Real Estate Around The World

Exit Strategies

noreply@blogger.com (John Breaux) — Sun, 09 Oct 2011 20:59:00 +0000

That's what it's all about, isn't it? I mean, you get into real estate not because of your love of brick and mortar but for the rewards - the benefit of ownership during and after the term of ownership.

Investing in real estate presents a multitude of opportunities where you can put your money. You can invest in single-family homes, single condos, duplexes or 4-plexes, office buildings, retail shopping centers or even storage facilities which are also doing well nowadays. If you are new to this time and money-tested trade, you must understand that there are a number of strategies that you can use to bring in profits. Most real estate experts call it exit strategies, and examples are buying low and wholesaling for fast cash, buy-and-hold for cash flow and capital appreciation and to buy-fix-and-sell for bigger profits. But you have to start out right. Let's cover some of the basics.

Buy at the right price

Getting a bargain now will help you to weather the fluctuations in property value over time so you can profit when you eventually sell it. Homework is necessary. You need to develop an understanding of what constitutes a bargain price in the area(s) in which you wish to invest. As an investor, you'll need to be able to act quickly once your target is in sight and knowing the market and having the right contacts - whether an agent or directly with the banks will certainly help. Get to know the market and the people within the market.

You also need to study rental prices of comparable units in the area, getting a feel for supply and demand trends. The local classifieds are a great place to start and a few hours of research should give you a good basis for determining what you can charge. Just make sure to factor in for utilities (electric, gas, oil, water, sewer, cable, etc.) if they’re included.

Depending on your personal goals, there may not be enough of a spread between what you will pay out monthly in mortgage, taxes, and utilities and what you can charge. Figure out what your spread needs to be, and analyze every house you consider against this amount. Of course, a bigger spread is preferable, as it means more profit. If you’ve got a few good options to consider, that spread can aid in your decision-making.

(My next posting will cover how to check out and be sure you're in the right area of town so please come back soon.)

Are you looking for US investment properties? Are you looking for a discounted short sale or bank owned property or just have a question? John Breaux can be reached at john@marathon-group.cz or +1 504-208-4331.

Becoming a Landlord

noreply@blogger.com (John Breaux) — Fri, 23 Sep 2011 14:10:00 +0000

For those who are calling it quits from the traditional 8-to-5 world, either through retirement or downsizing, it might be worth considering a new career - that of landlord.

While being a handy-man might not fit into your traditional image of retirement, it could be a strategy that can kill several birds with one stone, especially for those who buy a small multi-family building, live in it and manage it at the same time.

$100k Duplex - 11% net cash on cash return

Owning and living in a multi-family house (a duplex or 4-plex, for example) can provide relatively predictable cash flow, the potential for price appreciation over the long term and, of course, a place for you to live. It could hold particular appeal for retirees against the uncertainty of the stock markets and the almost paltry interest rates on savings accounts.

Of course, unlike a stock, which you can just buy and pray that it does well during the market cycles, real estate is a bit more stable investment. But maintenance and business decisions will be on your shoulders. That said, you should look at buying any investment property with the same eye toward price and expected returns as any long-term investment.

From a price perspective, this may be the best time to get into the landlord business. Low real-estate prices and the lowest interest rates in years make the cost side of the equation more favorable. Financing for smaller owner-occupied buildings is very much like a home loan; lenders will require documentation of rental income. But that shouldn't be a problem. The rental business has taken off over just the last year. Rents have been on the increase across much of the country, even in places like Florida where home prices have continued to decline. Families losing their homes to the bank (an unfortunate situation, to say the least) still need a place to live so landlords can pretty much look at long-term tenants for several years.

Also, there may be some tax benefits from being an owner/occupant because you can use part of the building as a business. This allows for deductions for things like depreciation and expenses that can be taken against rental income.

It should be mentioned that, as with any investment, there's no guarantee that when it comes time to sell you won't lose money. While it's a long term thing, you should always keep track of the market. This will help you decide when it's the best time to sell.

Are you looking for US investment properties? Are you looking for a discounted short sale or bank owned property? John Breaux can be reached at john@marathon-group.cz or +1 504-208-4331.

Buying Foreclosures - Not As Scary As You Might Think

noreply@blogger.com (John Breaux) — Sat, 03 Sep 2011 06:56:00 +0000

Buying a foreclosed or REO (Real Estate Owned) home may seem to some like a scary process, but as opposed to the waiting game played on Short Sales where the home owner is involved in the process, it's similar to buying any other home, especially if your offer is on a bank-owned property versus one sold at auction. You need a bit of experience on those so I'd advise to stay clear of them until you've done more homework.

There are several nuances that a potential buyer has to be aware of when dealing with a foreclosure, such as checking for liens against the title, or knowing that on a foreclosure even something as simple as cracked paint or a poorly located bathroom (some older homes have bathrooms off the kitchen, for example) can make an FHA loan impossible. Now, a good agent, if you're using one, will have most if not all of this information for you and can steer you to the better deals but for those willing to get their hands in the game, dealing directly with the banks might land them a bargain. You'd be surprised at what's out there that might only need cosmetic work and be a jewel in the rough.

Buying a foreclosed or REO property doesn't vary much from buying a home from a private owner. You write an offer to the seller, who in this case happens to be a bank, they respond to your offer and if both parties agree, you move to the closing. That's significantly different from a Short Sale where the property is still owned by the homeowner and there's a bit of a game being played by the homeowner trying to save his credit and the bank who has no interest in preserving the owner's credit.

Here are some basics about buying properties in foreclosure.

Finding foreclosure deals in your particular area can be simple, and worth a try for first-time home buyer or those wanting to get into real estate investing. Here are some ways of finding foreclosure listings:

Leading real estate portals like AOL and Yahoo! have real estate sections with a separate section with foreclosure listings.
Bank websites will list properties in their possession that are for sale.
Asset management companies (companies hired by lenders to handle foreclosures) often offer a list of available properties.
Real estate agents are very often appointed by the lenders to sell foreclosed homes in your area.
Look for For Sale signs that say "REO" (Real Estate Owned property) or "Bank Owned"
Auction companies hold auctions regularly and sometimes sell multiple properties in a day

Once you've narrowed down the area in which you want to buy, get to know the properties being offered and the area values and make an offer. Often the bank which owns the home has already discounted the price based on a recent appraisal and the fact that it's being sold "AS IS" - without any warranties, etc. so having an inspection done, while advisable, doesn't mean you'll get the bank to do any repairs. That said, it's not uncommon, however, to get a further discount just by asking for it. That's a bit of equity on your side which you can use towards repairs, etc.

