Currency Issues and Revealing Housing Stats in Florida

With the pound and euro continuing to strengthen relative to the dollar, your hard earned cash can now stretch very far indeed. If you wanted $60,000 in late May it would have cost you around €45,000/£40,000. Now it will cost €40,000/£36,500. That’s quite a difference.

So a weak dollar is great news for those seeking to purchase US property from abroad, but as many of our readers working in the financial industry will know, the prospect of a consistently weak dollar is of real concern to finance ministers, company bosses and traders around the world.

If one were to listen to the US authorities the message is pretty much the same every week, “it is very important for the US to have a strong dollar“. They haven’t been taking much action to backup that message though.

As any first year economics student will tell you, a weak currency boosts exports and restricts demand for imports, thus improving the economy and lowering the trade deficit. This might suit the US in the short term but it certainly doesn’t suit the EU or Asia, both of whom want to sell their goods and services to the US as cheaply as possible to kick start their own economies.

The other big worry revolves around the strategies big countries like the US, Britain, Germany, Japan and China will pursue to withdraw the massive assistance they’ve been providing to prop up their economies. That’s an article for another newsletter though.

Florida – Very Revealing Statistics…

I’ve been making quite a big effort over the past six months to emphasize the speed at which the Florida market has been recovering from the credit crunch and property slowdown. Yesterday morning I received two graphs from one of my main contacts on the ground that will illustrate this far more clearly than my words have ever done.

Graph 1: Supply in Florida has been falling dramatically for almost a year. This is because developers are not starting new construction projects and prices of existing stock have been slashed by up to 75%, thereby boosting consumer and investor demand (with a little help from US subsidies for first time buyers).

Graph 2: The market bottomed out in December 2007 and it took another 15 months before activity reverted back to late 2006 levels. Over the past six months, it has been quite frantic, which huge volumes of new contracts being issued to a wide variety of buyers.

Breaking through the pain barrier

In short – developers, banks, agents, investors and homeowners all had to go through a world of pain between September 2006 and September 2009. Their counterparts in Ireland, Britain and mainland Europe have had it easy in comparison.

Prices are still low, but they are not going lower, of that I am quite sure. There will always be good deals out there for the shrewed and well connected buyer, but the days of snapping up a high quality unit for $50-60k that used to cost $200-$230k are numbered.

Torcana Ltd is a property investment consultancy dealing with investments in foreclosed property, distressed property, and discounted property in USA, Spain, UK, and Panama. For more information please visit: – http://www.torcana.com

Interview with Florida Real Estate Insider Part 1

Torcana.com Sales & US Sourcing Manager David Shaw has his finger on the Florida disclosure market like few others.

He joins us today to discuss his experiences with distressed US properties over the past year. You’ll find a transcript of this interview below (also available on www.torcana.com/podcasts), where David discusses the main concerns of investors today and gives his opinion on where the best investment opportunities will be.

Q) Hi David. What do you feel are the biggest challenges in your day to day position as Sales and Sourcing Manager for Torcana?

Thanks Colin. My main challenge 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.

Q) What changes account for this fast pace?

Well, for starters, the blind fear and panic of late 2008 and early 2009 are now distant memories.

Firstly, 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 rating 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.

Q) What is your reading of the US housing market?

The bad news is that opportunities for easily purchasing a property at the very bottom of the US market are gone. This isn’t necessarily making front page news in The Times but statisticians and reporters tend to print yesterdays news.

There are two fundamental market forces at play. There is the “real market” which comprises 90% of existing US residential property. This stock may have lost significant value in the last few years but it is neither distressed nor foreclosed and the vast majority of it is not for sale.

The other, temporary market is the “distressed market” which completely undermines all efforts of the real market to sell surplus stock. This is because the “distressed market” as you will guess, is comprised of foreclosed and distressed property from banks and developers.

This market is the only show in town as far as bargain hunters are concerned, and it is our knowledge of the main players in this market and the process by which we help clients purchase, tenant, maintain and resell these assets that makes Torcana stand out from the crowd.

Contact Info:

Colin Murphy

29 Ballsbridge Rd, Dublin 4, Ireland
Dublin, Ireland, 28003
Telephone +353 1 4434 466
Fax: +353 1 258 6016
Website: http://www.torcana.com
Email: investments@torcana.com

How to profit from other peoples irrationality during the Recession

I recently read a great quote from Noel Whittaker (Australian financial columnist). It struck me as particularly relevant for those who are unsure of where or how to make their next important financial move.

“Life is full of uncertainties. Future investment earnings and interest and inflation rates are not known to anybody. However, I can guarantee you one thing.. those who put an investment program in place will have a lot more money when they come to retire than those who never get around to it”

Apart from working, investing is the only method of generating long term financial independence. From a personal point of view, I’ve made more money from my investments than I have from the various salaries and dividends I’ve drawn over the past 15 years.

It isn’t easy though. There are a lot of misconceptions out there, and much of it is caused by internet misinformation. 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.

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 who deal with it on a daily basis.

