Good afternoon and welcome
At the end of a very harsh week, both in terms of snowfall and political fallouts, it is very easy to forget how flexible and adaptable the US economy is compared to our own. When I was in Florida a couple of weeks ago, I was immediately struck by the no nonsense approach individuals, banks and companies were taking in response to their property crisis. These were clearly people who had identified their problems and accepted the severity of the solutions needed to solve them.
Let me illustrate by way of examples I found on the ground:
- Property prices are considered overvalued? Keep reducing them weekly until people start buying. Those who reduce quickest will sell quickest.
- A huge property developer is struggling to sell the remaining 20% of a project? Reduce the prices by 40%, offer financing, pay the taxes for a year and offer free furniture.
- An investor defaults on a mortgage? Foreclose the property and sell it at a 55% discount. If that doesn't work, try 75%. It sounds brutal, and it is, but it looks like it is working.
Consider the following figures just released by the Orlando Regional Realtors Association:
1. After more than a year of monthly falls, December 2008 was the 4th month in a row that sales volumes increased, with January likely to be the 5th month.
2. There was 21% more properties sold in December 2008 than December 2007 and the average time a property spent on the market before being sold also fell in December 08.
3. The median price of a property sold in Orlando in December 08 was $169,900. This is 2.3% higher than the median price in November. Has the bottom of the market been reached?
4. The median price of the foreclosed properties sold to Someplace Else Investors to date is $70,300 - over 60% lower than the average price of all Orlando properties being sold. This very clearly demonstrates the value of the investments we are sourcing (which are all located in affluent neighbourhoods).
Because of the drastic measures taken to attract new buyers, it is starting to look like supply is finally starting to decrease again. This is a market that deserves to be taken very seriously. Once you've done your homework and purchased in the right areas, it is becoming increasingly clear that Orlando's economic strength will deliver both stable rental income and capital appreciation for you.
A Landlords Point if View
Let's take another look at this from a landlords point of view - even though prices have taken an absolute beating over the last 18 months, rental rates have remained remarkably stable. Why is this? The answer is simple: people need to live somewhere. Orlando's population continues to increase (it is the 2nd fastest growing city in the whole country), and as the numbers of foreclosures increased, mortgage lending standards tightened, forcing sales volumes down.
Regular people just can't get a mortgage right now. Most young professionals have to choose between living with their parents and renting a nice property.
How can Someplace Else help me make a profit from this?
We have a local team of professional and licensed experts on the ground in Orlando, who continuously research and carry out due diligence on well regarded and affluent local neighbourhoods with strong local amenities. We only list properties which have a high rental demand and are offered in excellent condition.
Absolutely everything we sell in conjunction with our local partners is 100% turnkey.
We source properties
We organise viewing trips (Aer Lingus have a great sale at the moment),
We process paperwork
We open bank accounts
We apply for non resident tax numbers
We find tenants
We offer rental guarantees
We file annual tax returns.
If this is something you want to get involved in, please download and read our brochure and have a look below at the properties available as of today.
Kind Regards
Colin Murphy
Sunday, February 8, 2009
An attempt to explain a Recession Simply & Clearly
Good afternoon everybody
Every ten blogs or so, I feel compelled to write a longer and more general note describing economic shifts and events (as I see them) rather than my usual focus on property and property markets.
However, please do feel free to skip straight to the property investment information by clicking on the links to your right or scrolling down to the bottom of this email.
Making sense of it all
Like many of our readers and clients, I'm the type of person who tunes in regularly to radio chat shows, current affairs programs and newspaper reports on how the global turbulence is affecting our house prices, our labour markets, our stock markets and our changing consumption habits. There are lots of commentators out there who seem very qualified and sound like they know what they're talking about when discussing concepts like recapitalisation, nationalisation, liquidity ratios, deflationary pressures, credit ratings etc. and yet, when I've finished listening to them, I've usually forgotten what the question they were supposed to be answering was. Sound familiar?
With that in mind, and throwing caution to the wind, I'm going to pose a few questions I think a lot of people would like answered, and I'll try and do as quickly and clearly as possible. Please bear in mind that all of these issues deserve much more comprehensive answers than the size of this newsletter or the limits of my ability permit.
1. How did the subprime mortgage crisis in the USA affect property prices in Ireland & Britain?
2. Why are large international banking stocks trading at 30-60c per share when they were €20-€30 per share 18 months ago?
3. Why have banks moved so rapidly from loose lending criteria to excessively strict lending criteria?
4. Why is unemployment rising so quickly and why are our economies slowly so rapidly?
5. How can a person safely invest in a property market without falling victim to another property crash in 2010 or 2011?
How did the subprime mortgage crisis in the USA affect property prices in Ireland & Britain?
The subprime market, i.e. the practise of offering high interest mortgages to people with a high risk of missing future payments, was just the most extreme example of a mind boggling variety of mortgage products. It was viewed to be of low risk overall because it was assumed the value of the properties they were secured against would always continue to rise and could be resold if the client defaulted on his loan.
While there was a time when mortgage lenders like AIB, Bank of Ireland, Barclays & RBS etc. could only source funds from their local markets and would simply offer a multiple of the deposits received from savers to borrowers who wished to take out a loan, this has not been the case for many years.
Nowadays, banks based in net borrowing economies (like the USA) receive vast sums of money from banks in net saving economies (like China). These banks then repackage this money in horrendously complicated ways and give other international banks operating in borrowing economies (like Ireland & the UK) access to it.