Are you looking for US investment properties? Are you looking for a discounted short sale or bank owned property? John Breaux can be reached at john@marathon-group.cz or +420 602 355 810 or +1 504-208-4331.

New Orleans Seafood Festival | September 9 - 11, 2011

noreply@blogger.com (John Breaux) — Sat, 27 Aug 2011 15:53:00 +0000

New Orleans is world-renowned for the taste and fresh quality of its seafood, much of which comes from the nearby Gulf of Mexico. Given that reputation, organizers of the New Orleans Seafood Festival felt there was no better place to hold such a festival and they turned it into a three-day event.

This year's 5th Annual New Orleans Seafood Festival will be held from Friday, September 9 through Sunday, September 11 in Lafayette Square, across from historic Gallier Hall on St. Charles Avenue in downtown New Orleans. The free festival features live entertainment, celebrity chef cooking demonstrations, local arts and crafts and world-famous cuisine from top New Orleans restaurants and caterers.

This year's participating restaurants and other food vendors, and their specialties, include:

Acme Oyster House (shrimp po-boys, oyster po-boys)
Remoulade (shrimp Cajun eggrolls, crawfish pie, meat pies, fried fruit pies)
Café Giovanni (voodoo shrimp, chicken and sausage gumbo, strawberries and sweet cream)
Drago's (charbroiled oysters)
Galatoire's (shrimp remoulade, fried shrimp, BLT po-boys)
Salt Water Grill (cochon de lait po-boys, crabcake salad with remoulade, crawfish and spinach boat)
7 on Fulton (seafood gumbo, seafood sausage po-boys)
Broussard's (chilled seafood ceviche, bread pudding with Bananas Foster sauce)
Serrano's Salsa Company (grilled fish tacos, crab cake sliders, passion burger sliders)
Ninja Restaurant (soft shell crab po-boys and catfish po-boys, both served with spicy mayo)
Grand Isle Restaurant (spicy shrimp, crab fritters)

Although this year's musical lineup has not been completed, several acts have already been announced. They include Rockin' Dopsie Jr. and the Zydeco Twisters, Paul Varisco and the Milestones, The Revivalists and The Wise Guys. More musical acts will be posted as the information becomes available.

Also featured at the festivals will be artists' booths vending the works of some of the New Orleans area's most talented craftspeople in jewelry, woodworks, textiles and more. Souvenir baseball caps, posters, T-shirts, aprons, jewelry and other memorabilia are on sale on the festival grounds.

For more information go to their website at www.neworleansseafoodfestival.com.

Are you looking for US investment properties? Are you looking for a discounted short sale or bank owned property? John Breaux can be reached at john@marathon-group.cz or +1 504-208-4331.

US Mortgage Rates Lowest in Years

noreply@blogger.com (John Breaux) — Sun, 21 Aug 2011 12:48:00 +0000

Homes throughout the US are more affordable now than what we’ve seen in years and with mortgage rates lower than most of us have seen in our home buying lives, now might be the best time for investors to considering buying.

Ok, for local buyers it’s a little easier said than done. International investors have a bit more paperwork to contend with but they can still get financing. So consider this….

"Affordability conditions this year have been the most favorable on record dating back to 1970, but many buyers are being held back because banks are offering financing to only the most highly qualified borrowers, ignoring a large share of otherwise creditworthy buyers," Lawrence Yun, the National Association of Realtors' chief economist, said in a news release.

Yes, mortgage rates have fallen to levels seen in the mid 70s and before that, the 50s! That means 4.15% for a 30 year fixed mortgage. This, coupled with the lowest prices in years, should give investors more reasons to consider US real estate.

Now, let’s look at buying and renting. It can be done just about anywhere. Florida is the destination of choice for many South Americans as well as European buyers. The climate is the biggest draw followed by year round golfing and beaches galore. One thing to also consider, that I think many investors tend to not think about, is that in the years to come the US baby boomers, those born from the early 50s to the mid 60s, will be retiring and looking for a relaxing lifestyle. They will want to remain active and independent and Florida, as well as other parts of the South and South East will be a big attraction.

This means any property owned and rented today will have a certain attraction to buyers 7 to 10 years down the road. On the other hand, some of those boomers won’t want to own and will prefer to be “maintenance free” and rent their place in the sun. And we’re already seeing what’s happening in the rental market – occupancies are up and owners are very happy.

It’s more convincing now than ever before. The rental market throughout the south and southeast will continue to do well. Returns of 6% per year or more are out there. Housing will recover so a resale at some point in the future (no flipping allowed) will also bring profit. How much remains to be seen and we all have to understand that the gains people saw in the past decade won’t be there, if ever, again.

Information contained herein is for informational purposes only. Please check with your tax accountant and/or legal adviser before making any investment decision.

A Little Something About Short Sales

noreply@blogger.com (John Breaux) — Mon, 08 Aug 2011 06:55:00 +0000

Most people, including many agents, don’t understand short sales. I’ve been asked about this a few times so I thought I’d post a brief answer on how it works.

In a short sale the bank does not own the house. The owner of the house, the original mortgagee, is listing the house for sale in an attempt to get the bank to settle for something less than the mortgage payoff. Most, if not all banks in the US, insist that the house is listed with a local real estate agent. If he can secure a buyer, it might get him (the owner/seller) off the hook for the outstanding balance and still allows the buyer to get a clear title to the property.

The bank, however, can change their mind even at the last minute just before closing (and sometimes do) because they are not a party to the contract and not obligated to anything. They only agree to this if (1) They believe they will be better off agreeing to the sale than foreclosing on the property and/or (2) They do not believe anyone (the seller) is attempting to defraud them (by selling to a relative or friend). They spend a lot of time investigating to see if this is the best price they can get including getting appraisals and broker opinions. They also look into who is buying the house to be sure it's an arms length transaction and they consider the original purchase to be sure it was not a fraudulent transaction. It takes an inordinately long time to get back to you as buyer on whether or not your offer was accepted or declined. There are no guarantees.