Let’s take Florida as an example. There was an awful lot of irrational behavior on display in Florida during the boom years. This irrationality forced prices too high and placed unwarranted trust in developers promising they would build luxury resorts that potential renters would flock to.

That property boom has bust, and the prices for certain properties in wealthy locations are completely irrational in the other direction – i.e. they being sold at too large a discount. While the instinct to wait for the macro economy to recover and “normality” to return before investing is understandable, it could turn out to be a counterproductive strategy if your aim is to create wealth for the future.

There are still quite a few areas within Florida where high rental yields are available and the potential for capital appreciation is huge.

Torcana Ltd is a property investment consultancy dealing with investments in foreclosed property, distressed property, and discounted property in USA, Spain, UK, and Panama. For more information please visit: – http://www.torcana.com

Is there anything good about a recession?

We’re now in the final quarter of 2009, traditionally one of the busiest times of the year for businesses. This year is radically different to most of course, because we’re still trying to get out of a severe recession. Others might call it a slowdown, but I’m not particularly fond of that description – recessions tend to shake things up rather than slow them down.

A recession will expose weak business models, destroy bloated companies and create unemployment – this has been well documented. For stronger and healthier individuals and organizations, a recession will reveal hidden strengths, create new opportunities and release pent up energy. Companies can hire top class people on the cheap. Talented executives in large corporations will find their bosses’ much more willing to listen to ideas for developing new businesses and revenue streams.

Most importantly, at least from my narrow point of view, a recession means that distressed assets can be bought for absolute song.

The bad news is that opportunities for easily purchasing a property at the very bottom of the US market are gone. This isn’t necessarily making front page news in The Times but statisticians and reporters tend to print yesterdays news.

There are two fundamental market forces at play. There is the “real market” which comprises 90% of existing US residential property. This stock may have lost significant value in the last few years but it is neither distressed nor foreclosed and the vast majority of it is not for sale.

The other, temporary market is the “distressed market” which completely undermines all efforts of the real market to sell surplus stock. This is because the “distressed market” as you will guess, is comprised of foreclosed and distressed property from banks and developers. This market is the only show in town as far as bargain hunters are concerned.

One of my main challenges 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.

Torcana Ltd is a property investment consultancy dealing with investments in foreclosed property, distressed property, and discounted property in USA, Spain, UK, and Panama. For more information please visit: – http://www.torcana.com

Torcana hails growing confidence in property and financial markets

As Dusty Springfield famously sang, “the world goes round without even a sound, and it looks like summer is over”.

According to Colin Murphy, Director of Torcana.com, Dusty was spot on regarding the second part of that lyric but the property and financial worlds were making plenty of noise over the past few months.

“Stockmarkets have rebounded, as have equities and commodities” states Murphy, an expert in distressed property sales in UK and Florida. “Investors have regained their appetites for debt and the interest rates at which banks lend to each other has fallen back to near pre-crisis levels. Ben Bernanke, the Fed Reserve chief, has announced that the worst recession since 1929 was “very likely over at this point”. The Sage of Omaha himself, told CNBC last Wednesday that “the US housing crisis was over”.

“Ben Bernanke and Warren Buffett aren’t exactly prone to hype and their word is more than good enough for me”, he continued.

“Confidence is also growing rapidly amongst large investors. I’m not just talking about hedge funds starting to actually buy shares again rather than short them, but also about pension funds and private equity groups buying huge amounts of distressed property in places like Florida.

Twice in the last 4 weeks I’ve seen developments with 100-300 units for sale taken off the market because single groups have purchased them outright, swiping the rug out from under the feet of those who were considering purchasing one or two units”.

Now that decent mortgages are finally available for foreigners and inventory levels have fallen from 23 months to 8 months in 2009 alone, there will not be many once in a generation bargains left after the end of this quarter.

Or as Dusty would have put it “the breeze hurries by without even goodbye”

For further information, please see www.torcana.com

Contact Info:

Colin Murphy
29 Ballsbridge Rd, Dublin 4, Ireland
Dublin, Ireland, 28003
Telephone +353 1 4434 466
Fax: +353 1 258 6016
Website: http://www.torcana.com
Email: investments@torcana.com

Florida Specialists Torcana Ltd launch spectacular beachfront development in St. Petersburg

Waterside at Coquina Key is in St Petersburg, one of the most famous towns in the State of Florida being renowned for its natural beauty, coastline and national parks.

This is a stunning waterfront resort built on a private island in a colonial style and is right next to the wealthy and historical town of St. Petersburg. A private marina is on site and all units are concrete build. The resort consists of two villages: one in the north and the other in the south. Each property is waterfront facing with a variety of canal, lake and bay views.

Community amenities are second to none with restaurants, pools, spas, fitness centres and yacht club.

Purchasing direct from the developer, there are long term tenants in place who will be generating an income on the property from the day you complete. Torcana clients benefit from exclusive discounts on current developer sales prices and very healthy net rental yields.