If the banks who lent to people with a high default risk operated in the old fashioned way and were not so interconnected with the global economy, their boardroom and their shareholders would be duly punished when these loans were not repaid and we would all move on.
However, this was not the case as institutions everywhere had products linked to these subprime mortgages. Gradually (from August-December 2007), it was realised that an unknown but potentially catastrophic proportion of the money lent to people and institutions all over the world would never be repaid.
During 2008, when Irish & British banks had much more limited access to global funds, mortgage lending duly slowed, reducing the amount of people who could afford to purchase a home, thus reducing the demand for housing. If a market suddenly realises that there is a large and impractical gap between supply and demand of any product, prices will fall dramatically, and they certainly have this time.
Why are large international banking stocks trading at 30-60c per share when they were €20-€30 per share 18 months ago?
At the moment, large and diverse Irish and British banks are being valued by stock markets at about one years profits, which is astounding. These low share prices have more to do with the markets perception of a banks ability to raise new capital than any major faults in their business models. If a bank cannot borrow cheaply from other banks or raise money from wealthy individuals and institutions, then it cannot function properly. This is why governments are stepping in to provide funding to the banks so they in turn can pump it into the economy in ways only a bank can do (in the forms of mortgages, car loans, business loans, overdrafts etc.).
Major problems will arise and people will start dumping shares when banks do not pass this money onto customers either because it has so much debt already and/or governments become very dangerously exposed to these enormous debts by providing continued support without the markets help.
Why have banks moved so rapidly from loose lending criteria to excessively strict lending criteria?
Banks need to abide by very strict laws which only allow them to lend money as a proportion of the cash they have access to. As a rule of thumb, if a bank has €10 million in liquid assets, it can lend €100 million to people in the form of car loans & mortgages etc. If a fictional banks' cash dipped to €7 million towards the end of the business day, and they had already lent €100 million to their customers, they would need to borrow €3 million from somewhere to remain solvent. They might borrow this €3 million for a night, a month or three months, but the interest rates for doing so were far lower than the interest rates they charged the customers they passed it onto.
When banks realised that many of the loans they were giving were worth less than they thought because of falling asset values, they needed to hold onto more cash to preserve this 10% ratio. This in turn meant they charged higher interest rates to other banks who wanted to borrow, which created a vicious circle dramatically reducing everybodies ability to lend money to their regular customers.
Why is unemployment rising so quickly and why are our economies slowly so rapidly?
If businesses (large and small) have less access to the loans they need to expand and the overdrafts they need to meet day to day expenses, either their business models will no longer be viable and they will shut down, or they will reduce their overheads dramatically and continue as a smaller entity.
If the average man or woman on the street is fearful of their job and/or realises they no longer have access to the overdrafts & credit card facilities they previously took for granted, they will spend less money and purchase less goods and services.
If companies are getting smaller and people are spending less, an economy will slow and GDP growth will contract.
How can a person safely invest in a property market without falling victim to another property crash in 2010 or 2011?
Firstly, thank you to those who have gotten this far though our newsletter. Secondly, and harsh as it may sound, there are several ways those who are still liquid can profitably take advantage of a global downturn which is causing much suffering to others.
One of these ways, which Someplace Else Ireland identified about eight months ago and launched as a comprehensive service about three months ago, is to purchase highly discounted and undervalued properties from distressed sellers. To maximise the return of these types of properties, they must be purchased in wealthy, democratic economies, with a history of renewal and recovery from recessions, and in fundamentally sound cities and neighbourhoods where locals rent long term and have the ability to purchase and borrow against similar properties.
Regular readers will know of course, that I am referring to Florida. For the record, let me state that our focus is not on vacation homes. It is on long term lets to locals (only a small percentage of which work in the tourist industry). These properties are much more tax efficient, provide a much higher net rental return per square foot and are available at a higher discount than other property types.
Best Regards
Colin Murphy
Every ten blogs or so, I feel compelled to write a longer and more general note describing economic shifts and events (as I see them) rather than my usual focus on property and property markets.
However, please do feel free to skip straight to the property investment information by clicking on the links to your right or scrolling down to the bottom of this email.
Making sense of it all
Like many of our readers and clients, I'm the type of person who tunes in regularly to radio chat shows, current affairs programs and newspaper reports on how the global turbulence is affecting our house prices, our labour markets, our stock markets and our changing consumption habits. There are lots of commentators out there who seem very qualified and sound like they know what they're talking about when discussing concepts like recapitalisation, nationalisation, liquidity ratios, deflationary pressures, credit ratings etc. and yet, when I've finished listening to them, I've usually forgotten what the question they were supposed to be answering was. Sound familiar?
With that in mind, and throwing caution to the wind, I'm going to pose a few questions I think a lot of people would like answered, and I'll try and do as quickly and clearly as possible. Please bear in mind that all of these issues deserve much more comprehensive answers than the size of this newsletter or the limits of my ability permit.
1. How did the subprime mortgage crisis in the USA affect property prices in Ireland & Britain?
2. Why are large international banking stocks trading at 30-60c per share when they were €20-€30 per share 18 months ago?
3. Why have banks moved so rapidly from loose lending criteria to excessively strict lending criteria?
4. Why is unemployment rising so quickly and why are our economies slowly so rapidly?
5. How can a person safely invest in a property market without falling victim to another property crash in 2010 or 2011?
How did the subprime mortgage crisis in the USA affect property prices in Ireland & Britain?