Personally, I believe most buyers are better off not considering a short sale and would recommend looking at REO properties first. For short sales, you really have to have time to work through this process. This can be part of your search but just be aware that it takes time and it might be a waste if the bank doesn't cooperate.

Here's an interesting video just out on MSNBC which explains Short Sales in layman terms.

Are you looking for US investment property at a discount? Are you looking for a discounted short sale or bank owned property? John Breaux can be reached at john@marathon-group.cz or +420 602 355 810 or +1 504-208-4331.

Financing for International Buyers in the USA

noreply@blogger.com (John Breaux) — Fri, 15 Jul 2011 07:10:00 +0000

Depending on an international buyer's visa classification, lenders may have more stringent underwriting guidelines. Mortgage lenders are more cautious about financing second homes and investment properties for foreign nationals for a very practical reason. If a non U.S. citizen were to leave the country and default on a mortgage loan, the lender would have little or no remedy. To hedge their risk, lenders often require that international buyers make larger down payments and submit to more stringent requirements in order to meet their underwriting guidelines.

With these additional requirements from lenders, international buyers need to be patient with the financing process. It's not unreasonable to expect that it may take considerably longer than it would for U.S. residents to get a loan and expect lots of paperwork.

Most of this comes from US laws aimed at preventing money laundering, etc. One of the challenges many non-permanent residents (those foreigners in the US with working visas) face is a lack of an established credit history in the U.S. Even when lenders allow for alternative credit documentation, "non-perms" sometimes may have to settle for less than favorable financing terms, but they can refinance later for better rates and terms once they establish a positive credit history in the States.

Tourist visas for foreign nationals do not allow them to work or reside in the U.S. This Category includes Canadians, Europeans (or any other non U.S. resident) who

want to buy second homes for investment or vacation purposes. Before the home financing crisis, international buyers had more mortgage options available.

Some lenders still offer loan programs for foreign nationals, but they carry stringent documentation requirements. Without a credit history to consider, mortgage lenders focus on documented income and other assets. To underwrite a loan for foreign nationals, lenders typically require a substantial down payment of 35% or more, in addition to closing costs. Foreign nationals can expect to pay higher interest rates and possibly upfront charges for these loans. Requirements will vary from lender to lender, but here are some tips offered to international buyers to help them prepare for financing a property in the U.S. Following these steps can help foreign nationals secure a mortgage.

Financing Tips for International Buyers:

1. Establish credit in the U.S., if possible.

2. Open up an account with a U.S. based bank at least 3 months before you seek financing

3. Start an account in your home country with a large international bank with branches in the U.S. close to where you want to purchase a home. Many larger US banks like Bank of America (the US's largest mortgage provider) has offices in the UK and other locations.

4. Get a few reference letters declaring you are in good standing from 3 financial institutions in your home country if you can't accomplish #1 or 3.

5. Obtain verification of your gainful employment and line of work. A simple letter from an accredited accountant or some other third party in your resident country will suffice.

6. Apply to extend your visa or passport if it's due to expire in 6 months or less.

Are you looking for US investment property at a discount? Are you looking for a discounted short sale or bank owned property? John Breaux can be reached at john@marathon-group.cz or +420 602 355 810 or +1 504-208-4331.

Information contained herein is for informational purposes only. Please check with your tax accountant and/or legal adviser before making any investment decision.

Buying Property in Florida - What's Next?

noreply@blogger.com (John Breaux) — Wed, 06 Jul 2011 11:39:00 +0000

When you submit your offer, you'll be required to pay a deposit. This money is held in an escrow account (an account held by a neutral third party - in order words, not held by either the buyer or the seller). The deposit is generally held by the agent or the closing attorney. This is used towards the sale price and is not an extra charge.

Note: Escrow is a term which might confuse some European buyers mainly because it's not one that's typically used in the UK, for example, while it's common in the Czech Republic. You can read more on this here: Escrow from Wikipedia.

One important thing to mention here is that if you're a foreign national looking to buy in the USA, you really should establish a bank account there. Most sellers, especially institutional sellers like banks, won't consider an offer if you can't prove you have the funds readily available. Saying you have the funds in a European bank account won't mean much if it takes a week to get the funds transferred. Generally speaking your local agent will ask for this (a recent bank statement, for example) to be submitted along with your offer.

If you're making an all cash offer, once your offer is accepted you will have as many days as specified in your offer to make inspections, get condo association approvals, etc.

Once that's all done and you're satisfied with the information you've received you can proceed to closing. You will be provided with a good faith estimate in line with The Real Estate Settlement Procedures Act (RESPA) outlining who pays for what at closing.

NOTE: RESPA is about closing costs and settlement procedures. RESPA requires that consumers receive disclosures at various times in the transaction and outlaws kickbacks that increase the cost of settlement services. RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD (the US Department of Housing and Urban Development).

There are usually two columns on the good faith estimate - buyer's side and seller's side. You'll see all the costs delineated on the form with totals on the bottom. Besides the purchase price, you will be responsible for prorated property taxes, for example, utilities and home owner dues, if applicable and/or if any are outstanding. Your local agent will go through this with you and make any corrections and notify the closing attorney.

The closing will be scheduled and either you or your representative (empowered by a power of attorney) will be present along with the seller and your respective agents will be there. You'll need to have certified funds with you. Your local US bank can provide you with a certified check. You sign it over to the closing attorney, sign the closing documents and receive the keys to your new home or condo. Possession is immediate in the US.

Are you looking for US investment property at a discount? Are you looking for a discounted short sale or bank owned property? John Breaux can be reached at john@marathon-group.cz or +420 602 355 810 or +1 504-208-4331.

Buying Property in Florida - part deux

noreply@blogger.com (John Breaux) — Sun, 26 Jun 2011 15:03:00 +0000

Once you've found a property you feel meets your investment requirements your agent will help you write an offer. The Offer to Purchase Real Property or "Offer" is written on a State approved form which, more or less, allows for only fill-in-the-blank details.

