Torcana Distressed Property Seminar Mar09

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Information about Torcana Distressed Property Seminar Mar09
Real Estate

Published on March 10, 2009

Author: colingmurphy



An edited version of a distressed property seminar hosted by in a Dublin hotel on March 5th 2009.

DISCOUNTED PROPERTY SEMINAR D4 Ballsbridge Hotel, 5th March 2009 SCHEDULE 6.30 – 7.15 Purchasing Discounted Properties in Prime Locations 7.15 – 7.30 Refreshment Break 7.30 – 8.15 Latest recommendations: USA & UK 8.15 – 8.30 Q&A / Discussion

Should we really be investing in property? • Unprecedented global turbulence • Stock markets devastated, demand for goods & services plummeting • Unemployment, taxes, debts, defaults all increasing alarmingly • It’s bleak, but do these conditions unearth new opportunities to be exploited? • Absolutely, unprecedented opportunities in fact • But you must be extremely careful

Before you start.. • No “one size fits all” solution • Important factors to consider • Budget – how much do you want to invest? • Timescales – how long do you want to invest your money for? • Income – do you want income and / or capital growth? Risk factor – how risk averse are you? •

What to look for in an area before you invest there • Identify solid reasons for capital growth • Look closely at the economy & demographics • GDP growth, infrastructure, population growth • Examine external influences • Supply vs. demand • Building restrictions • Financing • Local & foreign affordability • These are fundamental factors that apply in all economic cycles!

What types of countries do we see value in? • Every country is suffering, but some will recover quicker than others • Who has the capacity / sophistication to borrow cheaply and implement well thought out reforms? • Which countries have strong domestic markets? • Where are the areas where people will always want to live? • Are there any property developers and banks suffering in these areas? • Can high quality investment properties be purchased at a fraction of their former cost? Are these at or near the bottom of the cycle? • Is there a genuine rental market that will ensure it is cashflow positive while you (patiently) wait for the market to recover? • Will banks provide finance to foreign buyers for these?

Where are we looking at right now?

COMING SOON … DISCOUNTED SPANISH PROPERTIES • One of the worlds most mature second home markets • Excellent infrastructure, great climate, flexible mortgages, robust tourism • Property boom now bust – huge volumes of unsold stock nationwide • Now huge range of opportunities to purchase distressed stock • Earlier this week we signed exclusive agreement with 8th largest Spanish bank • They have repossessed 1000s of properties all over the country • They also offer 80% financing to buyers of these properties • Prices starting at €67,000. Up to 40% discounts • More to follow next week on

Where are we looking at right now?

Orlando, Florida • Economic and market forces aligning to create some of the best purchase opportunities seen in a generation • Properties for as little as 30% of their former values • Excellent rental returns and cash flow positive (6-8% typical) • Turnkey services provided – legal, tax, title, management, banking • We only focus on properties which have high rental demand, are in strategic locations and are offered in excellent condition

Orlando, Florida - Are we approaching bottom of market? • The volume of home sales in Orlando in January 2009 was 17.7% higher than January 2008. • For the fifth month in a row 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 investors have to purchase these amazing properties?

Orlando, Florida • What is an REO Property ? REO simply stands for Real Estate Owned, and is a property that sits on the banks books, and is no longer owned by an individual It is the final stage of the foreclosure process, where the price of the property reaches its lowest point • What are the dangers and pitfalls to avoid? - HOA Fees / Delinquencies - Condition of Property - Property Taxes - Management Company - Intimate knowledge of location

Where in Central Florida? Metrowest Millennia Dr Phillips / Bay Hill Hunters Creek

Investment Sample Detail 2 bedroom example Previous Purchase Price $233,300 (ref 115) Current Purchase Price $61,900 Total Closing Costs $5,000 Monthly Income Estimated Rental $975 Gross Yield 18.9% Monthly Expenses Management Fee (10%) $97.50 Real Estate Tax $214 Home Owner Association $280 fees Insurance $30 Monthly net cash flow $353.50 Net Rental Yield 6.8%

Orlando, Florida - Purchase Procedure • Investor and Torcana identify desired property type(s) and budget to spend • Investor demonstrates ability to purchase property in this price range Step 1 • If the investor is happy to proceed they indicate that they would like to make an offer • Bank accepts offer and Purchase Contract is produced Step 2 • Investor pays refundable 3% consultancy fee (min €2900 / £2650) • Client transfers purchase amount plus legal costs to escrow account Step 3 • Title Company prepares and sends closing documents to investor Step 4 • Investor signs management agreement • Management company sources tenant and sends investor surplus monthly income Step 5

AVAILABLE AT THIS SEMINAR: Orlando Condos S101: 1 Bed 1 Bath, Serenata - $39,000. Monthly Rent: $725 S109: 1 Bed 1 Bath, Bermuda Dunes - $59,900. Monthly Rent: $725 S117: 2 Bed 2 Bath, Stonebridge - $74,900. Monthly Rent: $1150 S119: 3 Bed 2 Bath, Stonebridge - $95,000. Monthly Rent: $1300 Orlando Single Family Homes S110: 3 Bed 2 Bath, Eagle Creek - $159,900. Monthly Rent: $1350 S111: 4 Bed 2 Bath, Eagle Creek - $170,900. Monthly Rent: $1400 S113: 3 Bed 2 Bath, East Park - $194,900. Monthly Rent: $1350

The United Kingdom • Developer Attitudes – marked change in 2009, better discounts now available • Huge numbers of cancellations and mothballs – will cause future undersupply • Interest rates at all time lows, quantitative easing used for first time today • We are now entering prime buying time • Torcana have formed wide range of partnerships to capitalise on opportunities • Lawyers • Tax Advisors • Management Companies • Mortgage Brokers • Local Agents

The United Kingdom contd. • Areas and Types of Properties Available - First time buyers - 1 – 2 bed properties - Either central or commuter belt Bulk vs Single Buyer Discounts • What you should avoid • - Offplan Properties - Very large properties - Areas with oversupply (esp North England) - Extremely large developments Financing Options 70% Variable LTV from 1.99% to 2.19% above BOE base rate Minimum loan is £100,000 Loan amounts calculated on 5 times net salary Various fees involved (1-2%)

CONCLUSION Some of best investments have been made by going against the grain - Buy when everybody is selling. Sell when everybody is buying - Eg. Michael O’Leary 2001, PV Doyle 2007 This is a rewarding experience for those with speed and ability to act on information provided by specialist agents Thank you very much for listening

© Torcana Ltd 2009 This is a very fast moving market and the best properties are usually purchased within 7-10 days. Contact us now for further information: Torcana Ltd Ballsbridge, Dublin 4 Tel: +353 1 4433 991 / +353 1 4433 578 Email: Web:

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