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When investors return the money today? Where can you find 10% + return on assets?

November 10th, 2010 at 12:08

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With my real estate markets during the current correction from their peak in 2006-2007 in most developed countries, and savings rates at all time low, investors have significant liquidity to the research performance of their funds than ever before. The days of investments are done in anticipation of capital growth, investment must “stack” now in the direction of cash flow from Day 1 This does not mean, capital values ​​are ignored, far from there. Investors are increasingly stable investment, returning a measurable and regularly. Markets should be in a sort of equilibrium in terms of supply over demand values ​​and stable capital. In many respects, therefore, conditions are back to normal in many ways for owners of heavy portfolio.

So where are the returns investors are looking for today? Work on the team Proventure, we get to talk every day of return of investors around the world and it is interesting to relate these trends in their strategies. We hear that investors put their hard earned money in the past, and where and why they seek to invest in the coming years. Inevitably, many investors we talk about investing in Germany as a location for the next few years concentrated, since this is our main area of ​​operation as a real estate consultant. But still, we’re talking about investment in Eastern Europe and other parts of Western Europe and the U.S. as sites of viable investment projects. compare

Let’s for a small number of different markets and find investors for the draw at this stage that the business cycle.


What an interesting market to look to as we write this text, in August 2010. The U.S. is home to the raw capitalism, and repression is the real estate market in the same way that money and stock markets. Despite the assets in question to people’s homes and security, they seem depreciation lasts more exposed than other countries, and that brings pain and misery for the screening and inevitably lose opportunities for investors.

From a historical perspective on the market, we see that the United States generally had an average level of the property between 1960-1990 about 60%. homeownership is a realistic aspiration for many, but not a necessity, as in other markets such as Great Britain or Spain, where prices have been their own use more than 85-90%. This resulted in most places to invest in a stable market and a supply of tenants in the short and long term. The credit bubble of 1996-2006, everything changed.

During the period of low interest rates could be sectors of the population who aspire to own property is not already on the stage of their life, if at all affordable on the market “teaser” ready for the early years of the loan but the loan rates crippling back to normal commercial terms or better. to pay for this greed parts of creditors and their shocking lack of precision in the capacity of individuals, has had an impact now famous worldwide. Currently, 14% of the population behind in his mortgage payments or in foreclosure. There is an average and some markets are twice that rate. It’s 9 million households in trouble, double the households are sitting on negative equity. So where are we, and the United States earned a spot Investment Research? It is safe to say that the market is still largely devoid of confidence and decreases were almost all areas felt. But there are areas that have suffered sharp decline, as they?

justified Well, the U.S. has a huge market. Let us focus on a city, Orlando [Florida] as a case study.

Orlando area derives much of its economic power of tourism, business conventions, media and research tech-hello-dollar gray or retiring to the warmer climates of several northern states or abroad. The real estate market has increased with the dramatic increase in population of 30% in the last ten years alone. Typical of this region have closed and the evolution of condominiums is growing mainly in the south of the city and spread at an alarming rate in the country was empty. The city is well connected to a property of 100 years or more to broken only by the skyscrapers that seemed viable During the credit bubble.

A standard construction or property can be built quickly from prefabricated units section. The use of wood in structural elements often.

seen in the

Credit frenzy, Orlando was the preliminary plan, the financing and construction of housing, both on the local market and tourists. According properties and location of the subdivision increased 200-300% from 1995 to 2005 unprecedented growth in this market are not uncommon and seemingly limitless land to develop in the hat. The commercial development has been so crazy. Action Plans for “malls” and took small shopping centers road. In some parts of the city has 10 franchises Taco Bell in a radius of 1 km. All sectors of the real estate market, even in inner cities, we can say, provides much talk.


As for pricing, we will for the History of prices of a luxury apartment 2-room overlooking the city center with excellent tool zillo.com

The graph shows that such a unit that was off plan 0k, 0k now [or even cheaper navigate on the road] foreclosure sales prices.

Terms of Use potential to benefit from demand City solids. Circular 00-2000 should be scheduled every month, which result in health policy 12% or more.

Why would you buy? Well, the value Current low capital convincing is that the position of the device in the center, which enjoys a degree of rarity. This is an interesting statement.

Why do not you buy? Well, given the lack of confidence in the finance market is very difficult for the early years of the hold. It is good as a cash purchase, leverage is not so easy here. In addition, it’s not really clear where to go, the capital value, but investors for cash, according to a sustainable yield, this strong option.

The German market

Over 10 In recent years, property markets in the world prices of capital growth is generally between 200-300% by cheap credit and abundant power experienced. There are some exceptions to this trend, one of which is Germany. In Due to the reunification 20 years ago, the property market in Germany, particularly in the former East, has been operating out of step with other markets. speculation, fueled largely by buyers in western Germany a boom, which ended around 1996. As investors have driven the rents that is not accessible, the road gave the German market and went into decline from about 1996 to 2001. This was at the same time that most markets worldwide has seen its growth rate the highest. Prices have stabilized in most regions compared to 2001 and some capital appreciation in some areas, especially in prime locations in major cities like Munich, Hamburg, Frankfurt and Berlin.