The subprime market, i.e. the practise of offering high interest mortgages to people with a high risk of missing future payments, was just the most extreme example of a mind boggling variety of mortgage products. It was viewed to be of low risk overall because it was assumed the value of the properties they were secured against would always continue to rise and could be resold if the client defaulted on his loan.
While there was a time when mortgage lenders like AIB, Bank of Ireland, Barclays & RBS etc. could only source funds from their local markets and would simply offer a multiple of the deposits received from savers to borrowers who wished to take out a loan, this has not been the case for many years.
Nowadays, banks based in net borrowing economies (like the USA) receive vast sums of money from banks in net saving economies (like China). These banks then repackage this money in horrendously complicated ways and give other international banks operating in borrowing economies (like Ireland & the UK) access to it.
If the banks who lent to people with a high default risk operated in the old fashioned way and were not so interconnected with the global economy, their boardroom and their shareholders would be duly punished when these loans were not repaid and we would all move on.
However, this was not the case as institutions everywhere had products linked to these subprime mortgages. Gradually (from August-December 2007), it was realised that an unknown but potentially catastrophic proportion of the money lent to people and institutions all over the world would never be repaid.
During 2008, when Irish & British banks had much more limited access to global funds, mortgage lending duly slowed, reducing the amount of people who could afford to purchase a home, thus reducing the demand for housing. If a market suddenly realises that there is a large and impractical gap between supply and demand of any product, prices will fall dramatically, and they certainly have this time.
Why are large international banking stocks trading at 30-60c per share when they were €20-€30 per share 18 months ago?
At the moment, large and diverse Irish and British banks are being valued by stock markets at about one years profits, which is astounding. These low share prices have more to do with the markets perception of a banks ability to raise new capital than any major faults in their business models. If a bank cannot borrow cheaply from other banks or raise money from wealthy individuals and institutions, then it cannot function properly. This is why governments are stepping in to provide funding to the banks so they in turn can pump it into the economy in ways only a bank can do (in the forms of mortgages, car loans, business loans, overdrafts etc.).
Major problems will arise and people will start dumping shares when banks do not pass this money onto customers either because it has so much debt already and/or governments become very dangerously exposed to these enormous debts by providing continued support without the markets help.
Why have banks moved so rapidly from loose lending criteria to excessively strict lending criteria?
Banks need to abide by very strict laws which only allow them to lend money as a proportion of the cash they have access to. As a rule of thumb, if a bank has €10 million in liquid assets, it can lend €100 million to people in the form of car loans & mortgages etc. If a fictional banks' cash dipped to €7 million towards the end of the business day, and they had already lent €100 million to their customers, they would need to borrow €3 million from somewhere to remain solvent. They might borrow this €3 million for a night, a month or three months, but the interest rates for doing so were far lower than the interest rates they charged the customers they passed it onto.
When banks realised that many of the loans they were giving were worth less than they thought because of falling asset values, they needed to hold onto more cash to preserve this 10% ratio. This in turn meant they charged higher interest rates to other banks who wanted to borrow, which created a vicious circle dramatically reducing everybodies ability to lend money to their regular customers.
Why is unemployment rising so quickly and why are our economies slowly so rapidly?
If businesses (large and small) have less access to the loans they need to expand and the overdrafts they need to meet day to day expenses, either their business models will no longer be viable and they will shut down, or they will reduce their overheads dramatically and continue as a smaller entity.
If the average man or woman on the street is fearful of their job and/or realises they no longer have access to the overdrafts & credit card facilities they previously took for granted, they will spend less money and purchase less goods and services.
If companies are getting smaller and people are spending less, an economy will slow and GDP growth will contract.
How can a person safely invest in a property market without falling victim to another property crash in 2010 or 2011?
Firstly, thank you to those who have gotten this far though our newsletter. Secondly, and harsh as it may sound, there are several ways those who are still liquid can profitably take advantage of a global downturn which is causing much suffering to others.
One of these ways, which Someplace Else Ireland identified about eight months ago and launched as a comprehensive service about three months ago, is to purchase highly discounted and undervalued properties from distressed sellers. To maximise the return of these types of properties, they must be purchased in wealthy, democratic economies, with a history of renewal and recovery from recessions, and in fundamentally sound cities and neighbourhoods where locals rent long term and have the ability to purchase and borrow against similar properties.
Regular readers will know of course, that I am referring to Florida. For the record, let me state that our focus is not on vacation homes. It is on long term lets to locals (only a small percentage of which work in the tourist industry). These properties are much more tax efficient, provide a much higher net rental return per square foot and are available at a higher discount than other property types.
Best Regards
Colin Murphy
Florida - Safe and Exciting Investment Option for 2009
Good afternoon all,
I am very happy to report that 2008 was a profitable year for Someplace Else Ireland with turnover increasing significantly from previous years and for that we must thank all our loyal clients very sincerely.
Thoughts for the year ahead
While we pride ourselves on being more nimble and better able to spot trends than many of our competitors, 2009 is probably the first year for over a decade where all types of businesses will be forced to change their strategies and cost bases dramatically to survive (and hopefully thrive) this year. In terms of my thoughts for the year ahead, well, as I indicated in Issue 32, I don't think we will see much enthusiasm for offplan property at all in 2009, which will cause heartache for many Irish developers, estate agencies and investors.
