Foreclosures in Orlando Florida

Hi Folks

Ive been discussing with some banks in the US a deal to market foreclosed properties in Florida to markets in Asia. Properties discussed are at 50% discounts with sitting tenants.

Im not posting with a view to self promotion, would like to hear what some of the posters think about this kind of investment. What do you make of the florida market? Obviously its not great like everywhere at the moment, but with these kinds of discounts and tenants, do you see it as a decent investment for the future? Or even with such discounts do you still see it as a high risk.

look forward to your thoughts

Hi,

Just speaking for my self the property market in the U.S is way too big a risk it is much similar to Irish market were you will see in my view a further drop of at least 30% in values. If I was to invest I would look at the UK market and this would not be a long term investment I think the markets will recover but may take a second nose dive timing will be vital. The worst countries affected are Ireland, America, Dubai stay well clear

50% of what to what? What yield does it return? What terms are the sitting tenants contracts on? Has the property had tenants for the past 5 years? What guarantees are there that there will be tenants for the next 5 years? Can the property get hurricane insurance?

I've done some additional reading over the last few days and weeks. Smarter minds than me are predicting:

1) mid to long term dollar weakness
source [broken link removed]

2) deflation before inflation


3) slow gradual recovery
[broken link removed] source

4) more local bank failures (another 7 went in the US last weekend taking the total to 106) leading to restricted credit.
source source source

5) domestic property is down 31% (national Case Shiller index as of 2Q2009 compared to peak of 1Q2006) or 47% in Miami (Case Shiller index for condos as of July 2009 compared to peak of November 2006)
source

6) commercial is down 40% but the losses have not been realized because of an "extend & pretend" strategy with a wall of finance still required for real estate funds
source [broken link removed]

1-3 seem to stack up against capital recovery (especially for non-dollar investors)
4-6 seem to stack up even more supply against limited demand and limited finance

So IMVHO I think it's going to have to be a very strong rental-yield based story rather than a value recovery story.

I would think this would be a high risk due to: inherited liabilities for maintenance fees and taxes source, currency uncertainty, local job market factors which is significantly tourism based http://www.orlandosentinel.com/business/orl-hotel-occupancy-down-082509,0,1560433.story (source) [broken link removed], and potentially higher availability of competitive lets & capital erosion. source

Quote:"What has been a downward spiral in condo prices threatens to become a free fall. I found a unit in a new building listed for $307,500 at the beginning of August. It was marked down to $287,500 and then to $267,500 and then to $247,500 and then to $227,500 and now to $207,500." source

I also think timing will be a major factor, and would want to see some hard and sustained evidence of a recovery in the housing market. Don't think there's any rush to get in. European shares and corporate debt denominated in Euros look more attractive for my portfolio.

[disclosure: I am currently invested in some European property funds, based on good cash yield in Euros derived from long term leases in the retail sector. The continental European consumer has held up OK so far. source]

Howitzer said:

50% of what to what? What yield does it return? What terms are the sitting tenants contracts on? Has the property had tenants for the past 5 years? What guarantees are there that there will be tenants for the next 5 years? Can the property get hurricane insurance?

Click to expand...

Example I have been sent from my contact there -

Property valued by the bank market value $149,900 USD
Sale price $79,900
Rent per month $1000
HOA Fees $230 p/m
Current Lease ending 30.06.2010

Will have to check on how long the property has been rented and the prospects for lease renewal but that is the info so far. Need to investigate hurricane insurance

Hi,

The location of the foreclosed property is always a factor to consider. You may find that certain areas have many foreclosures for sale. This is not necessarily a bad thing, but you should find out the demographics of the area before you decide to stay there. Buying a house based on price alone is never a good decision and therefore all research should be undertaken prior to purchase.