“We’ve been trying to locate high quality and highly discounted oceanfront Floridian property for quite some time - and we’ve found something very special” comments Torcana Director Colin Murphy. “This is a genuinely beautiful resort, every property is waterfront facing, which is extremely rare” he continued.

Prices start at just $58,900 / €41,120 / £35,700…

Colin and his colleagues would like to invite you to visit www.torcana.com.

1. 1 bed condos (1 bathroom): Starting from $58,900 / €41,120 / £35,700
2. 2 bed condos (1 – 2.5 bathrooms): Starting from $92,907 / €64,850 / £56,300
3. Choice of four floor plans
4. Tenants in place
5. Exclusive Torcana units available between 30-40% of the peak purchase prices
6. Full after-sales services available
7. Net Rental yields in the region of 6%

Availability is limited and sales have been brisk, therefore please contact us via www.torcana.com for an information pack including the full brochure, floor plans, price lists, further images and to register your interest.

Contact Info:

Colin Murphy
29 Ballsbridge Rd, Dublin 4, Ireland
Dublin, Ireland, 28003
Telephone +353 1 4434 466
Fax: +353 1 258 6016
Website: http://www.torcana.com
Email: investments@torcana.com

US Mortgages for foreigners have finally arrived

Hundreds of you have asked us about mortgages in Florida and we have been in negotiations with dozens of US based banks over the past year in attempts to secure them. It has proved very difficult to say the least – there were far too many brokers and banks talking the talk and nothing more. However, and at long last, we are delighted to announce that we have finally managed to secure local financing for our clients.

Superior Bank successfully arranged mortgages recently for foreign nationals this summer and I’ve seen the proof with my own eyes. In a nutshell, if you have a job with steady income and you can prove that you have a 30% deposit and no bad credit history your application will be successful.

Request your Mortgage Information Packs on Torcana.com

Think about it – two bed tenanted waterfront properties costing $90,000 can now be financed for just $27,000 (€18,400 / £16,375). Three bed two bath tenanted properties near Disney costing $116,500 can be financed for just $34,950 (€23,800 / £21,150). Details of both these projects are on http://www.torcana.com

If you’d like to receive a full information pack on financing packages available, simply visit the new US Mortgage Section of our website and we’ll send one right out to you.

Dramatic Inventory Falls in Florida

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.

Torcana hails Growing confidence in Global Markets

As Dusty Springfield famously sang, “the world goes round without even a sound, and it looks like summer is over”.

Dusty was spot on regarding the second part of that lyric but the property and financial worlds were making plenty of noise over the past few months.

Growing confidence in the markets

Stockmarkets have rebounded, as have equities and commodities. Investors have regained their appetites for debt and the interest rates at which banks lend to each other has fallen back to near pre-crisis levels. Ben Bernanke, the Fed Reserve chief, has announced that the worst recession since 1929 was “very likely over at this point“. The Sage of Omaha himself (aka Warren Buffett), told CNBC yesterday that “the US housing crisis was over“.

Confidence is also growing rapidly amongst large investors. I’m not just talking about hedge funds starting to actually buy shares again rather than short them, but also about pension funds and private equity groups buying huge amounts of distressed property in places like Florida.

Twice in the last 4 weeks I’ve seen developments with 100-300 units for sale taken off the market because single groups have purchased them outright, swiping the rug out from under the feet of those who were considering purchasing one or two units.

For more information please visit us at : http://www.torcana.com

When Irish eyes are crying...

Like many Irish people living abroad, I’ve been paying a lot of attention to the political and economic situation back home. Unfortunately it looks increasingly likely that Ireland is going to be very volatile over the next 6-12 months. The Lisbon Treaty is coming up in early October, which is extremely important to ratify but a huge distraction in terms of rebalancing the economy and overall employment.

There is also a budget coming in October where details of roughly $5billion in cuts/savings in public expenditure will be announced which will face very heavy resistance from the unions and large sections of the general public.

But of course, our headlines will also be dominated by the NAMA legislation due to be debated shortly. It is probably the most controversial and most important legislation that our country has ever debated. I’m far from convinced myself that the government are taking the correct course of action with this.

No doubt many politicians and bankers are wishing they’d taken a different career path!

Alas, the Irish economy is far from recovery and property prices need to fall an awful lot more before they’ll get this investor interested. However, and belatedly, other countries are positively brimming with opportunities.

Encouraging Signs of Economic Recovery

Led by China, Asia’s emerging economies have revived fastest, with several expanding at annualised rates of more than 10% in the second quarter of 2009. A few big rich economies also returned to growth, albeit far more modestly, between April and June. Japan’s output rose at an annualised pace of 3.7%, and both Germany and France notched up annualised growth rates of just over 1%.

Australia is doing exceptionally well and is, by some measures, the best peforming advanced economy over the past year. Most economies are still smaller than they were a year ago. On a quarterly basis, though, they are turning the corner.

Closer to home, and in complete contrast to Ireland, our cousins in the UK had the ability to pump enormous amounts of liquidity into their financial systems to help kick start their economy. While they will have huge public debt as a consequence – the ripple effects of this liquidity on their housing markets has been dramatic.

