This article was published in The Daily Telegraph 12th June 2009.

US cities may have to be bulldozed in order to survive

Dozens of US cities may have entire neighbourhoods bulldozed as part of drastic “shrink to survive” proposals being considered by the Obama administration to tackle economic decline.

The government looking at expanding a pioneering scheme in Flint, one of the poorest US cities, which involves razing entire districts and returning the land to nature.

Local politicians believe the city must contract by as much as 40 per cent, concentrating the dwindling population and local services into a more viable area.

The radical experiment is the brainchild of Dan Kildee, treasurer of Genesee County, which includes Flint.

Having outlined his strategy to Barack Obama during the election campaign, Mr Kildee has now been approached by the US government and a group of charities who want him to apply what he has learnt to the rest of the country.

Mr Kildee said he will concentrate on 50 cities, identified in a recent study by the Brookings Institution, an influential Washington think-tank, as potentially needing to shrink substantially to cope with their declining fortunes.

Most are former industrial cities in the “rust belt” of America’s Mid-West and North East. They include Detroit, Philadelphia, Pittsburgh, Baltimore and Memphis.

In Detroit, shattered by the woes of the US car industry, there are already plans to split it into a collection of small urban centres separated from each other by countryside.

“The real question is not whether these cities shrink – we’re all shrinking – but whether we let it happen in a destructive or sustainable way,” said Mr Kildee. “Decline is a fact of life in Flint. Resisting it is like resisting gravity.”

Karina Pallagst, director of the Shrinking Cities in a Global Perspective programme at the University of California, Berkeley, said there was “both a cultural and political taboo” about admitting decline in America.

“Places like Flint have hit rock bottom. They’re at the point where it’s better to start knocking a lot of buildings down,” she said.

Flint, sixty miles north of Detroit, was the original home of General Motors. The car giant once employed 79,000 local people but that figure has shrunk to around 8,000.

Unemployment is now approaching 20 per cent and the total population has almost halved to 110,000.

The exodus – particularly of young people – coupled with the consequent collapse in property prices, has left street after street in sections of the city almost entirely abandoned.

In the city centre, the once grand Durant Hotel – named after William Durant, GM’s founder – is a symbol of the city’s decline, said Mr Kildee. The large building has been empty since 1973, roughly when Flint’s decline began.

Regarded as a model city in the motor industry’s boom years, Flint may once again be emulated, though for very different reasons.

But Mr Kildee, who has lived there nearly all his life, said he had first to overcome a deeply ingrained American cultural mindset that “big is good” and that cities should sprawl – Flint covers 34 square miles.

He said: “The obsession with growth is sadly a very American thing. Across the US, there’s an assumption that all development is good, that if communities are growing they are successful. If they’re shrinking, they’re failing.”

But some Flint dustcarts are collecting just one rubbish bag a week, roads are decaying, police are very understaffed and there were simply too few people to pay for services, he said.

If the city didn’t downsize it will eventually go bankrupt, he added.

Flint’s recovery efforts have been helped by a new state law passed a few years ago which allowed local governments to buy up empty properties very cheaply.

They could then knock them down or sell them on to owners who will occupy them. The city wants to specialise in health and education services, both areas which cannot easily be relocated abroad.

The local authority has restored the city’s attractive but formerly deserted centre but has pulled down 1,100 abandoned homes in outlying areas.

Mr Kildee estimated another 3,000 needed to be demolished, although the city boundaries will remain the same.

Already, some streets peter out into woods or meadows, no trace remaining of the homes that once stood there.

Choosing which areas to knock down will be delicate but many of them were already obvious, he said.

The city is buying up houses in more affluent areas to offer people in neighbourhoods it wants to demolish. Nobody will be forced to move, said Mr Kildee.

“Much of the land will be given back to nature. People will enjoy living near a forest or meadow,” he said.

Mr Kildee acknowledged that some fellow Americans considered his solution “defeatist” but he insisted it was “no more defeatist than pruning an overgrown tree so it can bear fruit again”.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5516536/US-cities-may-have-to-be-bulldozed-in-order-to-survive.html

As you will have seen over the last few weeks, the GBP has been gaining strength against the USD.  From a low of $1.37 in March ‘09, today’s rate is currently at $1.63.  This reduces the purchases costs by a considerable amount, whilst retaining the high net yields.

