Archive for October, 2009

USA Property Investment

Sunday, October 11th, 2009

Four Corners Properties

USA Property Investments

To keep you up to speed here’s the latest info on 3 key areas with a summary at the end;

1. Our strategy,

2. Examples of acquisitions,

3. Research on the area and the business case.

Basically, as you know, I’ve been over there, acquired one, committed to buy another two and am going back over in November to acquire more. In the process I’ve resourced a good team and contacts to source the best deals and get any works/maintenance completed.

Strategy going forward;

An American based company is currently being set up and we are planning to step up the volume of purchases with the aim of getting better deals for bulk purchase. Numerous people have expressed serious interest in investing in this next round and I have acknowledged your keen interest.

Collective acquisition seems the most preferred route with shared risk/reward. A mixture of properties with high yield/low value or higher value slightly lower yield with better growth potential are our target.

We are planning to rent to a mixture of private and government backed tenants. Properties have to pass County standards prior to rental and we purchase properties that need minor works (decor/carpets/kitchens etc) to meet those standards. We then carry out the works to ensure they reach the required standard for a rental permit. Rental demand is high due to lack of credit and this is one of the main reasons for discounts of up to 80% of previous selling prices. The yields are exceptionally high and market recovery would deliver potentially strong capital growth. Development and investment in the area is really starting to happen as you will see below.

Examples – Already owned;

Foreclosuers USA

This is the 2 bedroom detached property I acquired in September. It owes £18,000.00 as a completed project and will rent at $700/£500 pcm or $8,400.00/£6,000.00 pa gross.

Taxes and management costs need deducting but the yield will still net around 22% pa.

This will vary from property to property but is one of the lower price/ higher yield properties.

USA Property Investment

USA Property Investment

Here is a view from the back and you can see it is quite spacious and has a large garage.

USA Investment

USA Investment

The living room after decoration/blinds/lighting.

USA Property Investment

USA Property Investment

The kitchen with oven and fridge for rental purposes. We purchase these appliances second-hand.

Currently being purchased

The following pictures are of a one of the uncompleted properties that will be in the £20-25,000 bracket completed and ready to rent for approx $800.00 pcm/£9,600 pa gross. The yield will be lower but the capital growth potential higher than the first one. The Americans like a basement.

USA Investments

USA Investments

A good location –

USA Property Investment

USA Property Investment

Internal arrangements – we’ll redecorate, re-carpet where needed, paint kitchen units and re-glaze the bath.

USA Foreclousers

USA Foreclousers

Exterior – we’ll change the green to white and upgrade all internal fittings making the property ready to rent.

USA Foreclousers

USA Foreclousers

This is a three bedroom detached property with a basement to match the footprint of the property.

All properties will be completed, have a rental permit and be ready for the rental market.

Research

Below are some of the incredible investments into the county. This was one of the worst hit states in USA downturn and the re-investment and incentives are on a massive scale. It is predicted to be one of the first recoveries as these research stories illustrate;

Wayne County – Success Stories


Wayne County EDGE is positioning Wayne County as the place in the State of Michigan where people want to do business.

Despite the economic downturn, Wayne County EDGE has worked to bring over $2 billion in new investment into Wayne County in 2008 and 2009. In fact, according to SEMCOG’s latest 2008 estimates, Wayne County leads the Southeast Michigan region with the most construction activity per square foot (10.8 million sq. ft.). This represents over 34% of all activity in the region.

And of Southeast Michigan’s five largest development projects, three were in Wayne County.

With the many choices of existing development ready sites, aggressive economic development incentives and high quality of life, you can see why these companies recently decided to invest in Wayne County:

General Electric

  • GE is bringing nearly 1,200 high-paying jobs (average salary = $100,000, plus benefits) to its new $100 million Advanced Manufacturing Technology and Software Centre in Van Buren Twp.
  • The Global Research Centre will include an R&D facility that will house scientists and engineers working on next-generation manufacturing technologies for GE’s renewable energy, aircraft engine, gas turbine, and other high-tech products. It will also house GE experts in software development.

A123Systems

  • Advanced lithium-ion battery manufacturer A123Systems chose Wayne County as its regional headquarters and the location for its Michigan Centre of Energy Excellence, as well as future production plants. A123 will develop, prototype, and assemble battery cells and battery packs for Chrysler’s line of electric and hybrid vehicles.
  • It is anticipated that A123’s initial investment in Wayne County will be over $50 million, creating 300 jobs by 2010. This investment is expected to increase now that A123 has secured grants from the U.S. Department of Energy

Ford Motor Company

  • Ford has pledged to spend $550 million to retool its Wayne plant to build the European version of the Focus, as well as the electric Focus in 2011.
  • The project is expected to retain 3,200 jobs in Wayne County.