Every single region in England and in Wales recorded a monthly rise in house prices between June-July 2009. The average monthly increase was 1.7% – the biggest in five years.

Mortgage approvals are now at a 17 month high and 77% more mortgages were approved in July 2009 compared to July 2008. The number of transactions is also increasing steadily.

Torcana Ltd is a property investment consultancy dealing with investments in foreclosed property, distressed property, and discounted property in USA, Spain, UK, and Panama. For more information please visit: – http://www.torcana.com

Summer Launch in Florida: Earn $10k per year in net income!

I think we all know organizations who succumb to that August temptation of winding things down a little, of finishing the day earlier and pushing the big projects back to September. Not in this company though.

Less than 3 weeks after our last big launch I am writing to you today about a brand new project in the Kissimmee / Lake Buena Vista region of South Orlando. It’s a real beauty and is one of the best income generating developments I’ve seen in the region. In terms of location, rental yield and cashflow – it’s going to be very hard to beat. Download the brochure using this link: http://tinyurl.com/floraridge.

With the US dollar very low this week (£1= $1.70) (€1= $1.44) there has not been a better time to buy in many years.

For more information please visit us at: http://www.torcana.com

Torcana Update: August 2009

As many of our regular clients know, here at Torcana we specialize in bringing you high quality, heavily discounted, completed, cash flow positive and tenanted investments.

Strange as it may seem, there are very few companies out there providing investors access to this type of product.

In addition to finding and packaging these products, we also provide a very wide range of aftersales services; including opening bank accounts, obtaining tax numbers, obtaining condo insurance, liaising with your management company and provision of accountancy services.

Please visit www.torcana.com for more information on a very wide range of exciting discounted products in USA, UK and Spain.

Link between house prices and consumer spending

Many people (although hopefully not too many readers of these blog posts) can be forgiven for wishing journalists and commentators would simply shut up for a while about the trends in the housing and mortgage markets and concentrate on more important things like reducing unemployment and improving healthcare.

However, and whether we like it or not, the focus on the housing market needs to continue because it has direct links to many other industries and house prices directly affect consumer spending. Simply put, if people know that their house is increasing in value, they will tend to spend more money (and vice versa). In economic jargon, this is referred to as the Wealth Effect and it is very influential. The economic policy models of the Fed Reserve assume that a person whose house appreciates by $100,000 will increase his spending by the same proportion as a person who receives an extra $100,000 in stocks, shares and regular income.

Declining house prices also limit a banks willingness to lend money – not just for houses but also for cars, business start ups, holidays and general investment. Far too many people who should have known better lost sight of these forces.

Torcana Ltd is a property investment consultancy dealing with investments in foreclosed property, distressed property, and discounted property in USA, Spain, UK, and Panama. For more information please visit: – http://www.torcana.com

Happy Birthday Credit Crunch!

Next month will mark the 2nd anniversary of the credit crunch believe or not, and as Fiona Redden of the Irish Times has pointed out, this is as good a time as any to reflect on what lessons can be (re)learned. Among other things, she recommends a diverse portfolio, that we know when to cut our losses and take our profits, that we purchase a property based on predicted capital appreciation & rental income rather than add on incentives and that we always maintain a cash reserve.

Warren Buffet himself would be proud of such homespun wisdom Fiona.

Torcana Ltd is a property investment consultancy dealing with investments in foreclosed property, distressed property, and discounted property in USA, Spain, UK, and Panama. For more information please visit: – http://www.torcana.com

How house prices affect our everyday lives

After a (very) long winter, spring seems to have brought a touch of sunshine to American house prices. The latest Case Shiller indices were released last week and they showed that average prices continued to fall in April 2009: the ten city index was 0.7% lower the 20 city index was 0.6% lower than the previous month. What’s interesting to me is that these are the lowest falls since June 2008. The case for those declaring the worst is over continues to gain momentum.

Despite continued pessimism in some quarters of the market, the statistics point to similar turning points in the UK; with Nationwide reporting price rises of 0.9% in June and the Bank of England announcing four months in a row of rising mortgage approvals in May.

Shouldn’t we be concentrating on something else?

Many people (although hopefully not too many readers of these opinion pieces) can be forgiven for wishing journalists and commentators would simply shut up for a while about the trends in the housing and mortgage markets and concentrate on more important things like reducing unemployment and improving healthcare.

I am also particularly worried about the crazy tax burdens in Ireland – €13 billion was collected via income tax in 2008 (it will be less in 2009) but the government is about to pay €50-70 billion for the bad assets in our banking system. You know what they say – €10 billion here and €10 billion there and before you know it, we’re talking real money.

Link between house prices and consumer spending

However, and whether we like it or not, the focus on the housing market needs to continue because it has direct links to many other industries and house prices directly affect consumer spending. Simply put, if people know that their house is increasing in value, they will tend to spend more money (and vice versa). In economic jargon, this is referred to as the Wealth Effect and it is very influential. The economic policy models of the Federal Reserve assume that a person whose house appreciates by $100,000 will increase his spending by the same proportion as a person who receives an extra $100,000 in stocks, shares and regular income.

