Members always seem to be interested in Florida, the US and other hotspots so let’s talk overseas property today…
The media seem to understand prices rising and they seem to understand prices falling – all in a ‘boom’ or ‘bust’ way, of course. What they seem to struggle with is slowing growth or, for that matter, slowing falls – in essence, prices are still rising or falling but not as much as they were. And so we come to the US where the latest S&P/Case-Shiller index shows prices are up 12.4 per cent for the year ending Q1 2014. That is the smallest 12 month gain since last summer and is being presented as ‘doom and gloom’ by many.
Michael Gapen, senior US economist at Barclays Capital in New York, calls it correctly, ‘The upward trajectory of prices remains in place, but with a slower rate of appreciation. There’s still reason to suspect that home prices will rise as credit availability on the margin, is actually getting better, labour market progress is gaining strength and average income is improving.’ More to come; let us know if you are looking seriously at the US this year. We have one or two behind the scenes services, plus a new one when I am back from New York/Boston etc in late August.
Sterling inches down against the buck! The pound fell a cent to 1.68 versus the US dollar in May, chiefly because the US economy got into gear. For instance, the greenback jumped last month as the US created 217,000 new jobs, lifting the USA above its pre-financial crisis job total. Moreover, the US dollar also climbed, because both America’s manufacturing and services industries enjoyed robust growth last month. Given this, the Federal Reserve will be gradually drawing closer to hiking US interest rates, accounting for the buoyant buck!
Let’s give these another go with a motivated sale of a Detroit 4 x bed offering a 24 per cent net return in a great neighbourhood/location.
Deceptively large 4 x bed, 1 x bathroom, 1000 sq ft property.
Detroit recorded 11 per cent growth annual increase in last 12 months.
24 per cent net return based on $800 per month.
Below Market Value!
Located in a VERY good area of Detroit between Harper Woods and Grosse Point.
HUGE 24 per cent realistic net return.
Only $27,500 to purchase (approx £16,000).
Purchase price includes full refurbishment.
Management Company in place.
The current owner paid $48,000 in 2011 and have had the property tenanted until recently when the last tenancy ended.
Property is currently vacant as owner has suggested the property will benefit from a refurbishment – basic redecoration and cosmetic kitchen and bathroom work. quotes in from three local firms for $4,000 – $5,000.
Purchase for $22,500, then pay $5k refurbishment for full refurbishment before handing over to management company to place the tenant – all of these works overseen for you by a team on the ground in Detroit.
Tenants have already been pre-screened and are waiting to move in following refurbishment works.
Down a creek, without a paddle! The pound dived 3.5 cents against the Canadian dollar in May, to 1.8225. Why? Well, because, like the US, Canada’s economy is shaking off its winter blues! For instance, Canadian factory sales touched a five-year high in March. Moreover, loonie inflation reached the Bank of Canada’s 2.0 per cent target for the 1st time since 2012 last month. Lastly, given this, the Bank of Canada may have to start hiking interest rates above 1.0 per cent sooner rather than later.
Members have invested heavily and very successfully in Brazil over the past two years. We now have details of a new deal. Let us know if you might be interested…
Up to 17.5 per cent yields.
Low entry level from £21,000.
Returns in 12 months.
International escrow facility to protect investors’ funds, managed by independent solicitors.
Clear and defined exit strategy.
Proven and secure track record in similar projects.
In essence, you put from £21,000 in and get up to 17.5 per cent yields in a year. Interested? Email back – we have a PDF for you.
The real looks due to dive! Sterling held steady close to 3.76 versus the Brazilian real in May, yet could easily gain against Brazil’s currency soon. Why? Because Brazil’s economy is falling off a cliff! For instance, Brazil is forecast to come to a near-standstill in 2014, with just +1.5 per cent growth. In addition, business investment plummeted -2.1 per cent between January and March, while the forthcoming World Cup is expected to give Brazil no economic boost whatsoever.
We made some contacts in Antigua when we were out there last summer and that network has slowly rolled out across the Caribbean. We note that a recent report by Chesterton Humberts gives a thumbs-up for Barbados, particularly for ‘the key overseas markets of UK and Canadian buyers who have been benefiting from improving domestic economies and a good sterling to dollar exchange rate.’
Anita Ashton at Caribbean Mortgage Brokers says, ‘Most overseas property buyers at the moment want short term bridge financing or will pay cash but banks are willing to lend. Compared to last year, we have experienced an increase in mortgage lending of 15 per cent. This automatically widens the audience and is therefore another reason why the Barbados’ property market is picking up.’ We are constantly receiving property details from this part of the world and can easily put together a short report and buyers’ checklist for would-be serious buyers. Do let us know?
We have a report coming on impact investing – in essence, it’s ethical investing that still pays a decent return (14 per cent for a sub-£10,000 investment in the case of one we are currently looking at). The offer of the report will follow but as a taster, we’ll quote a few words. ‘Traditional investment thinking is focused solely in financial return. Impact investing disrupts that thinking. Investments can intentionally make both a positive social impact and generate a financial return.’
‘Impact investments used to be available only to institutions. Individuals could only donate to support their causes, but could not take a direct financial stake in their growth and development. With impact investing, now you can. With opportunities from as little as £6,000, you can make an impact and benefit from double digit annual returns.’ More to come.
The Toronto-Dominion Bank states that the property market in Canada is overvalued by 10 per cent but that there is a low risk of a US-style collapse. It does, however, draw attention to condominiums – a sector where there is a lot of building taking place and units are very popular with foreign investors but are less popular amongst the home market. Sounds familiar?
‘The high-rise condo market is an area we’re certainly watching closely, and I think all of the other banks, as well and the regulator are too. Just by virtue of the fact there is a lot of new construction of high-rise condos, and there are some questions around…how many of those are being purchased by investors as opposed to people (who) are actually living in them as a primary residence.’ As ever, it’s generally better to follow the home market – exit strategy-wise, at least – than foreign investors who tend to chop and change and move in and out quickly; when they can.
All for now, see you again soon.