These are just some of the important provisions included in this Florida Residential Real Estate Sale Contract:

Parties: Identifies the Seller and Buyer involved in the transaction;
Property to be Sold: Specific property being sold, including a legal description;
Price and Payment: The price for the property and when and how payments are to be made;
Earnest Money and Other Deposits: How the earnest money is to be kept and handled ;
Contingencies: Allows certain contingencies with regard to the property. This includes if the buyer is getting a mortgage;
Removal Of Contingencies: What happens if contingencies are not removed;
Time For Acceptance And Effective Date: Time by which offer needs to be executed by both parties;
Condition of the Property: Defines the condition of the property and whether or not the property is being sold "AS IS" or subject to any repairs;
Inspection: Mechanical, Pest and other inspections ;
Radon and Lead Paint Disclosure: Disclosure about Radon testing and Lead Paints;
Utilities: How utilities will be handles;
Casualty Loss: Defined who bears the risk of loss;
Title: Transfer of title from seller to buyer;
Existing Mortgages: Seller shall furnish to Buyer a statement from all mortgagee(s);
Professional Survey Engineering Plans And Studies: Whether a survey shall be made and the furnishing of all plans;
Delivery Of Deed: When and how the Deed will be transferred;
Closing And Possession of Property: Time and manner of closing and when possession occurs;
Restrictions, Easements, Limitations: The various easements, restrictions and limitations of the property - if any;
Obligations of the Parties at Closing: Seller's and Buyer's obligation at closing;
Closing costs: A checklist for who is responsible for which closing costs;
Defaults And Remedies: What happens in case of defaults and any remedies;
Disputes: Sets forth how disputes may be settled.

It is possible to add something that is not contained within the formal Offer. An example could be a list of furniture or fixtures that the Buyer may want. The document used for this purpose is called an "Addendum" and is attached to the Offer. It becomes a part of the transaction once signed by both parties.

In recent years, it has become common place for the Seller to provide the Buyer with a list of known defects, conditions or any other information concerning the property. This "REAL ESTATE DISCLOSURE STATEMENT" is not a warranty of any kind by the seller and is not a substitute for any inspections or warranties the Buyer may wish to obtain. It is merely a declaration of what the Seller knows regarding the property.

The results of the negotiations between the Buyer and Seller concludes with an agreement on price and terms and at that time an agreement between the two parties exists. This final agreement is called the "PURCHASE AGREEMENT" or "PURCHASE CONTRACT" and acknowledged by both by signing the document.

Are you looking for US investment property at a discount? Are you looking for a discounted short sale or bank owned property? John Breaux can be reached at john@marathon-group.cz or +420 602 355 810 or +1 504-208-4331.

Buying Property In Florida

noreply@blogger.com (John Breaux) — Wed, 22 Jun 2011 08:11:00 +0000

The next few posts will be my attempt at introducing my European clients on how to buy US real estate. I'd like to try to help bridge the gap between the European and American ways of buying property. How doing business there, while different from what you’re use to, is easy and almost always a totally transparent transaction. I’ve met with or spoken to several people interested in Florida real estate specifically so I thought I'd put together a guide of sorts to help them and hopefully you as well.

The first thing to know is that all agents (called Realtors in the US) have to be licensed in the State where they’re doing business. They must attend licensing classes and pass a State issued exam before a license is issued and every few years they must attend continuing education classes то maintain their license. This really legitimizes how business is conducted. If an agent fails to disclose a problem with the property or makes a mistake, he/she could lose their license and be out of work. Moreover, with the US being such a litigious environment, agents go out of their way to make every part of the buying process completely transparent. Everything must be disclosed thereby protecting property buyers from future problems.

Many of the better agents go on to learn more about the property business by attending classes geared to their specialty. You should look for agents with these designations in order to know you're doing business with a professional. Designations include CIPS (Certified International Property Specialist), CRS (Certified Residential Specialist), GRI (Graduate of the Realtors Institute) or CCIM (Certified Commercial Investment, Member) which is among the most sought after designation amongst commercial agents.

But probably the biggest difference between the US market (any US market actually) and most EU markets is that each US market has what’s called the Multiple Listing Service (MLS). These are Realtor database listing systems which almost every US agent uses to list their properties (commercial agencies rarely use the MLS).

Every

Typical MLS Listing Page

listing – and listings are almost always an Exclusive Listing - is input into the system and allows all agents to have access to all the listings in their area, regardless of who actually has the listing. This means that sales are shared between a listing (sellers) agent and a sales (buyers) agent. The seller pays the listing agent a commission and that agent pays a portion of the commission (usually 50%) to the buyer’s agent. You can have the best of both worlds because you can be represented exclusively by one agent, have access to every property being offered in your area of interest and you don't have to pay him a dime.

This is great for a buyer because you have the ability to hire an agent to represent your best interests rather than having to work with a listing (seller’s) agent who is actually being paid by the seller of the property, or you having to bounce around between different agents. A buyer's agent can show you any listings and help you find a suitable property. All you need to do is find an agent you like, and hopefully trust, and then get to work.

Are you looking for US investment property at a discount? Are you looking for a discounted short sale or bank owned property? John Breaux can be reached at john@marathon-group.cz or +420 602 355 810 or +1 504-208-4331.

Miami Beach, Florida Real Estate

noreply@blogger.com (John Breaux) — Wed, 15 Jun 2011 06:58:00 +0000

It wasn't that long ago, 2008 to be exact, that many thought that Miami and Miami Beach would be a condo ghost town. There were buildings as far as the eye could see - and see through - that had people wondering what would happen to this once vital city.

Well, a lot has changed since that time. Miami is winning the hearts of many of the former naysayers in what could be considered a true renaissance story. The city has become the epicenter of international interest and residential is leading the charge.

According to a study I saw done by Lewis Goodkin and Craig Werley, 85% of 24,000 condo and apartment units built since 2003 are now occupied. That, according to their study, is a 31% increase since summer 2009. Moreover, some 78% of the units built during the boom and left vacant have now been sold. "Sales and rental activity has outpaced even the most bullish predictions" said Mr Lewis.

This means that Miami's condo market now stands at one of the healthiest in the US. Why? Because, in large part, the interest by foreign buyers who bring cash to the closing table. Buyers, especially from South America, are scooping up properties at a frenetic pace. Prices remain low, compared to their original asking prices a few years ago, rental rates have improved and a push by the city to improve infrastructure and services have dramatically changed the landscape. People who once said that Miami was a risky place to be, in more ways than one, are now realizing that the gentrification has brought about major changes including a safer place to live and work. Tourism is a major industry and they all need a place to live, eat and shop. Miami is seeing an uptick in the commercial and retail arenas as well so it's become a win win for everyone.