Declining house prices also limit a banks willingness to lend money – not just for houses but also for cars, business start ups, holidays and general investment.

Far too many people who should have known better lost sight of these forces.

Torcana Ltd is a property investment consultancy dealing with investments in foreclosed property, distressed property, and discounted property in USA, Spain, UK, and Panama. For more information please visit: – http://www.torcana.com

Encouraging House Price Stats

After a (very) long winter, spring seems to have brought a touch of sunshine to American house prices. The latest Case Shiller indices were released last week and they showed that average prices continued to fall in April 2009: the ten city index was 0.7% lower the 20 city index was 0.6% lower than the previous month. What’s interesting to me is that these are the lowest falls since June 2008. The case for those declaring the worst is over continues to gain momentum.

Despite continued pessimism in some quarters of the market, the statistics point to similar turning points in the UK; with Nationwide reporting price rises of 0.9% in June and the Bank of England announcing four months in a row of rising mortgage approvals in May.

Torcana Ltd is a property investment consultancy dealing with investments in foreclosed property, distressed property, and discounted property in USA, Spain, UK, and Panama. For more information please visit: – http://www.torcana.com

New ways of purchasing foreclosed properties

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.

Torcana Ltd is a property investment consultancy dealing with investments in foreclosed property, distressed property, and discounted property in USA, Spain, UK, and Panama. For more information please visit: – http://www.torcana.com

New Foreclosure Mortgage in Spain

The manager of one of the banks we deal with called me last week to let me know they’ve launched a new mortgage product specifically for people purchasing distressed properties.

This is an excellent product: loan to value of up to 90% available for anybody resident in an OECD country, low application fees (0.35%), low interest rates (around 3%) and loan terms up to 40 years.

It’s a big deal that a Spanish bank has launched a 90% mortgage product specifically for these properties, as most of them have their heads completely in the sand. For example, myself and my (Spanish) wife can’t even get 90% for a regular property in Madrid!

This is perfect to use with our Granada product, which will achieve net rental yields of up to 8%. If you would like full details, please visit the Torcana website.

Torcana Ltd is a property investment consultancy dealing with investments in foreclosed property, distressed property, and discounted property in USA, Spain, UK, and Panama. For more information please visit: – http://www.torcana.com

Colin Murphy

Director

www.torcana.com

New Ways of Purchasing Distressed & Discounted Properties

As many of you will be aware, investors have been purchasing foreclosed properties in places like Orlando, Florida since early 2008. They have been doing this because 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. If a person was unlucky enough to receive “your bid was not successful” messages three times, he could easily have wasted 3 months trying to purchase a foreclosed property with absolutely nothing to show for it!

Even if you were lucky enough to have a bid accepted and you (or your agent) managed to navigate your way though the extremely slow and bureaucratic title companies – you might not get a tenant very quickly. I know of several people who had to wait more than 3 months for this – that’s three months paying HOA and Real Estate taxes without any income to show for it.

After I’d spent many months purchasing and helping people purchase property this way, it became evident that there was a much better way of doing this, both an agents and a buyers 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 you can find a developer who owned and rented high quality units and was about to be foreclosed by a bank? Let’s say you 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? The short answer is yes, he certainly will!

This method 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). If you can tailor your search for these types of tenanted units, then everything becomes a whole lot quicker – and much more profitable.

Torcana Ltd is a property investment consultancy dealing with investments in foreclosed property, distressed property, and discounted property in USA, Spain, UK, and Panama. For more information please visit: – http://www.torcana.com

Tips for purchasing your dream Spanish property at a discount

There is an enormous glut of properties in Spain at the moment, and we are very picky regarding the types of developments we choose. My top tip for those seeking the perfect mix of investment and vacation is our new 288 unit development in Granada. We have negotiated exclusive discounts jointly with the bank and developer and independent research forecasts net rental yields of 8%. It is a beautiful resort in an unbelievable location with access to beaches (10min), golf courses (15 min), ski slopes (35 min), airport (25 min) and the historic town centre of Granada (20 min). You can find further on our website.

Generally speaking, I would advise buyers to stay clear of large developments (I get nervous when they are bigger than 300 units) and high density developments (more than 3 storeys). You should be purchasing units that are least 30% lower than the previous purchase price and that are at least 65% sold (to avoid risk that community fee system will collapse). And of course, don’t even think about purchasing offplan, with hundreds of thousands of unsold finished properties available all over the country at bargain prices, there’s simply no need to take that risk.

Torcana Ltd is a property investment consultancy dealing with investments in foreclosed property, distressed property, and discounted property in USA, Spain, UK, and Panama. For more information please visit: – http://www.torcana.com

An Irishman promoting discounted European properties to American investors

I was in Brazil a couple of weeks ago, not to look at local property developments (although I did do that too) but to deliver a series of presentations to a large real estate conference attended by international property investors. I was the only person there promoting European property and the only person discussing the strategies available to those seeking to purchase highly discounted property from distressed sellers.