Unfortunately, you cannot be certain anymore that financing will be available for properties on completion and they may not increase in value either during the construction stage. This is especially true if there is an oversupply in the area where you purchased and a high percentage of buy to let investors with short term exit strategies (the South of Spain and the Black Sea coast of Bulgaria are two stand out examples of the above).
Safer options
The truth, as I can see it, is that the economic crisis of the past six months has presented better and safer alternatives to placing a 20-30% deposit on a property that is supposed to increase in value during a 2-4 year construction period. Our focus in 2009 is very much going to be on promoting highly discounted, cash positive and finished properties in areas that should recover quickly from the global downturn.
If you'd like to view examples of these kinds of properties, please call us or visit our website to see some excellent properties in Central Orlando, Florida. Florida might seem a strange recommendation from an emerging market investment property specialist, but it is by far the most exciting place for cash buyers to invest at the moment and the time to take advantage of the highly discounted bank owned properties is now. In addition to this week's hot properties illustrated below we have a very wide range of information available to view and download on our website, including investment slide shows, podcasts, area descriptions, tax & legal information and much more.
Florida - Low prices, low taxes, high rental yields
Apart from having the comfort of investing in an area that has been offering foreign property investors security and legal protection for decades, there is no stamp duty or state tax in Florida and both income tax and capital gains tax can lowered to trivial amounts due to the sheer amount of allowable deductions available.
Someplace Else Investors are purchasing property at less than 30% of their previous sales prices, which ensures a high net rental yield. These properties are also much easier to rent as tenants prefer and actively seek properties owned by cash buyers. They do this because it minimises their chances of being forced to leave again if their landlord misses mortgage repayments and the bank forecloses. Accurate Sales Prices & Rental IncomeAs previous sales prices are on public record for every property in Florida and as the current market value estimates we provide are sourced from the Orlando Appraisers office, investors can easily calculate the huge value in the low purchase prices of the bank owned properties we carefully select.
While there are often large differences between a property agents optimistic rental income estimates and the reality on the ground, investors in Florida can verify that the gross and net income figures we quote are extremely accurate. Firstly, there is a monthly publication called Apartments for Rent that lists units for rent across Metro Orlando with guide prices. Secondly, our partner management company has many years experience of renting properties in the micro areas we focus on, and thirdly, there are many other rental companies offering units to rent across metro Orlando which can be quickly compared against our quoted figures.
Conclusion
In short, Someplace Else does a lot of work behind the scenes to provide a completely hands off purchase process for this unique and very time sensitive investment product. The best properties are selected daily, the legal paperwork is processed efficiently, tenants are in place within weeks of closure, accountants are in place to take care of tax affairs and secure online bank accounts are quickly opened.
There's lots of further information on our website. As always, my colleagues and I look forward to hearing from you soon.
Regards
Colin Murphy
I am very happy to report that 2008 was a profitable year for Someplace Else Ireland with turnover increasing significantly from previous years and for that we must thank all our loyal clients very sincerely.
Thoughts for the year ahead
While we pride ourselves on being more nimble and better able to spot trends than many of our competitors, 2009 is probably the first year for over a decade where all types of businesses will be forced to change their strategies and cost bases dramatically to survive (and hopefully thrive) this year. In terms of my thoughts for the year ahead, well, as I indicated in Issue 32, I don't think we will see much enthusiasm for offplan property at all in 2009, which will cause heartache for many Irish developers, estate agencies and investors.
Unfortunately, you cannot be certain anymore that financing will be available for properties on completion and they may not increase in value either during the construction stage. This is especially true if there is an oversupply in the area where you purchased and a high percentage of buy to let investors with short term exit strategies (the South of Spain and the Black Sea coast of Bulgaria are two stand out examples of the above).
Safer options
The truth, as I can see it, is that the economic crisis of the past six months has presented better and safer alternatives to placing a 20-30% deposit on a property that is supposed to increase in value during a 2-4 year construction period. Our focus in 2009 is very much going to be on promoting highly discounted, cash positive and finished properties in areas that should recover quickly from the global downturn.
If you'd like to view examples of these kinds of properties, please call us or visit our website to see some excellent properties in Central Orlando, Florida. Florida might seem a strange recommendation from an emerging market investment property specialist, but it is by far the most exciting place for cash buyers to invest at the moment and the time to take advantage of the highly discounted bank owned properties is now. In addition to this week's hot properties illustrated below we have a very wide range of information available to view and download on our website, including investment slide shows, podcasts, area descriptions, tax & legal information and much more.
Florida - Low prices, low taxes, high rental yields
Apart from having the comfort of investing in an area that has been offering foreign property investors security and legal protection for decades, there is no stamp duty or state tax in Florida and both income tax and capital gains tax can lowered to trivial amounts due to the sheer amount of allowable deductions available.
Someplace Else Investors are purchasing property at less than 30% of their previous sales prices, which ensures a high net rental yield. These properties are also much easier to rent as tenants prefer and actively seek properties owned by cash buyers. They do this because it minimises their chances of being forced to leave again if their landlord misses mortgage repayments and the bank forecloses. Accurate Sales Prices & Rental IncomeAs previous sales prices are on public record for every property in Florida and as the current market value estimates we provide are sourced from the Orlando Appraisers office, investors can easily calculate the huge value in the low purchase prices of the bank owned properties we carefully select.