And there are still lots of opportunities to be had. Not just in Miami and Miami Beach but all along the Florida coast (actually, anywhere in Florida). You just need to know what to look for. Do a little homework, work with an agent you know will steer you in the right direction and give you all the information you need to make a good investment decision and you won't go wrong.

Florida - The Sunshine State

noreply@blogger.com (John Breaux) — Mon, 30 May 2011 03:42:00 +0000

They nailed that slogan! I've been here in South Florida for two weeks and have seen only a few drops of rain the entire time. Now I've moved a little further up from the Gold Coast to St Augustine, the US's oldest established city and still great weather.

Studio Condos in South Beach

My reason for being here - simple. More and more people have been asking me about investing in Florida real estate. I decided to take some time to explore a few of the markets which have been mentioned and can say that I'm personally very impressed with what's out there and how much bang you can get for your buck. There's nothing like it in the CEE.

First, there's Miami Beach which is a personal favorite. I found studio condos two blocks from the beach completely furnished for $60,000 to $80,000. Another property, an older 80 sq meter (810 sq ft) two bedroom unit in need of reconstruction, for $100,000. It was in the heart of SOBE (South Beach) - three blocks from Lincoln Road and two blocks from Ocean Drive. And still there are others in mid beach and north beach for less but equally interesting because they're all still "on the beach" - just not SOBE.

$78,000 2 bedroom home in Homestead, FL

Then there are the single family homes (SFH) within a short drive from Miami for less. They are houses that were caught up in the foreclosure frenzy and are now renting at $600 to $1,000 per month. These homes, many believe, will appreciate faster than the condos only because Americans will once again want to own their own home. Once the country recovers you'll see people who were once renting going back to home ownership.

So a lot is out there for you. Just depends on the route you want to take. Both can be excellent long term investments. A condo has more up front costs such as the monthly home owner association dues (which typically average about $250-$300 per month) but they're fairly easy to manage from afar. Those dues cover things like repairs and maintenance of the building, roof, elevator, etc. Single family homes are more for the long term renter but you might have maintenance/repair issues as time goes on - from a simple repair to new landscaping for example, after a tenant moves out.

If you're considering investing in real estate, now is as good a time as any and South Florida is one of the best places I've seen in recent years. It's been out of reach for many people for so long but prices have come down to affordable levels. And with the rental market going strong, even the most conservative investor gets very reasonable returns.

For more information send me an email or message here and I'll get back to you. I'll be happy to help you find you're place in the Sunshine State.

I Love Real Estate

noreply@blogger.com (John Breaux) — Thu, 10 Mar 2011 19:10:00 +0000

The bottom line is that it has more to do with the fundamentals of the transactions and the interactions with people than anything. Real estate can be a great investment in good times and in bad simply because it can (or should) produce positive cash flow for the investor. Yes, equity is important but cash (flow) is king.

Real estate hasn't really hit bottom yet in regards to prices but I hear that demand is increasing, at least on some level, and will continue, albeit at a snails pace, over the next 12 to 18 months. But demand alone DOES NOT justify a price increase which might otherwise be ok in another time or place. This time things are different. The shadow inventory alone (some say there's 10,000 units sitting unsold in Prague alone) will continue to stifle prices for probably another two years.

In spite of the so called recovery of the broader economy, high unemployment and continued financial market jitters mean mortgage lenders will remain guarded in their lending practices. Monetary policy, however, does remain supportive and the historically low mortgage rates have boosted home affordability, providing some price stability across parts of Europe. In Western Europe, for example, prices have risen by about 2% on average since this time last year and there is a very mixed picture at the individual country level, reflecting the diverging path of economic recovery. Property values continue to fall, however, in Ireland, Greece, Spain and the Baltics, where the economic difficulties continue. The Nordic markets and the UK appear to be the strongest markets, price-wise, while prices are stabilizing in larger markets such as Germany and France. But through it all it appears that the so called pricing correction that many claim happened during the crisis fell short of balancing investment price-to-income ratios. This may imply that there are still downside risks to today’s pricing levels.

Same ole, same ole

noreply@blogger.com (John Breaux) — Mon, 14 Feb 2011 08:59:00 +0000

Not much news to really talk about. It's the beginning of the year and we only just begin seeing activity from about mid February. It's pretty historic that way. August is dead because of summer holidays and December through mid February is the same because of Christmas and winter holidays. Today marks the start of business is some ways because school begins again today. That usually means parents are back at work too!

With that are published reports of how down the residential market is and how tough it might be to see any real progress. As I mentioned in a previous post, there are some 10,000 unsold apartments on the market. This coupled with developers looking to start new projects we're talking years to get to a balance in supply and demand. The buyers market scenario will be around for some time.

Now the question is when interest rates will begin to climb. That usually stirs some activity as buyers act on their buying impulse to get in before a rate hike.

Another interesting article, which I posted here (to the right) concerns banks having so many unsold flats and not being so proactive in their marketing and sales. Times might be changing on this as people around say that this year might mark a change in how the banks cooperate with their developer clients.

This Weak Recovery

noreply@blogger.com (John Breaux) — Fri, 14 Jan 2011 08:46:00 +0000

For those who like to crunch numbers it seems that we are on our way to recovery but not a full recovery by any means. It's still a long way back to health.

From all we can gather both on paper and anecdotal, the commercial business is expected to do well in 2011. 2010 has already given indication that institutional investors are moving again. Residential, however, still seems stuck. There remains a large block of unsold new development flats. So called buyers are still very wary of pricing of new developments and have made that clear by steering towards existing, older, homes/flats. And to add fuel to the fire, they remain cautious regarding their jobs, worried about their pensions and therefore prefer to save wherever they can and use the slowdown time to shop.

Almost every residential agent will tell you the same thing; sales on older flats went fairly well last year while new developments stagnated. This, they say, is because the developers are stuck on their prices. I guess it's their own fault really. They bought land at the peak of the market and now can't make their numbers work at lower sales prices. It's a clear damned if you do situation. The owners of the older flats had less basis in their property and therefore could afford to reduce their price to move it.

There was one ray of sunshine however. Seems that sales at new developments had more success up to a ceiling of about 45,000CZK per meter. Above that, sale were very slow; almost zero.