Hardened investors who had arrived with the intention of purchasing offplan condo hotel or vacation property in South America were surprised to find themselves very seriously considering purchasing city centre property in Birmingham or vacation homes in Andalucía instead. They simply weren’t expecting an Irishman to stand up and offer them high quality finished properties in these locations at lower prices and higher rental yields than their offplan South American equivalents. It was a great success for Torcana overall, and if any of our regular clients would like to view one of the presentations I delivered please click here.

Torcana Ltd is a property investment consultancy dealing with investments in foreclosed property, distressed property, and discounted property in USA, Spain, UK, and Panama. For more information please visit: – http://www.torcana.com

Regards

Colin Murphy

Torcana Ltd

Travel schedule of an international foreclosed property specialist

Apologies for the longer than usual delay between issues – a very hectic travel schedule over the past 10 days taking in conferences in Brazil, meetings in London and site visits in Granada, Almeria and Birmingham has robbed me of the time I usually set aside to write these newsletters and blog postings.

However, our website www.torcana.com has been updated daily with great new projects and my colleagues have been kept extremely busy from a large influx of enquiries from PR exposure in Business & Finance Magazine, The Sunday Times and Homes Overseas Magazine.

I wasn’t in Fortaleza Brazil last week to look at local property developments (although I did do that too); I was actually there to deliver a series of presentations to a large real estate conference attended by international property investors. It was a great success for Torcana overall, and if any of our regular clients would like to view one of the presentations I delivered please click here.

Torcana Ltd is a property investment consultancy dealing with investments in foreclosed property, distressed property, and discounted property in USA, Spain, UK, and Panama. For more information please visit: – http://www.torcana.com

Regards

Colin Murphy

Torcana Ltd

Offplan Emerging Market vs Discounted Developed Market

A new trend seems to be emerging in certain property circles. Several times in the past six months I have seen evidence of hardened investors who have always pursued an offplan investment strategy considering a radical change.

The profitable strategy of the past decade is fairly simple on paper – find a reputable builder, reserve an apartment in a great location which will be built in 2-4 years time, negotiate preferable payment terms and wait for capital appreciate during the construction stage. Definitely not as easy as it sounds, but hundreds of thousands of people have been doing it successfully.

Times are changing though, and these same hardened buyers are now pursuing a new strategy with equal vigor – instead of offplan apartments or condo hotels in emerging markets, they are snapping up completely finished properties in developed markets at discounted prices.

Why? The credit crunch. Developers are struggling to sell excess stock, which means they are under pressure from the banks that financed them. This forces them to drop prices dramatically to stimulate supply and boy are they doing it. I’ve seen prime urban properties in very wealthy cities selling cheaper than an offplan resort in an area with a fraction of the income per capita.

Spain is one area where big discounts are available, but you must be careful not to purchase the wrong kind of property. Generally speaking, I would advise buyers to stay clear of large developments (I get nervous when they are bigger than 300 units) and high density developments (more than 3 storeys). You should be purchasing units that are least 30% lower than the previous purchase price and that are at least 65% sold (to avoid risk that community fee system will collapse). And of course, don’t purchase offplan – with hundreds of thousands of unsold finished properties available all over the country at bargain prices, there’s simply no need to take that risk.

Surprisingly, the United Kingdom, the world’s 6th largest economy, is another area where both domestic and international investors are taking advantage of record low prices. Demand has dropped dramatically in the past 18 months, but so has supply, there was less than 6000 properties completed in October 2008 in the whole United Kingdom, the lowest since records began. With 30%+ discounts available in central London and 40-50% discounts in Birmingham, many are taking advantage of favourable rental yields and are patient to wait 4 years+ for capital appreciation.

Changed times indeed.

Torcana Ltd is a property investment consultancy dealing with investments in foreclosed property, distressed property, and discounted property in USA, Spain, UK, and Panama. For more information please visit: – http://www.torcana.com

Can Germans Hold their Drink?

Germany, by far the biggest and most fiscally sensible EU member, has suffered its largest contraction since reunification, with exports down 19% and a year on year GDP decline of 6.7%.

Doesn’t really seem fair does it? If the last 15 years can be imagined as a huge EU party, then Germany was drinking club sodas for the duration but still ended up with the worst hangover afterwards. T

Those statistics above were mostly responsible for a half cent fall in the euro against the dollar, good news for those who have been diversifying into dollar assets…

All comments welcome.

Regards

Colin Murphy
Director
www.torcana.com

Chaos in Ireland’s newest “bad bank”

I was quite dismayed to read the main headline in the Irish Times this morning confirming what many of us have feared – that the head of the National Treasury Management Agency (NTMA), who is supposed to be running the states “bad bank” has nowhere near the staff necessary to manage all these loans, and worse still, he still doesn’t know how it will be set up and operated.