Market characteristics:

The housing market is substantially different from other places, with a strong tenant laws and more typical residence. Typically, a home for the rental will be offered completely empty, without cooking, lighting or floor. The new tenant will be all their own furniture and stay for a longer period, usually an average of 7 years. Tenants have signed contracts for a period determined, but in fact to live after being hired, just to get out if they are not regularly make payments or the owner (or members of the immediate family), the unit to be filled. Tenants need to end a period of 3 months’ notice and repair and decorate the unit in a good condition during the expulsion.

Finance for nationals and foreign buyers generally 60-80% of its loans value. The level of funding, according to the client’s income and the rental value of the property. Typical rates are fixed for 5 or 10 years and about 1.3% above the swap rate € 5 or 10 years . Thus, prices are currently around 3% for 5 years and 3.8% for a fixed 10 years.

Typical price:

real estate, commercial and residential more per square meter and not by or rooms are priced. Therefore, the investments can be easily compared by size, price and location. Residential properties can be purchased on a single database or by purchasing a full block of flats. L purchase of a complete block tends to reduce the price paid per square meter. Some typical price per square meter in large cities, depending on the size and location:

Berlin – 1.000 to 2.000 Eur psmFrankfurt – 2,500 psmMünchen to 4.000 Eur – 3.500 to 5.000 Eur psm

locations in eastern Germany (Dresden, Leipzig, Chemnitz, for example) have renovated the properties of PSM in good condition from 500 Eur. remarkable value and market the most underrated in the world according to the OECD. Situation with regard to the sustainability of the tenancy is to these sites is crucial.

As a residential example, is less than one unit 19 apartments in Leipzig. The purchase price is € 420k and a yield of about 12% is achieved net.

Typical yields:

In the same way that real estate is sold on the market is the property per square meter. The rent is often broken in rent to “cold” and “hot”, with the rent with the income of the investor and the monthly rent for all invoices, including Excluding taxes and property maintenance routine. Hire a cold start at approximately 4 EUR psm in regions with very low-cost cities in eastern Germany with cold rents in cities like Munich 12 psm Eur obtained above and in many cases. The yields range from 5% for individual apartments in Munich, Frankfurt and Hamburg to about 10-12% when you buy in bulk in places like Dresden, Leipzig and Chemnitz. Berlin offers a full range of revenue and is a highly diversified.

Current Cost:

ownership costs are transparent and are relatively low. The majority of prints are made on the property taken from the “annuity hot” or settlement costs, and should not be included in computing income. This includes basic maintenance of buildings, cleaning public areas, building insurance and property taxes. The net rent, except for unscheduled maintenance, the cost of the rental management of the primary relaxation. A variety of fee structures for rental management, including a lump sum or a percentage of the apartment rent is collected. Rental management usually cost between 5-10% of net rents, according to the area and the load pattern selected.

The positive aspects of the investment climate:

hands-off investment – propertylettingNun regulated tenant long term, unfurnished and robust tenant and property management practices, yields high rental possible suitable for all types of good investor finance available at competitive costs and InteresseVerlässliche legal system of land registry transparent operating

negative aspects of investment:

laws robust tenant – a tenant can not not simply be removed if they do not pay their rent seinHohe cost (10-12%) Broadband Properties is subject to a forced sale may be problematic to deliver to market


very good yields, supported by sound legal system and high finance. Capital values ​​are very low compared to anywhere in the developed world. Really unfurnished offers substantial holdings in a relatively hands-off “way of being built in one.


In terms of property in Europe, excluding Germany, Investor returns have very few options. Markets are either stable, but the production yields of around 3-6%, or decrease the value of capital and difficult to predict the ground. Markets the euro area and Britain a few years would you say before entering the market for income and stability in the capital value. Places that have experienced huge capital is stabilized, however, and should in future years [with rising wages as an important index] should keep in mind. might be the following sites worth visiting in the coming years with a capital over the last 3 years is as follows:

Lithuania [ Vilnius, Kaunas] – 55% PreissenkungLettland [Riga] – 70% reduction in price, Ukraine, Kiev – price reduction of 55% below the yields of 8% + can be found in Sao Paulo, Brazil 8 1% Santiago, Chile 8.7%, Jakarta, Indonesia 11.1%, Kuala Lumpur, Malaysia 8.7%

diligence here, the analysis should availability of financing to pay the interest and currency stability. No a good start to a yield of 10% if the rate is 12%, or if the currency weakens considerably to maintain for the duration of.

Good luck with your hunt for yield.

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