Orlando, Florida • Economic and market forces aligning to create some of the best purchase opportunities seen in a generation • Properties for as little as 30% of their former values • Excellent rental returns and cash flow positive (5-8% typical) • Turnkey services provided – legal, tax, title, management, banking • We only focus on properties which have high rental demand, are in strategic locations and are offered in excellent condition
  • 13. Orlando, Florida - Are we approaching bottom of market? Property sales are up 48% in March compared to the same month last year Median house price is 37% lower than 1 year ago Affordability index is now at 192% The number of properties for sale on the MLS is 20% less than 1 year ago Properties are selling 20% quicker (in terms of how many days they are on the market for) than 1 year ago Sales of condos are up 228% on 1 year ago
  • 14. Orlando, Florida • What is an REO Property ? REO simply stands for Real Estate Owned, and is a property that sits on the banks books, and is no longer owned by an individual It is the final stage of the foreclosure process, where the price of the property reaches its lowest point • What are the dangers and pitfalls to avoid? - HOA Fees / Delinquencies - Condition of Property - Property Taxes - Management Company - Intimate knowledge of location
  • 15. Where in Central Florida? Metrowest Millennia Dr Phillips / Bay Hill Hunters Creek
  • 16. Investment Sample Detail 2 bedroom example Previous Purchase Price $233,300 (ref 115) Current Purchase Price $61,900 Total Closing Costs $5,000 Monthly Income Estimated Rental $975 Gross Yield 18.9% Monthly Expenses Management Fee (10%) $97.50 Real Estate Tax $214 Home Owner Association $280 fees Insurance $30 Monthly net cash flow $353.50 Net Rental Yield 6.8%
  • 17. OUR RECOMMENDATIONS – BEST BUYS $50,000 - $100,000 – Madison • Guaranteed availability and smooth purchase transaction • Tenant in place • Great onsite amenities and many units have golf course views • Contribution to closing costs this is a great entry level product $100,000 - $150,000 – Bella Piazza • Brand new with luxury furniture and upgrades • Ideal for short term and long term rental with some available tenanted • Fantastic location and onsite amenities including three pools • Contribution to closing costs these properties are half original sales price $200,000 + Reunion, Dr Phillips, Bay Hill • Ideal for short term and long term rental • Sought after locations and many golf properties • Stunning properties with high end finishes and upgrades • Quality developments demanding high, consistent rents
  • 18. The United Kingdom
  • 19. The United Kingdom • Developer Attitudes – marked change in 2009, better discounts now available • Huge numbers of cancellations and mothballs – will cause future undersupply • Interest rates at all time lows (currently 0.5%, down from 5% in Sep 08) • We are now entering prime buying time • Torcana have formed wide range of partnerships to capitalise on opportunities • Lawyers • Tax Advisors • Management Companies • Mortgage Brokers • Local Agents
  • 20. The United Kingdom - Signs of Market Activity RICS Monthly Survey 15th April • Estate agents report net balance of 31% more new potential buyers in March • Highest since September 2003 • Fifth consecutive month with positive balance Bank of England • Number mortgage loans approved increased in February • First monthly increase since early 2007 • Major banks all planning to increase mortgage lending
  • 21. The United Kingdom contd. • Areas and Types of Properties Available - First time buyers - 1 – 2 bed properties - Either central or commuter belt Bulk vs Single Buyer Discounts • What you should avoid • - Offplan Properties - Very large properties - Areas with oversupply - Extremely large developments Financing Options 70% Variable LTV from 1.99% to 2.19% above BOE base rate Minimum loan is £100,000 Loan amounts calculated on 5 times net salary Various fees involved (1-2%)
  • 22. BULK OPPORTUNITIES AVAILABLE AT THIS SEMINAR: Hoxton, London N1 28 Residential apartments New build, recently completed Yield – 5 % (Guaranteed for 1 year) Purchase offers £9.56m or from £221,200 per unit (30% BMV) Putney , London SW15 14 Residential apartments Yield – 6.2% Purchase offer £3.52m (30% BMV) Individual units available from £241,500 (available upon 6th unit purchase) Earlsfield, London SW17 30 Residential apartments New Build, recently completed and tenanted Yield – 7.4% Purchase offer £7.4m or from £190,000 per unit (30% BMV)
  • 23. Torcana Interactive Website
  • 24. Thank you very much for listening. Colin Murphy & David Shaw Torcana Ltd 29 Ballsbridge Wood Dublin 4 Tel: 01 443 3991 Fax: 01 258 6016