So what has to happen to get the new development sales moving? Should the banks take a hit on their loans so that the developer can reduce his pricing to move units? Why not? Doesn't seem that anyone will make money if sales won't occur. These loans could be restructured in such a way that the bank and the developer work together on the sales and marketing and participate on the profit side once sales get underway. Everyone has to understand that they will take home less but at least there's something there to take home. Moreover, they - the banks and developers - should give their buyers the feeling that, as a result of the reduced prices, there's more of a chance of value appreciation down the road. For residential investors it will be about yield, period. If they can't buy and realize a return on my money, why bother?

Which brings me to another point. Could or should developers limit the number of investor units? It might keep the rental pool in the city "controlled" as it were and could, in theory, prop up rental prices which so far as been slipping.

Happy New Year - PF 2011

noreply@blogger.com (John Breaux) — Wed, 05 Jan 2011 16:38:00 +0000

So the new year has begun - a new world order is in process! Well, according to the Mayan calendar we can expect major changes over the next few years and hopefully to the betterment of everyone concerned.

We are also looking forward to a good year. Insiders - bankers, developers and investors alike - all say that 2011 markets a turn around in almost all market sectors. Commercial real estate is said to be the best performer this year but residential will follow suit. In residential it will be all about how comfortable people feel with their position in their jobs, families, living conditions, etc.

So looking forward, not backwards, is the call to order. We have high expectations for the year - both personally and in business and look forward to helping all of our clients get back to business.

Happy New Year everyone and all the best throughout this year....

This is pretty cool!

noreply@blogger.com (John Breaux) — Thu, 16 Dec 2010 15:12:00 +0000

Thanks to our friends at Bezrealitky.cz, there's this very nice and self-explanatory price map of Prague and its surrounding areas. These prices appear to be based on the hundreds, if not thousands, of For Sale By Owner listings within the Bezrealitky pages.

I think it's a great tool to see where pricing is within the city. Not many new developments are shown, although there is one high-price "bubble" in the middle of Zizkov which I would tend to think is Central Park Praha. You be the judge and please feel free to comment on whether or not you feel this map correctly portrays the pricing in Prague.

News and Information

noreply@blogger.com (John Breaux) — Wed, 01 Dec 2010 17:22:00 +0000

I've added some links to the side that I will update more regularly. These links will be of current events including news from various markets around the world which I hope will be of interest to everyone. If you find something that you'd like to share, please let me know. I'll give credit for any article I receive.

When exactly is a good time to buy?

noreply@blogger.com (John Breaux) — Tue, 23 Nov 2010 11:28:00 +0000

It's really a hard call to actually RECOMMEND to anyone that now might be a good time to buy. Really depends (1) on the market you're considering and (2) what price level you're looking to get into. And though it hurts my overall sales business, I am almost feeling better about recommending renting for the following reasons.

Using the Owning versus Renting School of Thought

In many cases, annual rents (not including service charges and utilities) are typically 2.5% to 3% of the purchase price while mortgage rates are 4 to 5%, so it could cost almost twice as much to borrow the money as it does to borrow the house. So then why buy when it's more advantageous to rent - at least until prices come down to an affordable level?

Let's face it; renting is a cash business that proves what people can really pay based on their salary, not how much they can borrow. Salaries and rents in and around Prague prove definitively that high property prices have to come down more before sales will get back to "normal".

If you're considering buying either as an investment or to occupy, here's something I found that I think is a very good way to judge whether or not owning works for you (or if you're better off renting).

annual rent / purchase price = 3% means do not buy

annual rent / purchase price = 6% means borderline

annual rent / purchase price = 9% means ok to buy

So let's use a typical new development in Prague to test this. Average prices are hovering around 55,000 CZK per meter. Using a 60 sq meter flat as an example and a rent of 13,500 per month we arrive at a Rent/Price indicator of 4.5%. A luxury flat in a somewhat desirable location fares worse. 120 square meters, priced at 80,000 CZK per meter commands only about 30,000 CZK per month. That equates to an indicator of 3.7%. Hardly encouraging when thinking about buying.

The same 60 sq meter flat priced at 45,000 per meter and renting for even slightly less will bring you closer to the 6% borderline indicating that this flat could be worthwhile owning.

Two more things to consider if you're thinking about buying. First is that there are a lot of empty new flats out there. Developers cannot compete with existing (second hand) sales and will have to reduce prices because they must sell to keep their businesses going. They need the money now. They simply have too many empty flats that they cannot sell at current prices.

Second, in my opinion, when interest rates go up, prices will come down. Those with cash in hand will win out as they will have leverage with the developers who will need that cash.

It was the best of times; It was the worst of times

noreply@blogger.com (John Breaux) — Mon, 25 Oct 2010 13:13:00 +0000

I'm using the opening line from Charles Dickens' "A Tale of Two Cities" only because I am thinking of the differences a few years have made in the property market in Prague - perhaps everywhere nowadays.

Once robust, the market seemed to see no bounds. Businesses started on a few Crowns because leasing and sales were booming and immediately generating cash flow which kept business owners in a lifestyle which they immediately became accustomed. Business plans were not even a requirement for many. Why? They all knew what they were doing. Hire a few girls for leasing flats in the center and houses around the International School and they'd be swimming in it. Talk a few developers into letting your company represent their projects; help with designing the layouts that the buying public would like; implementing the right marketing campaign, etc, etc. Every Tom, Dick and Honza got into the real estate agency business or worst, property development, it seems. Every bank got on the mortgage band wagon. And no one at any point thought about what might happen if a market correction occurred.

And it did. We went through a downturn that people tried to ignore at first. Not one developer or seller recognized that pricing was high - too high, in fact, for the target group they should have been concentrating on - the locals - now that the foreign investors pulled out.

So the foreign owners are now wondering what to do. Should I stay or should I go? What kind of money can I get if I sell today? What? A loss? Ok, I'll just hang on for another year or so! Yeah, buddy! You don't realize it but that same development you're in still has a dozen flats to sell and they've been marked down 20%. You're behind the eight ball. You'll be competing with new product for at least another two years THEN another project down the street which will be coming out of the ground at lower prices. Plus the biggest hurt is that your rents don't cover your nut. No one explained to you that local renters won't pay expat prices and that the expat market has more or less dried up.