We have updated the 5 Buffalo Portfolio (released 2 weeks ago) which now comprises of 3 properties, details below:

BPIBKC75HAV: A Single Family property, already tenanted, with a Net Monthly Income of £282
BPIBKC253CO: A single Family property, already tenanted, with a Net Monthly Income of £273
BPIBKC42PR: A Double Family property, already tenanted, with a Net Monthly Income of £414

Total Portfolio Purchase Cost incl fees: £64,772 - this includes a portfolio price reduction of £3,225 from the original price of £67,997.  Without the price reduction, and with the previously quoted dollar rate at $1.5, the portfolio savings now amount to £7,245.
Instant Equity: £32,118 (based on Zillow Estimates)
Monthly Net Income: £969
Annual Net Income: £11,628
Portfolio Net Yield: 18.0%

We are also able to offer a 3 month rent guarantee with this portfolio

With the GBP / USD trading at its current rate, now is a great time to make the most of these extra savings.  This is a low risk, high yield portfolio, with properties in good locations in the better areas of Buffalo.  With little to no refurbishment, tenants already in place, and property management assigned, this is very much a “ready to go” investment portfolio.

For details, please email enquiries@wnypropertyinvestments.co.uk or telephone +44 (0)845 257 7218

By Peter G. Miller - the author of the Common-Sense Mortgage ; syndicated in more than 100 newspapers. 

The financial headlines during much of the past two years have been largely, if not hugely, negative, but in the generalities of the day we sometimes look beyond a basic reality: Opportunities for real estate profits are still out there.

The people I have in mind are small real estate investors, individuals who have a few properties here or there, enough to impact their balance sheets, standard of living and monthly income.

I bring this up because for all the recent financial news, many small investors have done fairly well. Indeed, on the basis of cash flow several of them are no doubt asking, “downturn, what downturn?”

The idea is not that small real estate investors are somehow immune from the declining prices seen in most markets, rather the point is that they don’t particularly care because they’re not selling or refinancing on a regular basis.

What does sharpen their interest is income today and income tomorrow. They’re long-term holders of real estate, people who like monthly cheques.

“Lost in the headlines about falling real estate prices and slowing sales is a baseline reality,” says Jim Saccacio, Chairman and CEO at RealtyTrac.com, the leading online marketplace for foreclosure listings and data. “People have to live somewhere. Most people like to live indoors. The need for good indoor space is how long-term investors fill their wallets.”

Sales Versus Rentals

The traditional focus of real estate has concerned sales and sale prices. This makes sense because real estate sales are a major financial transaction for most buyers and sellers. 

Rentals are different. Rather than buying and selling with some frequency the idea is to buy and hold. For how long? Well, in some cases for decades and generations.

While some investors favour condo units because much of the maintenance is done by the condo association, others prefer single-family houses because such properties are largely self-managed by tenants. 

Good landlording means going for the long-term. The goal is not to maximize monthly rentals, it’s to maximize cash flow and income streams over time. At first this may seem contradictory, but a landlord who seeks the highest possible rental rate is also likely to be a landlord with vacancies.

Vacancies set off lots of problems. First, there’s the central matter of no income. Given a choice of a high rental rate and one monthly vacancy every year or two — or a lesser rental rate and no vacancies, savvy small landlords would much prefer the stable income approach. Why? Because they have steady and ongoing costs in the form of taxes, mortgages and other expenses whether a property is rented or not.

Cash Flow

Home prices in most areas have taken a beating during the past year, but that’s not why small landlords are interested in buying more property, including perhaps foreclosures. Instead, the reason is this: While home values have fallen rental rates have been remarkably stable.

How can this be? Easy. People have to live somewhere. As the number of local foreclosures has increased, mortgage lending standards have tightened so that sales have been pushed down, and as the population has grown, the demand for good rental units has remained steady — especially for owners with nice properties.

Economics 

Yes, it’s true that November 2008 home values were down 13.2 percent from November 2007, but for long-term owners it doesn’t much matter because they’re not selling. Not only have typical cash values risen substantially since 1988 (by about 100%), the more important point is that rental rates have gone up and largely stayed up.

