Majority of properties in Orlando are bought from distressed sellers

According to the January 2011 sales figures from the Orlando Regional Realtor Association (ORRA) just 25% of all properties sold were from regular sellers. The remaining 75% of properties snapped up, mostly by investors, were via banking controlled foreclosures and short sales.

The reason for this huge disparity is that while prices of all property types are down significantly, the average sales price of a foreclosed ($94,500) and short sale ($75,000) property is far lower than that of a regular property for sale on the open market ($145,000).

Colin Murphy, director of Florida specialists Torcana Ltd, explains the differences between these property types. “A normal sale is just that – a regular family, investor or fund selling a property on the open market free from interference from their lenders.

A short sale occurs when a lender allows a property owner to sell their home for less than the value of the mortgage. This can be a time consuming, bureaucratic process.

A foreclosure is when a lender repossesses a property and gives buyers & agents the opportunity to purchase it in an auction. As with short sales, only professional buyers should consider this option, as title, structural, tax and tenancy problems are often associated with distressed properties. 

The latest statistics in Orlando, Florida from ORRA  point to a recovery with the sales of condo apartments in January 2011 26% higher than in January 2010. The official number of homes for sale or inventory is also down 9.5%. Nationally the numbers who are a month late in paying their mortgages is now at its lowest level since the recession began.”

Mike Fratantoni of the Mortgage Bankers Association says” The delinquency numbers are sending a very clear message: that we‘ve turned a corner and that things are improving”

According to Colin Murphy, “At Torcana we have a two-fold strategy in this market. We target distressed developers directly and negotiate bulk discounts on high quality pre tenanted properties. We promote these to our database of vacation home seekers and investors with a full after sales service included. This enables buyers to secure a property at a discount of up to 70% on peak prices, which are thoroughly inspected before the purchase process commences. 

We also source and directly purchase a range of foreclosed, short sale and developer owned properties at a substantial discount (perhaps 80%) in a small section of communities over a period of time, say six months, which we refurbish, tenant and resell to regular high net worth investment buyers at a discount of approx 65%”.

Concluded Colin, “Opportunities abound in markets like this, but buyers should tread carefully and invest conservatively. While prices are at record lows and statistics point to a market that is bottoming out, a conservative “buy and hold” strategy will serve you best in the long run. In other words, buy, with cash, a discounted property in an established location, enjoy a good income, treat your tenants well and hold until such time as the market shows signs of another property bubble”

Currently being marketed by Torcana  is Siesta Lago in Orlando where properties start from £37,000 for a spacious ( 840 sq ft), one bedroom, one bathroom apartment which after costs such as maintenance, tax and insurance will bring in a net income of around £3,165 per year – that equates to 8.55% net per annum. A three bedroom, two bathroom villa of 1130 sq ft for £61,500 produces a net annual income of approx £5,112 per year – a net return of 8.3%”.