While there are often large differences between a property agents optimistic rental income estimates and the reality on the ground, investors in Florida can verify that the gross and net income figures we quote are extremely accurate. Firstly, there is a monthly publication called Apartments for Rent that lists units for rent across Metro Orlando with guide prices. Secondly, our partner management company has many years experience of renting properties in the micro areas we focus on, and thirdly, there are many other rental companies offering units to rent across metro Orlando which can be quickly compared against our quoted figures.
Conclusion
In short, Someplace Else does a lot of work behind the scenes to provide a completely hands off purchase process for this unique and very time sensitive investment product. The best properties are selected daily, the legal paperwork is processed efficiently, tenants are in place within weeks of closure, accountants are in place to take care of tax affairs and secure online bank accounts are quickly opened.
There's lots of further information on our website. As always, my colleagues and I look forward to hearing from you soon.
Regards
Colin Murphy
Saturday, December 6, 2008
Spotting Profitable Trends in 2009
Good morning and welcome to our Blog.
New Attitudes within the Industry
Someplace Else exhibited at an overseas property trade show called OPP Live last week. This was the fourth year I've been to the show and as usual it was very well organized and I met a lot of old friends plus a wide variety of interesting people who work in the industry.
The atmosphere at this years' show was very different to the previous ones though. Previous OPP Live shows were all held in very different economic environments, where profit margins were wide, the public's appetite for overseas property was insatiable, and financing for builders and buyers was very easy to come by.
As most employers reading this will no doubt agree - property companies who take too long to trim unnecessary overheads and refuse to adjust their product offering to suit a changing marketplace will soon find themselves out of business.
Meeting a Changing Markets Needs
We've certainly no intention of making those kinds of mistakes in my organisation, and judging by the recent media interest and the huge response to our Florida Foreclosure services, there is still a huge demand for property that buyers can identify as being a great value medium to long term investment. Some of our readers may also be interested in our Florida property of the week below.
Outside of the USA, Panama remains very popular due to its uniquely international economy, although there is a firm emphasis on purchasing developments that are already under construction.
Berlin, a sluggish market compared to some, with guaranteed long term rental yields that were written off by many as being too small, is now being seriously reconsidered. With many cities experiencing sharp contractions after a decade or more of growth, investors are now more confident regarding the long term value of buying high quality finished property in the capital of Europe's biggest economy at 25-30% of the cost of other major European cities.
Still The Best Asset Class
All in all, I remain convinced that property is by far the best asset class to invest in. It also remains a uniquely fulfilling experience. I just can't bring myself to leave surplus cash in a bank account with meager interest rates and I certainly won't be putting it in our ridiculously volatile stock markets.
But you have to choose carefully
Big profits are definately there for the taking in the property industry but your investments absolutely have to be in the right locations, at the right prices and you must research them thoroughly and examine your personal finances carefully before committing.
These are all fundamental rules to abide by in both booms and recessions. The difference is that people ignoring them will suffer a lot more now than they would have done 5 years ago.
Please feel free to comment and get in touch
As always, myself and my colleagues are always delighted to speak to investors or to hear your feedback and comments regarding these posts.
Warm Regards,
Colin Murphy
Director
New Attitudes within the Industry
Someplace Else exhibited at an overseas property trade show called OPP Live last week. This was the fourth year I've been to the show and as usual it was very well organized and I met a lot of old friends plus a wide variety of interesting people who work in the industry.
The atmosphere at this years' show was very different to the previous ones though. Previous OPP Live shows were all held in very different economic environments, where profit margins were wide, the public's appetite for overseas property was insatiable, and financing for builders and buyers was very easy to come by.
As most employers reading this will no doubt agree - property companies who take too long to trim unnecessary overheads and refuse to adjust their product offering to suit a changing marketplace will soon find themselves out of business.
Meeting a Changing Markets Needs
We've certainly no intention of making those kinds of mistakes in my organisation, and judging by the recent media interest and the huge response to our Florida Foreclosure services, there is still a huge demand for property that buyers can identify as being a great value medium to long term investment. Some of our readers may also be interested in our Florida property of the week below.
Outside of the USA, Panama remains very popular due to its uniquely international economy, although there is a firm emphasis on purchasing developments that are already under construction.
Berlin, a sluggish market compared to some, with guaranteed long term rental yields that were written off by many as being too small, is now being seriously reconsidered. With many cities experiencing sharp contractions after a decade or more of growth, investors are now more confident regarding the long term value of buying high quality finished property in the capital of Europe's biggest economy at 25-30% of the cost of other major European cities.
Still The Best Asset Class
All in all, I remain convinced that property is by far the best asset class to invest in. It also remains a uniquely fulfilling experience. I just can't bring myself to leave surplus cash in a bank account with meager interest rates and I certainly won't be putting it in our ridiculously volatile stock markets.
But you have to choose carefully
Big profits are definately there for the taking in the property industry but your investments absolutely have to be in the right locations, at the right prices and you must research them thoroughly and examine your personal finances carefully before committing.
These are all fundamental rules to abide by in both booms and recessions. The difference is that people ignoring them will suffer a lot more now than they would have done 5 years ago.
Please feel free to comment and get in touch
As always, myself and my colleagues are always delighted to speak to investors or to hear your feedback and comments regarding these posts.
Warm Regards,
Colin Murphy
Director
Great Opportunities Presented by a Downturn
Hello and welcome to Issue 30 of the Someplace Else Blog
Firstly - I must apologize for the gap between this post and the last - these past two months have been much more hectic than normal.