General Motors

  • GM will invest $43 million into a 160,000 sq. ft. plant in Brownstown Twp. for the production of battery packs for the Chevrolet Volt.
  • More than 100 advanced technology jobs will be created, packaging the battery cells that will power the Chevrolet Volt and other electric vehicles in GM’s line-up


Fisher Coachworks

  • Fisher Coachworks LLC is investing $7 million to develop a 40-foot hybrid bus at a 25,000 square-foot facility to be located in Wayne County. The project is expected to create more than 500 jobs.

Great Lakes Recycling

  • GLR is a full service recycler that has been in business for over 80 years. Its new facility located in Huron Township will encourage waste minimization and increase recycling awareness, serving municipalities and businesses throughout the region. This project will create 42 new full time jobs and represents more than a $12 million investment.

The Michigan Institute of Aeronautics

  • The Michigan Institute of Aeronautics, one of the largest aviation maintenance schools in the nation, is expanding and locating its Power Technology Institute in Wayne County. The project is expected to create 145 new jobs.
  • The Institute, with 103 students currently, expects to grow to over 600 students over the next five years. It focuses on alternative energy and trains students to become technicians and dispatchers.

Pump Engineering

  • This manufacturer of high-efficiency pumps and energy recovery turbochargers is investing $4.2 million to expand in Huron Charter Twp. The project will create 110 total jobs, and it is estimated that the increased economic activity created by the project will create an additional 59 indirect jobs.

Cobo Hall

  • In June 2009, Governor Granholm signed legislation that allows the City of Detroit to lease Cobo Hall to a regional authority and authorizes $300 million for its expansion and renovation. The expansion of Cobo Hall will create hundreds of construction jobs and retain 16,000 jobs.


Severstal North America Inc.

  • The fourth-largest steelmaker in the U.S. plans to invest $700 million to rehabilitate, modernize and enhance aging facilities in Dearborn to improve its steel mill. The project is expected to retain 76 Michigan jobs.

Steel Tool & Engineering Co.

  • This manufacturer and engineering provider of precision component parts for military and commercial aircraft jet engines plans to invest $3.5 million to consolidate operations in Taylor and Wyandotte into a facility in Gibraltar. The project is expected to create 112 new jobs, including 50 directly by the company.

Wayne County Motion Picture Studio Projects
Wayne County EDGE remains actively involved in the proposed development of two studio projects in Wayne County:

  • Unity Studios ($60 million media production facility and media trade school to be built on 104 acres that could create over 1,000 jobs)
  • 23rd Street Studios ($40 million facility to be built on 18 acres in Detroit)

The Michigan Life Science and Innovation Centre (MLSIC)

  • A partnership between the County, the MEDC, and Ann Arbor SPARK to create a cutting edge business accelerator in an abandoned Pfizer facility for life sciences companies. The MLSIC connects experienced entrepreneurs such as Esperion Therapeutics to business accelerator organizations and start-ups under one roof.
    • The catalyst for the Centre was Dr. Roger Newton, co-founder of the drug Lipitor and one of Michigan’s most renowned entrepreneurs and scientists
  • The 57,518-square-foot building offers office space, laboratory facilities and rare vivarium areas that are accessible by the private sector.
  • Tenant Lycera Corporation has just closed on $36 million in venture capital funding, and Velesco Pharmaceutical Services moved its Ann Arbor laboratories into the MLSIC this summer.

TechTown

  • Wayne County has awarded TechTown, one of the nation’s most active business accelerators, a $750,000 grant to build out space for at least nine new companies that have been on the facility’s waiting lists for months.
  • TechTown is also the location for Michigan’s first Stem Cell Development and Commercialization Centre. This partnership between Wayne County, the private sector, and the academic sector capitalizes on legislation that has paved the way for embryonic stem cell research in Michigan
  • Wayne County has also announced a $500,000 training grant to TechTown to support the establishment and growth of at least 25 new logistics companies.
  • This grant was received by the County from the federal government and constitutes part of its drive to establish an Aerotropolis.

Summary

We are looking to create a diverse portfolio of property, to spread the risk, create great returns and invest in the strong possibility of capital growth. We’d like to continue to re-invest profits to expand the portfolio where possible.

You’ll need to commit by way of £1,000 deposit and be prepared to transfer funds in the near future. We’ll obviously need cleared funds to complete purchases and there is a small time lag. We already have a dollar account to achieve highest exchange rate.

Best wishes

Karl Luker
Paul Hewett