Apparently a committee is being setup to have a discussion about it next week. It’s enough to make a grown man weep.

Comments welcome.

Kind Regards

Colin Murphy

Director

www.torcana.com

Why is Ireland protecting the wrong people?

There’s quite a lot I can’t figure out about Ireland these days. Perhaps I’m spending too much time in Spain.

For example, why is the government so preoccupied with protecting the level of house prices when most of the people trying to sell are buy to let investors and property developers? Why are major banks cutting mortgage lending by 80% while average house prices have only fallen 20-30%?

It’s a big problem in Ireland that people don’t seem to see foreclosures and fire sales as a necessary evil to stimulate demand and reduce supply. There is simply no way to recover quickly without it.

It reminds of how the French always seem to sympathize with business owners rather than consumers.

Let me give you an example of how a more ruthless banking system can help stimulate a devastated property market. The property bubble in Orlando, Florida started in late 2006, and the banks were absolutely ruthless with people who got caught out – mostly investors and developers, but yes, ordinary people too.

The numbers of foreclosures increased dramatically, and the asking prices for them just kept falling and falling, first by 20%, then 40%, and eventually, in early 2009, by 70-75% from peak levels. Initially, the supply rocketed and demand fell off a cliff.

Without a doubt, a weaker banking and political system or a stronger lobbying group would have put a stop to it. Didn’t happen like that though. You keep dropping prices, you get rid of the rot in the system, and eventually, guess what? People will start buying again.

Let’s compare Orlando housing activity in April 2009 with April 2008

- House prices have fallen 37%
- 48% more homes were sold
- 50% of all homes sold were distressed priced or bank owned
- Properties are selling 15% quicker
- There is 20% less inventory than a year ago

Source: Orlando Realtors Association

In an ideal world of course, we would politely request points 2, 4 and 5 above. But I can’t see that happening somehow.

All comments welcome.

Kind Regards

Colin Murphy
Director
www.torcana.com

Property Lessons: What can Ireland learn from overseas markets?

Hello and welcome to Issue 6 of the www.Torcana.com Newsletter.

It’s getting harder to keep track of everything that’s happening in the property world these days, as every country seems to be tackling problems in new ways.

The news cycle in the UK at the moment is preoccupied with the MP Expenses scandal, although a fairly small report in the BBC today that repossessions have gone up 50% year on year was of much more interest to me.

This is a very important trend, as repossessions force average property prices down, and that’s the only way long term demand will be stimulated.

Birmingham – From £83,412

As you’ll see in our website, prices have been reduced by up to 40% from a 2009 RICS valuation in a new project we’re promoting in Birmingham city centre. We will be making a lot of noise about in the coming weeks so please get in touch asap if you’d like to receive the availability list early.

Can Germans Hold their Drink?

Germany, by far the biggest and most fiscally sensible EU member, has suffered its largest contraction since reunification, with exports down 19% and a year on year GDP decline of 6.7%. Doesn’t really seem fair does it? If the last 15 years can be imagined as a huge EU party, then Germany was drinking club sodas for the duration but still ended up with the worst hangover afterwards. Those statistics above were mostly responsible for a half cent fall in the euro against the dollar, good news for those who have been diversifying into dollar assets.

What can Ireland Learn from Other Property Markets?

A few regular readers commented that the “Green Shoots – Is property making a comeback?” title of last week’s newsletter was far too optimistic. That certainly would be a ludicrous title to a newsletter on the Irish property market, but I was really referring to certain parts of the USA and, to a lesser extent, the UK, both of whom have taken much more drastic action than we have to correct the huge imbalances in their property markets.

Speaking of which, I was quite dismayed to read the main headline in the Irish Times this morning confirming what many of us have feared – that the head of the National Treasury Management Agency (NTMA), who is supposed to be running the states “bad bank” has nowhere near the staff necessary to manage all these loans, and worse still, he still doesn’t know how it will be set up and operated. Apparently a committee is being setup to have a discussion about it next week. It’s enough to make you weep.

Is it better to protect than repair?

Why is Ireland so preoccupied with protecting the level of house prices when most of the people trying to sell are buy to let investors and property developers? Why are major banks cutting mortgage lending by 80% while average house prices have only fallen 20-30%?

The property bubble in Orlando, Florida started in late 2006, and the banks were absolutely ruthless with people who got caught out – mostly investors and developers, but yes, ordinary people too. The numbers of foreclosures increased dramatically, and the asking prices for them just kept falling and falling, first by 20%, then 40%, and eventually, in early 2009, by 70-75% from peak levels. Initially, the supply rocketed and demand fell off a cliff.

Without a doubt, a weaker banking and political system or a stronger lobbying group would have put a stop to it. Didn’t happen like that though. You keep dropping prices, you get rid of the rot in the system, and eventually, guess what? People will start buying again.

Let’s compare Orlando housing activity in April 2009 with April 2008

- House prices have fallen 37%
- 48% more homes were sold
- 50% of all homes sold were distressed priced or bank owned
- Properties are selling 15% quicker
- There is 20% less inventory than a year ago

Source: Orlando Realtors Association

In an ideal world of course, we would politely request points 2, 4 and 5 above. But I can’t see that happening somehow.