Secondly - to all those who have gotten in touch with us and bought a wide variety of our Florida Foreclosed properties, many thanks. We have been amazed at the response and would ask that you please bear with us while we work though the backlog of enquiries.
Why Florida?
While Florida is certainly not an emerging market in the traditional sense, we are convinced that current market decisions are presenting some incredible investment opportunities.
The USA has been suffering from the credit crunch for almost 18 months now and yet it is still receiving half of the world's total foreign direct investment. That is an incredible statistic. This unique country has also consistently demonstrated a remarkable ability to reinvent itself and recover from economic slowdowns.
Florida, traditionally one of the strongest and most stable markets, with a diverse economy, fast growing population and year round tourist industry has been particularly hard hit over the past year with many regular families struggling to pay the mortgages on their homes. The average price of a Florida home has fallen between 20-40% and while they may fall a little further; we are very near the bottom of the market. One indication is that for the first time in over a year the amount of available property listed in central Orlando is decreasing rather than increasing.
The reason that foreclosed (i.e. bank owned) properties are such an amazing opportunity is that they are being sold by the banks at 60-70% less than their previous value. Below you will see a description of a 2 bed 2 bathroom property in the Metrowest area for $68,900. The previous sales price was $236,000 and the current appraised value is $137,865. Even if the appraised value does drop another 5% or so you still have an incredible bargain that is cash flow positive from day one (we provide complete turnkey solutions to all listed properties).
I must emphasize that there is a very limited window of opportunity to buy these distressed properties. The best will be snapped up by a wide range of national and international buyers over the next couple of months and the market will simply readjust. It is for cash buyers only (although financing is available further down the line) and is one of the fastest moving micro markets I have experienced.
Weekly Listings
We send out a list of 10 properties every Monday to people who have subscribed over the past few weeks and if you'd like to add yourself to the list please email investments@someplaceelse.ie with "Subscribe to Foreclosed Property" written in the subject heading. If you'd like to speak to myself or one of our consultants please include your phone number and a suitable contact time. You can also click here to see a copy of last week's version.
New Panama Project
Panama is also a fascinating option for would be property investors and in a global slowdown it is confirming our earlier emails that it is one of the world's most robust and diverse economies. One project I have always admired since I first looked at Panama has been Denovo Apartments, which you'll find described below. It has been sold out for quite some time and we have just received notice that six units have come back on the market.
Construction is well under way (they are up to the 14th floor) with an estimated completion of July 2009. The location is terrific and has just about everything an international investor will look for. Myself and my colleagues will be delighted to discuss further with those who are interested in learning more. Bear in mind that this is an extremely well known and respected project and we are certainly not expecting these units to be on the market for very long.
Downturn Opportunities
Just as the major Irish & UK developers sowed the seeds of their fortunes by purchasing land and property at knockdown prices in the 1980s and early 1990s when everybody else was selling, there are now market niches everywhere waiting to be exploited - especially in the US dollar economies.
Warm Regards
Colin Murphy
Director
Warm Regards,
Firstly - I must apologize for the gap between this post and the last - these past two months have been much more hectic than normal.
Secondly - to all those who have gotten in touch with us and bought a wide variety of our Florida Foreclosed properties, many thanks. We have been amazed at the response and would ask that you please bear with us while we work though the backlog of enquiries.
Why Florida?
While Florida is certainly not an emerging market in the traditional sense, we are convinced that current market decisions are presenting some incredible investment opportunities.
The USA has been suffering from the credit crunch for almost 18 months now and yet it is still receiving half of the world's total foreign direct investment. That is an incredible statistic. This unique country has also consistently demonstrated a remarkable ability to reinvent itself and recover from economic slowdowns.
Florida, traditionally one of the strongest and most stable markets, with a diverse economy, fast growing population and year round tourist industry has been particularly hard hit over the past year with many regular families struggling to pay the mortgages on their homes. The average price of a Florida home has fallen between 20-40% and while they may fall a little further; we are very near the bottom of the market. One indication is that for the first time in over a year the amount of available property listed in central Orlando is decreasing rather than increasing.
The reason that foreclosed (i.e. bank owned) properties are such an amazing opportunity is that they are being sold by the banks at 60-70% less than their previous value. Below you will see a description of a 2 bed 2 bathroom property in the Metrowest area for $68,900. The previous sales price was $236,000 and the current appraised value is $137,865. Even if the appraised value does drop another 5% or so you still have an incredible bargain that is cash flow positive from day one (we provide complete turnkey solutions to all listed properties).
I must emphasize that there is a very limited window of opportunity to buy these distressed properties. The best will be snapped up by a wide range of national and international buyers over the next couple of months and the market will simply readjust. It is for cash buyers only (although financing is available further down the line) and is one of the fastest moving micro markets I have experienced.
Weekly Listings
We send out a list of 10 properties every Monday to people who have subscribed over the past few weeks and if you'd like to add yourself to the list please email investments@someplaceelse.ie with "Subscribe to Foreclosed Property" written in the subject heading. If you'd like to speak to myself or one of our consultants please include your phone number and a suitable contact time. You can also click here to see a copy of last week's version.
New Panama Project
Panama is also a fascinating option for would be property investors and in a global slowdown it is confirming our earlier emails that it is one of the world's most robust and diverse economies. One project I have always admired since I first looked at Panama has been Denovo Apartments, which you'll find described below. It has been sold out for quite some time and we have just received notice that six units have come back on the market.