It's called long term investment for a reason. Hang in there. The market will recover. Never to the peeks (or volumes) we saw but it will level out; prices will normalize and rents will eventually improve.

But in the meantime.... will we see properties selling for below replacement costs as being seen in other parts of the world? Will there be significant foreclosures hitting the market?

I believe that all of this is merely waiting in the wings. Banks are holding out. They do have developments that they continue to feed and developers they continue to support but they won't continue. I think it will make itself known in 2011. The so called vultures are hovering above. These guys will come in and make deals - if they're not already meeting behind closed doors cutting deals - and we will see projects change hands and inventory being sold at lower prices.

Is it time to consider other markets?

noreply@blogger.com (John Breaux) — Mon, 11 Oct 2010 18:57:00 +0000

FLORIDA IS ATTRACTING EUROPEANS INVESTORS AT A HEIGHTENED PACE

Here's something worth considering. What about buying in the USA? More and more Europeans are looking west and buying in Florida. Property prices are at all time lows and most investors have confidence in a recovery. The US ALWAYS recovers and when it does property values follow suit. It is not a short term "flip" scenario this time around, but if you're considering any long-term investment, property in the US is worth considering.

The article below gives a few solid examples - from Florida to Las Vegas - for investing in the US.

MIAMI – Oct. 5, 2010 – The Viceroy, a swanky condominium complex in downtown Miami, gives the impression that the United States is in another real estate boom. The sales office is strangely exuberant. Buyers gush about the glam condos – designed by hipster tastemaker Kelly Wearstler – and their hotel-like amenities: poolside libations, daily housekeeping and room service food stirred up by a celebrity chef.

Since January, 262 of the Viceroy’s 372 units have sold. But there’s a twist: Almost 90 percent of the buyers are foreigners. And they all paid cash.

The Viceroy’s story is playing out across Miami. Individual investors from as far as Argentina, Canada, Colombia, France, Israel, Italy, Norway and Venezuela are swarming the city’s sales offices to get in on what they see as one of the greatest real estate fire sales in the history of the United States.

At one time, these people would have invested in the U.S. stock market. Now they see the opportunity of a lifetime in the nation’s debilitated housing market. The idea is to rent out the properties and then sell them once the economy turns around.

The math is seductive: Prices at the Viceroy are roughly 52 percent off the 2007 peak. Units once sold for as much $670 a square foot. Today the average price is $319.

“I have never seen such a high concentration of foreign nationals acquiring real estate,” says Peter Zalewski, who has been in real estate for 15 years and founded Condo Vultures, a consulting and brokerage firm. “Eighty percent of the sales in downtown Miami are foreign-based. This is unprecedented.”

Miami is hardly the only hot spot for buyers from outside the United States. Real estate brokers say they’ve seen a surge in Washington, New York, Las Vegas, Los Angeles and San Francisco. In Seattle, Asians are buying property sight unseen, says Joe Brazen of Brazen Sotheby’s International. In New York, 25 percent of buyers at the Armani-designed 20 Pine building, near the World Trade Center site, are from overseas.

“It’s a positive in a sea of negatives,” says Jonathan Miller, chief executive of Miller Samuel, a real estate consulting firm in New York.

This year in Phoenix, for the first time, there have been more buyers from Canada than from California, according to real estate data outfit Information Market. With the Canadian dollar approaching parity with its U.S. counterpart, the opportunity was simply irresistible to Jim Chuong, a 38-year-old Novartis sales manager from Toronto.

Chuong, whose house in Canada is already paid off, used to invest in U.S. stocks. Now he’s investing in Phoenix condos, paying $50 a square foot for units that would cost $500 a square foot in Toronto.

“It’s ridiculous is what it is,” Chuong says.

For foreigners with cash, the deals can make them money from day one. Chuong buys two-bedroom condos for less than $40,000 in low-crime areas. He only picks up units that already have renters. After paying association fees and taxes, he walks away with $300 a month, pre-tax, on each. The deals are now easy to do, thanks to the cottage industry of companies that has grown up to manage virtually everything for foreign buyers, down to badgering renters for the monthly check.

For the international investor class, the United States’ bloated inventory of homes, high unemployment and weak currency make for an unusually attractive buyer’s market.

“Never before have all these things come together like this,” says Patrick O’Neill, chief executive officer of the Hong Kong-based O’Neill Group, which helps Chinese invest in international real estate. O’Neill says Chinese buying in places like New York is on track to double this year.

“Unless you want to go to Baghdad,” O’Neill says, “the United States is the best you can get.”

The trend is showing up in the statistics. In a National Association of Realtors report released in July, 28 percent of brokers reported they had worked with at least one international client, up from 23 percent a year earlier. Among those, 18 percent had completed at least one sale, compared with 12 percent in the 2009 report.

“I was going to invest in the stock market, but I decided to invest in real estate instead,” says Diego Garcia, a Mexico City native on assignment in New York City with Pfizer Inc., where he is a regional finance director. Garcia paid $850,000 for a Manhattan one-bedroom in a gleaming new high-rise that he plans to live in for now. “I’m a conservative guy,” Garcia says, “and this was more conservative.”

That’s not to say there aren’t steep risks. An economic jolt could easily throw the whole plan into disarray. The housing market is far from a recovery. In many places, prices continue to fall. What happens if currency values reverse and a foreign owner needs a quick sale? Or a renter bolts in the middle of the night, leaving an empty unit and no cash flow?

It’s not as if foreign buying can be counted on for a housing market turnaround. Overseas buyers represent a mere 7 percent or so of today’s total. Yet in some cities, such as Miami and Washington, the foreign sales are helping to stabilize the markets.

In past downturns, buying a property in the U.S. was the prestigious purview of the wealthy, but today the market is within reach of the swelling ranks of the global upper-middle class.

Colombians, who often call Miami the most beautiful city in their country, have always been drawn to Florida. The difference now is the upside-down economics. It is cheaper to buy in Miami than in Bogota, and you can fly between the two cities for $59 each way.

“Muchos muchos muchos muchos opportunity,” says Elsa de Blaschke, who owns a construction company with her husband in Barranquilla, Colombia, and is hunting for an investment property to buy in Miami. De Blaschke chose not to invest the capital at home because she says Florida offers a better chance of a bigger return.