Myself and my colleagues are more than happy to discuss the issues raised in these notes, and as always, there’s a great selection of properties for you to look through below.

Kind Regards

Colin Murphy
Director
www.torcana.com

Where Are The Swashbuckling Irish Investors Gone?

The image of the swashbuckling Irish investor has taken quite a hammering over the last 18 months. Both Irish and non-Irish media publications frequently expressed their admiration at the way the Irish purchased enormous amounts of off plan investment property throughout Europe and the USA.

Unfortunately, many of these same investors are now frantically trying to cut their losses and have retreated back to Dublin, Cork and Galway with their proverbial tails between their legs.

Where are we seeing market activity?

I honestly do think that the types of properties Torcana are promoting (i.e. sourcing high quality finished properties available at large discounts from highly distressed vendors) is the only market niche that has seen an increase rather than a dramatic decrease in activity lately.

The sector was previously dominated by the off plan market for vacation properties, for investment properties, and for a combination of both. In the next post, I have described why demand for these types of properties has fallen off a cliff.

Markets that did well for completed / 2nd hand properties, such as Germany and France are both also suffering quite a lot now.

Anybody out there agree?

Torcana Ltd is a property investment consultancy dealing with investments in foreclosed property, distressed property, and discounted property in USA, Spain, UK, and Panama. For more information please visit: - http://www.torcana.com

Quantitative Easing - How It Affects Property Investors

Quantitative easing is not the same as printing more money, although this is also an option open to central banks such as the US Federal Reserve and the Bank of England.

Quantitative easing on a large scale occurs when a central bank issues huge amounts of short-term bonds, which in turn enables them to buy back their own long-term bonds.

By doing this, bond yields and therefore long-term interest rates will decrease.

Ok, so what will that do?

Well, that would drive mortgage interest rates down and potentially kick start the property market. The downside for US importers is that this will also weaken the dollar – which of course, is an upside for investors seeking to purchase American property using GBP and EURO.

Issuing and then buying back your own bonds – sounds ridiculous doesn’t it?

I guess it does a little, but if you think about it, it is actually very similar to a regular person increasing their bank overdraft and using the extra money to pay back more of their mortgage.

It made sense for the Bank of England and Fed Reserve to do this, because interest rates were close to zero and mortgage rates for those trying to invest in property or get on the property ladder were often as high as 6-7%, which was causing huge friction in the stock markets.

As noted above, one of the side effects of quantitative easing is that it drives down the interest rates on their 10 year bonds, which are often linked to mortgage rates.

Decreasing long-term mortgage rates effectively puts more cash in people’s pockets that will hopefully encourage them to spend more.

Torcana Ltd is a property investment consultancy dealing with investments in foreclosed property, distressed property, and discounted property in USA, Spain, UK, and Panama. For more information please visit: - http://www.torcana.com

Torcana.com – Our Opinion on Spain

Quite a few people have asked me about Spain recently and whether or not it would be wiser to wait a little longer until prices drop further.

The truth is that the Spanish market has not bottomed out yet, and there are many banks and developers who will shortly be joining the ranks of those who are already very distressed. This increase in supply should cause a drop in median house prices.

However, this doesn’t make it any easier to predict how far the markets might fall or when the “best” time to buy might be. At the moment we have highly distressed stock (in great condition) that is reduced 30-50% from peak levels, and I can’t see average foreclosed properties falling much further to be honest, even though the average regular property price still has a long way to drop.

If you want an extreme example of how much property developers are suffering down there, look no further than a small Belgian developer in Marbella who kidnapped a local bank manager at gunpoint in an attempt to secure a 50,000 euro loan a few weeks ago. Thankfully he was arrested and nobody was harmed after the bank manager used coded language in a phone call to his branch who then alerted the police.

I kid you not folks, it was reported in El Pais.

Feel free to view our Spanish property listings.

Kind Regards

Colin Murphy

Director

www.torcana.com

Issue 4 – Applying Buffett’s Logic to Property Markets

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 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. 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…

Kind Regards

Colin Murphy

Director

Torcana Ltd

http://www.torcana.com

US Housing Market Showing Signs of Recovery

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:

1. Property prices are considered overvalued? Keep reducing them weekly until people start buying. Those who reduce quickest will sell quickest.
2. 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.
3. 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 of 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 Torcana 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.

1. We source properties
2. We organise viewing trips (Are Lingus have a great sale at the moment).
3. We process paperwork
4. We open bank accounts
5. We apply for nonresident tax numbers
6. We find tenants
7. We offer rental guarantees
8. We file annual tax returns.

If this is something, you want to get involved in, please contact us and request a brochure.

Torcana Ltd is a property investment consultancy dealing with investments in foreclosed property, distressed property, and discounted property in USA, Spain, UK, and Panama. For more information please visit: - http://www.torcana.com