Construction is well under way (they are up to the 14th floor) with an estimated completion of July 2009. The location is terrific and has just about everything an international investor will look for. Myself and my colleagues will be delighted to discuss further with those who are interested in learning more. Bear in mind that this is an extremely well known and respected project and we are certainly not expecting these units to be on the market for very long.
Downturn Opportunities
Just as the major Irish & UK developers sowed the seeds of their fortunes by purchasing land and property at knockdown prices in the 1980s and early 1990s when everybody else was selling, there are now market niches everywhere waiting to be exploited - especially in the US dollar economies.
Warm Regards
Colin Murphy
Director
Warm Regards,
Friday, October 10, 2008
Overseas Property: Telling it like it is
Well, it's certainly been a dramatic couple of weeks. The major governments and bankers have finally starting acting in concert. Let us sincerely hope that the coordinated interest rate cut yesterday combined with government bailouts and capital injections will steady the markets again. However, I think they're going to have to cut interest rates by as much as another point.
Telling it like it is
With many companies, both inside and outside the property industry, keeping their proverbial heads down until the economic skies are clear, I thought I'd do the opposite by telling you a little bit more about how Someplace Else have been doing over the last couple of months, and what our future plans are going to be.
There's nothing particularly special about Someplace Else Ireland and we've no closely guarded secret strategy. However we have always run a tight ship - before, during and after the boom times. We don't have dozens of costly admin and marketing staff on the payroll, we don't have plush offices that cost a small fortune to maintain, we don't hire celebrities to endorse our products, we don't waste money in glossy ego driven adverts in the national press or radio and we don't pay PR companies a fortune to make us feel good about ourselves.
Not doing any of the above means we can spend a lot more time (and money) on website improvements and optimisation, google campaigns, staff training, customer service, newsletter design, targeted emails, research, travelling to new locations, launching diverse new products, packaging them in an investor friendly way, meeting and forming exclusive partnerships with developers, lawyers, tax advisors and mortgage brokers etc. and finally - more research.
Recent Company Performance
Because we do all this and because we have very close relationships with so many investors - the recession and general gloom in the market hasn't caused our revenues to drop at all. In fact, we've sold more properties in more locations in the last three months than we did for the same period last year.
So what are we doing next?
1. Argentina
As you may have noticed last week, we've launched a very innovative vineyard product in Argentina (see main image above), which has two revenue streams and provides buyers with a lifetime supply of high quality and personalised wine - which, by the way, has proven to be an extremely recession proof industry. See detailed description below or download brochure.
2. Berlin
A bit closer to home, I'm very much looking forward to launching our new Berlin product. It's called PP Rubens, it's located in Schoneberg in the west of the city, and it comes with 10 year rental, maintenance, management and modernization guarantees. Prices start at just EUR 87,588. Download Preview.
3. Florida
Florida is another area I've been paying very close attention to lately, and many commentators (including myself) feel that the bottom of the market has almost been reached. We will shortly be launching a consultancy and management service for investors seeking to purchase foreclosed properties.
Properties like these will generate a positive cash flow at a fraction (30 to 40 cents on the dollar) of their previous market value. We've put together a short preview document which can be downloaded here. You'll need to email me personally if you are interested learning more about these opportunities and you'll need to be prepared to pay in cash and to move quickly.
4. Panama
The complete Fortune Plaza brochure is finally ready and can be downloaded here. This is one of Panama's finest hands off investment opportunities. Panama stacks up as an investment destination in so many ways as it has an extremely diverse and business friendly economy, it is a tax haven, and it benefits from strong trade relationships with both developed and emerging economies.
Quick Summary:
- Dos Rosas Vineyard Argentina: Download Brochure
- PP Rubens Berlin: Download Factsheet
- Florida Foreclosure Opportunities: Download Preview
- Fortune Plaza, Panama: Download Brochure
Keeping in touch
As always, myself and my colleagues are available to speak with and answer questions from new and existing clients. Our Dawson Street (Dublin) and Fulham (London) offices are always open for those who'd like to drop by and say hello.
I hope the above has been of some use, and I'll look forward to hearing from you soon.
Warm Regards,
Colin Murphy
Director
Someplace Else Ireland
Telling it like it is
With many companies, both inside and outside the property industry, keeping their proverbial heads down until the economic skies are clear, I thought I'd do the opposite by telling you a little bit more about how Someplace Else have been doing over the last couple of months, and what our future plans are going to be.
There's nothing particularly special about Someplace Else Ireland and we've no closely guarded secret strategy. However we have always run a tight ship - before, during and after the boom times. We don't have dozens of costly admin and marketing staff on the payroll, we don't have plush offices that cost a small fortune to maintain, we don't hire celebrities to endorse our products, we don't waste money in glossy ego driven adverts in the national press or radio and we don't pay PR companies a fortune to make us feel good about ourselves.
Not doing any of the above means we can spend a lot more time (and money) on website improvements and optimisation, google campaigns, staff training, customer service, newsletter design, targeted emails, research, travelling to new locations, launching diverse new products, packaging them in an investor friendly way, meeting and forming exclusive partnerships with developers, lawyers, tax advisors and mortgage brokers etc. and finally - more research.
Recent Company Performance
Because we do all this and because we have very close relationships with so many investors - the recession and general gloom in the market hasn't caused our revenues to drop at all. In fact, we've sold more properties in more locations in the last three months than we did for the same period last year.