How To Take The First Step 

Wall Street is fond of telling people that past performance does not guarantee future results and the same is surely true for real estate. If long-term investing seems attractive, that’s great — but it’s not a sure deal.

If local real estate seems better or at least more understandable then investing in pork belly derivatives, insurance products without reserves or investment advisors without a conscience, then the first step is to buy nothing.

Instead, take your time and learn about your local market. Are rentals in demand? Speak with real estate brokers, investors and real estate attorneys. Ask about local rules and regulations. Study local foreclosure lists and look for properties near you. Get information from your local economic development office. Read some books — and not the ones that promise great riches overnight.

…AND AN ADDITIONAL NOTE FROM BRENNAN PROPERTY INVESTMENT LTD – TALK TO US, WE HAVE THE KNOWLEDGE AND EXPERIENCE AND INSIDE TRACK TO HELP OUR CLIENTS SOURCE HIGH YIELD, SECURE INVESTMENTS.

This is a diverse portfolio, offering a total of 5 properties in excellent locations of Buffalo, all fully tenanted, and with a very good level of “instant equity”.  There are little to no refubishment costs, so this is very much a “ready to go” investment portfolio.

Portfolio Summary
Net Monthly Income: £1,827
Annual Net Income: £21,924
Instant Equity: £68,066
Total cost to purchase portfolio incl. fees: £118,767 - includes a portfolio price reduction of £5,583 from original price of £124,350
Annual Net Yield: 18.5%
We are also able to offer a 3 month rent guarantee for this portfolio. 

Portfolio Properties listed individually below:

BPIBKC75HAV:  Single Family property in Buffalo, already fully tenanted, with a NET monthly income of £282.  Total cost to purchase: £20,650

BPIBKC253CO:  Single Family property in Buffalo, already fully tenanted, with a NET monthly income of £273.  Total cost to purchase: £21,350

BPIBKCHAGEN:  Double Family property in Buffalo, already fully tenanted, with a NET monthly income of £392.  Total cost to purchase: £24,683

BPIBKCWOHL:  Double Family property in Buffalo, already fully tenanted, with a NET monthly income of £466.  Total cost to purchase: £27,650

BPIBKCPR:  Double Family property in Buffalo, already fully tenanted, with a NET monthly income of £414.  Total cost to purchase: £30,017

In terms of instant equity, there is a very good level due to the types of property, and more importantly their locations: 

BPIBKC75HAV:  Agreed price: $26,000.  Zillow Estimate: $40,500

BPIBKC253CO: Agreed Price: $27,000.  Zillow Estimate: $51,000

BPIBKCHAGEN: Agreed Price: $32,000.  Zillow Estimate: $51,500

BPIBKCWOHL: Agreed Price: $36,500.  Zillow Estimate: $63,000

BPIBKCPR: Agreed Price: $40,000.  Zillow Estimate: $58,500

For further information, or to purchase this portfolio, please contact us:

enquiries@wnypropertyinvestments.co.uk
Tel: +44 (0)845 257 7218

Every investor likes to see an increase in the number of buyers for houses very similar to their own investment properties.

There are now no less than three buying groups currently operating in these cities of Western New York.

FIRST BUYING GROUP:

It is especially pleasing that the first one is being created by the US Government! It is encouraging, and substantially funding, first-time buyers to enter the market place.

EXTRACT from the National Association of Home Builders, Washington D.C.:

$8,000 Home Buyer Tax Credit at a Glance

The (following) information … pertains to the American Recovery and Reinvestment Act of 2009.

• The tax credit is for first-time home buyers only. For the tax credit program, the IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.
• The tax credit does not have to be repaid.
• The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
• The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.
• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.

So what type of property would first-time buyers want? Their criteria are similar to most other peoples’ wants and needs:

• Not too expensive so that they can afford the running costs and Property Taxes.
• A place they can call their own, be proud of and potentially develop.
• Be in a good condition or be refurbished at a reasonable cost
• As with all personal (and Investor!) choices, it must be in a GOOD LOCATION, because that means that not only is it a nice place to live in (and hence other people want to move to) but equally importantly there will be a GOOD RE-SALE VALUE when they decide to move on.
• Clearly, whatever the price level of the property, they achieve a 10% saving – what a great start to property ownership. (Note that the tax credit is House Price Capped to encourage first-time buyers who need the contribution – there is a maximum of 10% of the house price available, so properties over $80K have a capped $8K tax credit).

