INTERNATIONAL
the tenant, and the rules for the scheme are strictly policed so that troublesome tenants are rarely seen. Section 8 Investment Realty
foreclosures, rental levels dropped owing to oversupply. But Florida is now creating households (partly due to immigration from other US states and from South and Central America) and using up that inventory. “Spare capacity is starting to dwindle,” he explains, “and rents will eventually start to rise.” Investors getting a yield of seven per cent today could be looking at an effective yield of 16 to 25 per cent on the purchase price in five years’ time.
Social HouSing A different type of opportunity comes from Section 8 properties under the HUD (Department of Housing and Urban Development) programme – similar to housing benefit. The landlord’s covenant is with the US Government, not with
the village davenport
THE VILLAGE AT TOWN CENTER, DAVENPORT, £42,000 buys a two bed condo, 70 per cent below peak price with a potential 10-12 per cent yield on holiday lets.
(
www.section8investmentrealty. com) makes a speciality of such properties and points out that net yields of 12.5 per cent can be achieved on them. Suburban properties in Tampa, for instance, could make a good choice – but because they are in blue-collar neighbourhoods and some way from the beach, lifestyle investors wanting a holiday property should steer clear. It is worth noting that there’s very
little new building going on in Florida right now. David Cox reckons properties now are selling at around a third of their original build cost, so it doesn’t make economic sense to start new developments. Colin Murphy, Director at distressed property specialists Torcana, notes that sales of new property are now almost non-existent in Florida – it’s resale that is driving the market.
international buyerS flock Despite the absence of new property, buyers are flocking to Florida to take advantage of low prices. “We’ve never had a bigger variety of international clients than we have
now,” Colin Murphy says. Perhaps surprisingly, it’s Canadians who are leading the charge, accounting for 36 per cent of international buying in Florida according to National Association of Realtors figures, with Latin Americans and British buyers almost level pegging at 16 and 15 per cent respectively. However, it is not an easy market
for the UK based agent to enter. It’s never been easy to take advantage of foreclosures and short sales, because the legal processes and negotiations involved are convoluted and many sales fall through along the way. David Cox says another difficulty today is the fact that many banks have fired the senior staff who were involved in loose lending during the boom, but this often leaves over- promoted and under-skilled staff in charge. It can therefore be difficult to get a decision on a sale. “You have to offer on 20 to 25 deals to get one to stick,” he complains. Furthermore, he says, “Short sales
are a waste of time for a UK investor as they so often come unstuck. It’s not so easy to find a bargain as people think.” In 18 months, Property Frontiers has only found two good developments that they could take all the way to market.
48 MAY 2011 PROPERTYdrum
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