So what are we doing next?
1. Argentina
As you may have noticed last week, we've launched a very innovative vineyard product in Argentina (see main image above), which has two revenue streams and provides buyers with a lifetime supply of high quality and personalised wine - which, by the way, has proven to be an extremely recession proof industry. See detailed description below or download brochure.
2. Berlin
A bit closer to home, I'm very much looking forward to launching our new Berlin product. It's called PP Rubens, it's located in Schoneberg in the west of the city, and it comes with 10 year rental, maintenance, management and modernization guarantees. Prices start at just EUR 87,588. Download Preview.
3. Florida
Florida is another area I've been paying very close attention to lately, and many commentators (including myself) feel that the bottom of the market has almost been reached. We will shortly be launching a consultancy and management service for investors seeking to purchase foreclosed properties.
Properties like these will generate a positive cash flow at a fraction (30 to 40 cents on the dollar) of their previous market value. We've put together a short preview document which can be downloaded here. You'll need to email me personally if you are interested learning more about these opportunities and you'll need to be prepared to pay in cash and to move quickly.
4. Panama
The complete Fortune Plaza brochure is finally ready and can be downloaded here. This is one of Panama's finest hands off investment opportunities. Panama stacks up as an investment destination in so many ways as it has an extremely diverse and business friendly economy, it is a tax haven, and it benefits from strong trade relationships with both developed and emerging economies.
Quick Summary:
- Dos Rosas Vineyard Argentina: Download Brochure
- PP Rubens Berlin: Download Factsheet
- Florida Foreclosure Opportunities: Download Preview
- Fortune Plaza, Panama: Download Brochure
Keeping in touch
As always, myself and my colleagues are available to speak with and answer questions from new and existing clients. Our Dawson Street (Dublin) and Fulham (London) offices are always open for those who'd like to drop by and say hello.
I hope the above has been of some use, and I'll look forward to hearing from you soon.
Warm Regards,
Colin Murphy
Director
Someplace Else Ireland
Safe havens from the credit crunch
Hello and welcome to the Someplace Else Blog
I'd like to start by thanking all those who came to visit our stands at the recent property shows in London and Birmingham. We were absolutely delighted by the quality and quantity of people that can to speak with us about our new vineyard development in Mendoza, Argentina.
Amid all the financial turmoil and panic in the media, our staff were only too happy to speak face to face with people who were browsing the aisles and calmly considering and questioning the facts and figures put in from them by the various companies attending.
Argentina is where our latest project is located, and regular readers of these newsletters will know that we've been heavily involved in this country for two and a half years, investing millions of dollars in a range of resorts. The main reasons why we like Argentina so much, apart from its diversity and natural beauty, are also reasons why it is very extremely well positioned benefit foreign buyers seeking a safe market to invest their capital.
One of the most interesting aspects of Argentina is the fact that the property boom is not fuelled by lending or foreign speculation. It is down to local demand for both primary and secondary residences where purchasers buy with cash. This lack of mortgage debt has meant that the credit crisis has had hardly any affect on Argentina.
In our opinion, until the credit crisis is resolved, banks start lending to each other and the mortgage markets open up again; the safest places to invest are areas where the property market is not linked to or reliant on mortgages or foreign speculative buyers. Argentina meets the above criteria perfectly.
Our new project, called Dos Rosas, is upscale vineyard development, which combines premium wine, a boutique hotel and residential vineyards in a stunning location in Argentina's Mendoza wine region. With a dual income stream and 12 cases of high quality personalised wine every year, this is undoubtedly one of our most innovative and recession proof investments.
Detailed information can be found by reading below and by DOWNLOADING our full pdf brochure.
Looking forward to your thoughts.
Kind Regards
Colin Murphy
I'd like to start by thanking all those who came to visit our stands at the recent property shows in London and Birmingham. We were absolutely delighted by the quality and quantity of people that can to speak with us about our new vineyard development in Mendoza, Argentina.
Amid all the financial turmoil and panic in the media, our staff were only too happy to speak face to face with people who were browsing the aisles and calmly considering and questioning the facts and figures put in from them by the various companies attending.
Argentina is where our latest project is located, and regular readers of these newsletters will know that we've been heavily involved in this country for two and a half years, investing millions of dollars in a range of resorts. The main reasons why we like Argentina so much, apart from its diversity and natural beauty, are also reasons why it is very extremely well positioned benefit foreign buyers seeking a safe market to invest their capital.
One of the most interesting aspects of Argentina is the fact that the property boom is not fuelled by lending or foreign speculation. It is down to local demand for both primary and secondary residences where purchasers buy with cash. This lack of mortgage debt has meant that the credit crisis has had hardly any affect on Argentina.
In our opinion, until the credit crisis is resolved, banks start lending to each other and the mortgage markets open up again; the safest places to invest are areas where the property market is not linked to or reliant on mortgages or foreign speculative buyers. Argentina meets the above criteria perfectly.
Our new project, called Dos Rosas, is upscale vineyard development, which combines premium wine, a boutique hotel and residential vineyards in a stunning location in Argentina's Mendoza wine region. With a dual income stream and 12 cases of high quality personalised wine every year, this is undoubtedly one of our most innovative and recession proof investments.
Detailed information can be found by reading below and by DOWNLOADING our full pdf brochure.
Looking forward to your thoughts.
Kind Regards
Colin Murphy
Subscribe to:
Posts (Atom)
