It´s not all bad news - there are some gems out there
As mentioned above, we did actually view one property that my friend is going to put an offer on. In my opinion, he has found pretty much the only type of property I would ever encourage an investor in coastal Spain to purchase.
It was in a small development, less than 120 units and the surrounding area isn´t overdeveloped. There were only 11 available and asking prices have been reduced by 40% from peak. There are no mortgage gimmicks on offer. There was plenty of activity in the resort and lights on many of the units, an encouraging sign in late November. Most owners are keeping them exclusively for personal use - i.e. they don´t want to rent them out.
The quality of the properties is extremely high - the floors, walls, fixtures, lighting, electronics, heating and security were all at a standard comparable to a 5 star hotel. It was located 400m from the sea, close to lots of shops, bars, restaurants and with easy access to the motorway, the airport and the train station.
My American friend will probably put a low ball offer on a 2 bed 2 bath unit with spacious interiors and a large garden and terrace. The asking price is 40% below the peak rates, and they´ll probably accept 50% below peak prices for a cash deal and an end of year sale.
Taking this great price and the lack of rental competition in the resort the net rental yields are still going to be very low - about 3.5%. That´s probably as good as you can get right now.
In my view however, this is the only type of property in Spain where you have a varied exit market strategy and a real chance of selling at a profit in 5-7 years time. The problem of course, is that there aren´t very many of these deals around, and you´ll need at least a 30% deposit.
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Let´s get the bad news out of the way first. The views I expressed on Ireland and Spain in the Xmas newsletter in December 2009 have not changed one iota. Both are high risk - low return investment destinations and I can´t see that changing in the near term (it will eventually).
Another global house-price crash looks unlikely according to a new report in the Financial Times last week.
A strategic default is when a person decides to stop repaying their mortgage even when they can afford to continue doing so. Why would somebody do that? You´ll lose your home and your good credit history will be badly damaged.
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The key reason why some firms thrive while some implode during an financial recession is still a puzzle to many people business-owning business owners. Some wrongly assume that all businesses should suffer via recessionary cycles. But the truth is that some companies are usually essentially recession-proof, and it is not necessarily because they are much larger, better known, or a lot more generously capitalized.
Companies like Arch Coal (ACI) and Massey Energy (MEE) watched his or her stock climbed.
Don´t forget - Florida isn´t a giant property bubble like Dubai.
As you might expect, lenders in the USA hate the fact that a person can choose to walk away from their mortgage. There is no law against doing it. These lenders are lobbying HARD to get the rules changed so that people don´t have an incentive to walk away. For example, they´d like it if a strategic defaulter couldn´t get another loan for 20-30 years instead of 3-7 years. That would prevent a lot of them from doing it.
A strategic default is when a person decides to stop repaying their mortgage even when they can afford to continue doing so. Why would somebody do that? You´ll lose your home and your good credit history will be badly damaged.
When the financial crisis first hit in 2008, the economic and political collaboration between Europe & America was unprecedented. That isn´t happening anymore.
Let´s get the bad news out of the way first. The views I expressed on Ireland and Spain in the Xmas newsletter in December 2009 have not changed one iota. Both are high risk - low return investment destinations and I can´t see that changing in the near term (it will eventually).
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