“The international buyer pool is better than we have ever seen it before,” says Phillip White, president of Sotheby’s International, based in New York.

To match demand, U.S. brokerages are hiring agents who can speak foreign languages and are pouring more resources into marketing overseas.

In October, agents from 11 Sotheby’s International branches will descend on Hong Kong’s convention center to regale wealthy buyers there with slick visuals on showcase properties. In Toronto, agents from Florida Home Finders play to crowds of 800 every other Sunday at a Holiday Inn banquet hall. Jenny Huertas, Condo Vultures’ international sales director, throws seminars for potential clients across South America.

“Their jaws drop. They can’t believe it,” Huertas says. “They think these deals are too good to be true.”

Copyright © 2010 The Associated Press; Michelle Conlin, AP real estate writer.

For Information on Properties FOR SALE in Florida CLICK HERE

And now a word from our sponsors

noreply@blogger.com (John Breaux) — Sat, 02 Oct 2010 11:42:00 +0000

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Kulovy Blesk

noreply@blogger.com (John Breaux) — Mon, 27 Sep 2010 14:30:00 +0000

"The Biggest Event in the History of Migration!"

I bring up this great 1978 Czech movie because it is somewhat of a reflection of what someone at the recent CEDEM conference said is happening in the market.

A young man or woman bought a small studio or one bedroom flat a few years ago and after a year got married, then had a child and might be on their way towards having their second child. They can't really afford to sell and buy a larger flat - maybe their salary has gone down or they just fear losing their job. So they swap flats with someone - someone who has a larger flat but can easily move into a smaller flat. Maybe mom and dad live in a larger panelak flat for example. The young family moves in, does minor work to bring up the standard and the parents move into the newer, albeit smaller, flat.

And so goes the inventiveness of Czechs. They are known for being clever and resourceful. They may have uncovered a way to move around without paying more than the cost of two men and a van and a new Ikea kitchen.

H&M and Flats in Prague

noreply@blogger.com (John Breaux) — Tue, 21 Sep 2010 16:23:00 +0000

Ok, we've all seen them. You know, the H&M suits that are made by the zillions by underage workers somewhere east of here. They're made for the teens and 20 somethings who have not yet developed a waistline - and they're usually a grad's first interview suit.

But I digress. The reason why I bring up the H&M suits is because you can find them everywhere. Kind of like the projects in and around Prague - well, most of the former Eastern bloc cities which have undergone voluminous development. Once you've seen one flat you've pretty much seen them all.

A LITTLE HISTORY

The Panelaky were built between 1959 to 1995 to accommodate the postwar housing shortage and to provide large quantities of housing at lower costs, in large part because of mass production, to the masses. They also wanted to instill some "collectivist nature" in the people, I guess - everyone is equal and everything is for the common good. Regardless if you were in Prague, Brno or Bratislava (even East Berlin or Warsaw) you saw the same designs over and over.

In the early days of the new development euphoria, local "architects" seemed to know only one design - "the box". Much like the panelaks, it was very utilitarian. You walked in the front door, sometimes face to face with the water heater (ok, sometimes it was over the tub or kitchen sink). You walked through a door to face more doors - the kitchen was behind one, the living room another, then the bedroom, the ubiquitous separate toilet behind yet another, then the bathroom. All leading from wasted space called the corridor. The walls were white, the floor was laminate something or other, the plaster "finish" was usually uneven.

We progressed into the mid 90s with a move from something + 1 to something + kk - the kitchen corner. The kitchen space became a part of the living space, not relegated to a separate room. Water heaters made their way into closets. Bathrooms were not as utilitarian. It was, to coin a phrase, one giant leap for mankind!

It brings me to the point of this rank - that developers have not REALLY progressed much past the standard issue from, say, ten years ago. The exterior designs have advanced and today we're seeing landscaping being added to the mix but more or less what we still see are those damn single needle tailored, massed produced, H&M suits.

So what to do to separate the men from the boys? Offer, like in Poland, shell and core units where the buyer designs his/her own interior - complete with client change headaches? Or completely finish them out?

Developers are throwing anything and everything at the wall and hoping something sticks. Offering free design service, shell and core to those more adventurous, kitchens included and other so called perks. Nothing seems to be getting buyers in the door - not even the lowest mortgage rates in history.

Could we be moving more towards the German model? That is, renting instead of owning? It's certainly cheap to rent nowadays. Could a rent to own scheme then work? The developer (and the lender) would at least have some cash flow and the development would be "living".

I would like to hear some views on this.

P.S. Back to those H&M suits. If one of those twenty something grads comes into your office wearing one, hire him. He's trying!

"You can't do today's job with yesterday's methods and be in business tomorrow."

noreply@blogger.com (John Breaux) — Tue, 14 Sep 2010 15:41:00 +0000

It seems that almost every day some real estate developer or banker or agent is in the media trying to get us to believe that the market has turned and good days are just around the corner. They say prices are going back up 2-3% from last year but seem to forget that prices went down 15-20% from 2007 levels. Every one of them claims to be busy – a new development here, another phase there - so why do they seem so hard up. They may be busy, but are they making any money. A look at the market shows that the most important statistic for any developer (or agent for that matter) just sucks....liquidity. No transactions = no money.

Years ago my parent’s dog had to have his leg taken off because of cancer. If they didn’t take that step their beloved pet would have most certainly died. He sulked for a few days but then just seemed to decide that he was now a three legged dog and was going to make the best of it. He reset his thinking to the new reality and got on with doing what dogs do! (He lived a bit longer by the way...)

Of course if he was a "Developer Dog" he wouldn't have done this. Instead he would have looked at his stump everyday and excitedly barked..."look, it's growing back", "it's growing back"! If we could speak pooch that would have been OK for a few days but after it not actually growing back we would have had no choice but to ignore him or put him out in the backyard.

Since it’s not legal in most places to chain the developers to the fence, we have to try and hope they can get this message metaphorically. Stop looking at the last 10 years to forecast the future. It ain't gonna work that way anymore, folks! Stop telling us that the old price is the right price. We know it isn't. Instead, adjust to the new reality and tell us what is really going to happen. Don't tell us prices haven't gone down if virtually nobody is selling anything. Step up to the plate boys! We don't need promoters any more than we need pay phones or typewriters. We need experts not bullshitters.