Our local Property/Realtor sources and contacts have already recognized an up-take in demand from first-time buyers.

SECOND BUYING GROUP:

This one (of several) has been around for quite a long time, but they dipped out of the market during the Credit Crunch, but now are back in business. Many of our clients ask us why the Americans are not taking up these investment opportunities and our answer has always been “YES THEY ARE!” US buyers don’t publicise they are buying these properties – they simply look at web-sites, contact the sellers and invest. In the past, there have been investors from California, Florida, Texas, NYC AND Buffalo taking advantage of the LOW Capital Costs (and hence HIGH YIELDS) of property in these areas.

Evidence is back that the Californians are acquiring more property – and they tend to buy in batches of 5-6 at one time! They also have a sense of urgency – cash purchases and a willingness to outbid the competition.

How encouraging that is for the Property Investor who also wants FUTURE CAPITAL GROWTH!

THE THIRD BUYING GROUP is of course our own Astute Investor Clients. Being able to achieve 14-20% (sometimes even higher) NET Yields easily out-performs other investment options (certainly bank deposits and ISAs). We have sold nearly 400 properties in over 3 years and there are hundreds of satisfied BPI clients enjoying their investment returns.

SO WHAT CAN BPI DO TO HELP EXISTING AND NEW CLIENTS EVEN MORE?

Brennan Property Investment Ltd offers a wide range of Buy-to-Let Investment Properties which are always located in areas that renters want to move to.  It is essential to generate regular rental income in order to achieve the HIGH YIELDS available. But why not add a strong probability of CAPITAL GROWTH?

Some investors seek maximum yields often provided by Double Family properties.  Others prefer what we term Premium Investment Properties, defined as:

• Good location (normally in an area with a mix of owner-occupied and rental properties).
• Excellent condition (even though there may be some refurbishment requirement, normally cosmetic).
• High appraised value (often such properties will have a valuation higher than the purchase price or will be located in an area of higher priced properties).

Additional advantages of such properties include:

• The combination of GOOD Condition and Location means the Investor can demand a higher rent
• They normally attract good level clients who are more likely to look after the property well because they treat it as their home, making improvements and keeping the décor fresh.
• As a result, it is likely that the tenants would stay in the property a long time.
• The property will have a ready market should you decide to sell it – to Investors, First-time Buyers and Homeowners, providing the BPI Investor with a built Exit Strategy

OUR PREMIUM INVESTMENT PROPERTIES ARE EXACTLY WHAT FIRST-TIME BUYERS ARE SEEKING AND WHAT THE EXPERTS IN CALIFORNIA ARE BUYING.

WE GIVE OUR CLIENTS THE OPPORTUNITY TO GET IN FIRST!  CLICK HERE TO ACCESS TODAY’S PREMIUM PROPERTY OFFERS.

A Single Family property located in Buffalo.

Annual Net Yield: 13.3%
Net Monthly Income: £273
Tenanted: Yes

Agreed Price: $33,500 (now reduced to $32,500)
Zillow Estimated Valuation: $56,500
Instant Equity: $24,000

In order to improve the yield further, we have reduced our fees on this property from £2,200 to £1,750, which is reflected in the price below:
Total cost to purchase: £24,567 including fees & costs.

As you will see from the map below, this property benefits from a premium location, where the surrounding properties are valued from $51K - $71K, and in some cases more.  We have negotiated the price on this property at $39K, well below its estimated valuation of $58,500.

Features:

• Detached, two storey, single family home. Built in 1930.
• 3 bedrooms, large living room, eat-in kitchen, upper sitting room (or further bedroom), 1½ baths.
• Lot size: 4320 sq ft.  Gross Living Area: 1225 sq ft.
• Driveway with plenty of off street parking.
• Already full let to a Section 8 tenant paying rental of $725/month.
• Tenancy Type: Month to Month.

A Single Family property located in Buffalo.

Annual Net Yield: 14.2%
Net Monthly Income: £274
Tenanted: Yes

Agreed Price: $31,500 (now reduced to $30,500)
Zillow Estimated Valuation: $55,000
Instant Equity: $24,500

In order to improve the yield further, we have reduced our fees on this property from £2,200 to £1,750, which is reflected in the price below:
Total cost to purchase: £23,234 including fees & costs.

