Mark Twain famously quipped that he never recognised an opportunity until it passed him by, although the great American author still managed to waste most of his money on a string of dubious inventions and get rich quick schemes. Had Mr Twain been alive today, I can imagine him squandering his money on technology startups just before the dot com bust, on properties at the very top of inflated markets or on banking stocks just before the current financial crisis.
It is often said that some of the most successful investments have been made by going against the grain, by buying when others are selling, and vice versa. We can’t all be a Michael O’Leary placing Ryanairs biggest ever aeroplane orders just 12 weeks after 9/11 or a PV Doyle selling a range of high profile Dublin hotel sites at the peak of a property boom. However we could all find some time to analyse when would be the best time to dispose of assets we already own (preferably when everybody wants to buy and will pay over the odds for them) and when would be the best time to purchase more (when everybody wants to sell, preferably at a heavy loss).
From a property point of view, now is probably not the time to try and sell anything purchased in the last 3 years, but if you have the money - it is definitely a great time to purchase from other people at huge discounts.
Where Are The Most Distressed Sellers?
After many months of research, Central Orlando was one area identified by my colleagues and myself as an area offering a particularly high number of distressed buyers. There is no shortage of places containing distressed buyers, but for us, Orlando stood above the crowd for the following reasons:
- Florida is diverse, wealthy and resilient economy
- Orlando is still a city with a fast growing population and home to a diverse range of industries
- Young hard working people like living there, as do older and wealthier people on the verge of retirement
- There is little or no mortgage financing available which ensures very strong long term lettings to the local market
- Bank owned properties in affluent neighbourhoods are available at 25-30% of their former purchase prices.
These are all great reasons to look at the opportunities in this city, but you need to drill down much further to figure out how long you’ve got to buy the best properties. Every month I become more convinced that the window for purchasing these types of investments will close a lot sooner than I originally thought.
Consider the following:
- The volume of home sales in Orlando in January 2009 was 17.7% higher than January 2008. Home builders in the UK and Ireland would give their right arms (and more) to be able to say that.
- For the fifth month in a row (as predicted in Issue 36) the numbers of properties sold increased in Orlando, due in no small part to the relentless lowering of prices in early to mid 2008.
- The number of properties available for sale in January 2009 was 12% lower than the number of properties available for sale in January 2008.
- The number of properties foreclosed in Florida in January 2009 was 22% lower than the number foreclosed in December 2008. Is this a blip or a trend reversal? How much longer will foreign investors have to purchase these amazing properties?
The market for purchasing high quality distressed properties is both competitive and fast paced. It isn’t a market for people who are just looking but it can be an extremely rewarding experience for those who have the speed and ability to study and act on the information provided by specialist agents like ourselves.
A good friend and very wealthy Standard Oil executive called Henry Rogers eventually saved Mark Twain from financial ruin and taught him how to invest wisely. I wonder what he would have advised him to invest in today?
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
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