Analysis of a New Florida Property Opportunity

Property Prophets have recently teamed up with two other leading agents to form The BMV Florida Property Network and have launched a fantastic new property development in Orlando called Venetian Place. This investment opportunity differs vastly from most overseas property offerings.

The stereotypical overseas property buyer generally targets opportunities with an emotional and lifestyle feel-good factor heavily attached to it. This generally means that the value of the opportunity is diluted by strong, emotional preferences and divided priorities.

Most overseas property agents will ask potential investors the question “What are you looking to buy, a holiday home or an investment?” to which the answer 99% of the time is “a bit of both”. In the current overseas property market, it is difficult to find a good solution to both requirements together, but the huge demand in the market has led to holiday home developers fabricating an “investment spin” in their marketing material in order to meet the demands of the masses.

The term “emerging markets” has fuelled further development of this market, as established markets get “found out” when supply exceeds demand several times over. In most cases, the most disappointing factor is the rental income achieved from such investments.

You cannot spend “capital appreciation”, nor can it pay your bills, mortgage and maintenance costs, and therefore, the ongoing profit and loss of any investment is one of the most important factors.

The Venetian Place investment opportunity has the same characteristics as a domestic buy-to-let investment . The only major differences are that the property is situated in USA and that it is a cash purchase.

Many investors may initially be put off with the concept of cash, but I am sure that if we could wind the clocks back and buy a property in London in the 70’s we would all do so. There is no better time to “buy equity” in the USA , especially in properties where your tenants are already in place.

The average yields from residential lets in Orlando have traditionally been low due to the high prices and large ongoing costs, but with the recent slump in the market, healthy yields can be achieved.

So why are American citizens not buying up stock and how come these properties are being sold on the international market? The US property market is more depressed than we may think. In October last year, two of the biggest banks, Citibank and Bank of America stopped offering mortgages altogether, and smaller lenders soon followed suit.

Since 9/11, there has been a huge shift in residential ownership preferences in the US. Previously, owners wanted the biggest house possible, now the number one priority is security and many communities have become gated and many properties have been converted into condominiums. This has also led to working class families selling their larger homes in less desirable areas and moving into condominiums in more desirable zones. Most cannot afford to buy as most cannot sell their homes.

Venetian Place is set in a middle-class neighborhood close to Orlando International airport and the Theme Parks of Disney World. Many of the residents work at the airport as pilots, security guards or flight attendants. There are also many Disney employees who all must undergo extensive background screening.

The properties are already fully tenanted and providing net yields of 8% to 11%. These are long-term tenants who generally stay for 3 to 5 years minimum, and all tenants are managed by the on-site property management company.

The properties are way under-valued and discounted by 60-65% as the developer looks to release equity from these properties to buy land for further development. Land in the region is currently priced at an all time low which makes it worth-while for the developer to sell these properties below building costs . Previous selling prices can be validated just by looking at the property tax due on each property. Property tax is 1.2% to 1.5% of the property value per year, as assessed by the local council. The rateable value of these properties is over 3% of the current selling prices.

Finally, these properties are FHA approved , which is a national scheme to offer high levels of finance to first time buyers in USA, giving you an excellent future exit strategy.

Therefore, the main reasons which separate this opportunity from others are:

1. Residential Buy-to-Let investment

2. Tenants already in place delivering NET yields of 8 to 11% giving you an immediate income

3. Buy with cash now and finance in 6 months when the market recovers

4. Prestigious and sought-after location, the number one tourist destination in the world.

5. 60-65% below market value

6. Good tenant profile and established property management structure

7. All closing and legal costs included in the purchase price

8. Large local demand (there is a waiting list of tenants)

9. Built by Grec Conversions – one of the most successful and reputable builders in Florida

10. FHA approved properties – excellent exit strategy

Property Prophets offer property for sale in Florida and property for sale in Orlando . For more details, please visit their website at www.property-prophets.com

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