As you will see from the map below, this property benefits from a premium location, where the surrounding properties are valued from $50K - $65K, and in some cases more.  We have negotiated the price on this property at $30,500, well below its estimated valuation of $55,000.

Features:

• Detached, two storey, single family home.  Built in 1920.
• 3 bedrooms, living room, dining room, eat-in kitchen, 1.5 baths.
• Lot size: 3900 sq ft. Gross Living Area: 1776 sq ft.
• Driveway with plenty of off street parking.
• Just recently let at $675/month.
• Tenancy Type: Month to Month.

A Single Family property located in Buffalo.

Annual Net Yield: 15.4%
Net Monthly Income: £264
Tenanted: Yes

Agreed Price: $27,500 (now reduced to $26,500)
Zillow Estimated Valuation: $51,500
Instant Equity: $25,000

In order to improve the yield further, we have reduced our fees on this property from £2,200 to £1,750, which is reflected in the price below:
Total cost to purchase: £20,567 including fees & costs.

As you will see from the map below, this property benefits from a premium location, where the surrounding properties are valued from $49K - $81K, and in some cases more.  We have negotiated the price on this property at $26,500, well below its estimated valuation of $51,500.

Features:

• Detached, two storey, single family property.  Built in 1923.
• 4 beds, 1 bath.
• Lot size: 3680 sq ft.  Gross Living Area: 1290 sq ft.
• Detached garage.  Driveway with plenty of off street parking.
• Already fully let to a Section 8 tenant at $650/month.
• Tenancy Type: Month to Month.

A Single Family property located in Rochester.

Annual Net Yield: 15.5%
Net Monthly Income: £266
Tenanted: Yes

Agreed Price: $26,500
Zillow Estimated Valuation: $56,500
Instant Equity: $30,000

In order to improve the yield further, we have reduced our fees on this property from £2,200 to £1,750, which is reflected in the price below:
Total cost to purchase: £20,567 including fees & costs.

As you will see from the map below, this property benefits from a premium location, where the surrounding properties are valued from $48K - $71K, and in some cases more.  We have negotiated the price on this property at $26,500, well below its estimated valuation of $56,500.

Features:

• Detached, two storey, single family property, with 3 bedrooms, living room, dining room, kitchen, bathroom.
• Built in 1928.
• The roof was replaced in 2008 and the wood siding painted last summer. Overall in good condition. The kitchen has a new floor covering.
• Lot size: 5630 sq ft. Gross Living Area: 1296 sq ft.
• Driveway with plenty of off street parking.
• Already let to a long-term Section 8 Tenant, paying rental of $725/month ($515 S8 and $210 from tenant without fail).
• Tenancy Type: Month to Month.

A Double Family property located in Buffalo.

Annual Net Yield: 17.2%
Net Monthly Income: £414
Tenanted: Yes

Agreed Price: $40,000 (now reduced to $39,000)
Zillow Estimated Valuation: $58,500
Instant Equity: $19,500

In order to improve the yield further, we have reduced our fees on this property from £2,200 to £1,750, which is reflected in the price below:
Total cost to purchase: £28,901 including fees & costs.

As you will see from the map below, this property benefits from a premium location, where the surrounding properties are valued from $51K - $71K, and in some cases more.  We have negotiated the price on this property at $39K, well below its estimated valuation of $58,500.

Features:

• Detached, two storey, two family property. Built in 1910.
• The lower unit has 3 bedrooms, living room, dining room, eat-in kitchen, 1 bathroom. Section 8 tenant.
• The upper unit has 2 bedrooms, living room, eat-in kitchen, 1 bathroom. Recently updated and painted. Fully let.
• Lot size: 3000 sq ft. Gross Living Area: 1586 sq ft.
• Driveway with plenty of off street parking.
• Already fully let with tenants paying a combined rental of $950/month. 6 month rental guarantee.
• Tenancy Type: Month to Month.

If you would to request the full property file, or wish to reserve this property, please do not hesitate in contacting us.

enquiries@wnypropertyinvestments.co.uk
Tel: +44 (0)845 257 7218