US MARKET:It's the land of property so cheap it's nearly free - and brave Irish investors might yet make a killing on the US property crash
IN THE post sub-prime depression there are opportunities for investors eager to cash in on the property misery born in the USA. Take Chicago, for instance, the largest city in America's midwest and the third largest in the US. It is rumoured to be seriously in the running for the 2016 Olympic Games, and all the investment breaks that go with it.
According to Remax's Chicago real estate agent, Irma Mejia, "Prices have obviously fallen significantly in recent months, as much as 20 per cent in some places, making the current market a great opportunity for buyers with a lot of properties that will give a good rental income."
Mejia says that there is really good value to be had across Illinois and particularly around Midway airport and downtown. Many of the city developments in progress have come to a standstill, she says, waiting for finished stock to sell.
Giving some indication of the market's pace, Mejia says that, "Out of, say, 230 homes for sale, we are only selling 10 every three months."
In Detroit, there is property on the market for as low as $100, and no, that's not a typo. OK, so a lot of the places look spookily like something out of the Amityville Horror after more than one paranormal fire-attack. They require massive repairs and you will probably need the A-Team to protect you, but hey a $100 is still only a $100 (and that's only €65), and who knows how neighbourhoods change?
Decidedly more upmarket is an offering from Weathersby Realty's Mary Weathersby, who is selling a three-bedroom colonial-style house on Vancouver Street, in Detroit for $350 (€230). She acknowledges drolly, in a wonderful laidback drawl that, at this particular price "the house will be demolished and sold as a lot. Why is the price so low? Well, there are excellent areas to live in, there are good areas and there are poor areas. This very, very, definitely, is not a good area to live in".
On www.realtor.com there are 298 properties for sale at $2,000 (€1,317) or below (many owned by "the bank" and needing serious repair), 3,577 on the market at or below $10,000 (€6,586) and an amazing 10,674 on or below $50,000 (€33,000).
Such websurfing is the ultimate in crash-property voyeurism and yet while Detroit is not particularly renowned for its free love, it isn't exactly in the middle of a war zone.
That aside, Detroit's $150,000-bracket (€99,000) has a lot of investment potential. A brick bungalow, for instance, that has been stylishly refurbished with hardwood floors and new bathroom, kitchen, electrical appliances and doors, is seeking offers around $125,000. A similar property in Ireland would easily fetch €750,000.
Not that there's only a bit of cream to be found in the refurbished market.
Twelve miles north of Boston, Locations Estate Agency is the Irish agent for 33 loft apartments, starting at $219,000 (€144,234). Stylish, roomy, slick and ultra modern they represent a good investment in an area on the up and without the hassle of refurbishment, guard-dogs or validating your assurance premium.
LEA's Carol Russell says the Boston area "is offering excellent value for money for the Irish investor, with pre-negotiated discounts of about 20 per cent and an excellent currency opportunity, allowing the investor to take advantage of the currency, the potential capital growth and the real value for money with excellent rental returns in selected locations".
Moving further south, in Miami, Florida, digging out a bargain is a little bit harder: on www.realtor.com there are only 38 properties for sale below $50,000 (€33,000).
There are still bargains, according to Coldwell Banker's Edward Sarkissian, where prices have fallen "by 25 per cent over the last year making it a very good time to buy. We have a really big inventory at the moment. Taking just central Florida we have over 20,000 properties on our lists.
"In the past three years sales have fallen by 35 to 40 per cent while our inventory has gone up by a couple of hundred per cent. And then we were hit by the sub-prime problem big-time."
Stirling Sotheby's Jane Scrima tells a similar story about Orlando: "The best three places for investment are near Disneyland, downtown or out near the airport where they are about to turn ground on three new hospitals.
"There really are some very good buys because I'm not sure they will not drop any more. But it's all about location here like everywhere else."
Typically, there are a lot of condos in the $150,000 range, some looking a hell of a lot better than others. One of the one-bedroom properties has access to a gym and a swimming pool on Autobahn Place, near the town centre. It costs $152,000 (€100,143).
In Austin, Texas, there are a lot of investment opportunities for ridiculous money, but Bettye Turner of The Turner Team, who has a really nice blank canvas of a condo on the market in Ohlen for $84,000 (€55,000), believes "the market is holding its own although it's pretty much better than most places, with good investment potential in duplexes and fourplexes."
While Zeromovein's Joe Henzich, which has a spacious three-bedroom property on Johnny Weismuller (the area, not his bones), for sale for $185,000, (€122,000) believes Austin is a really good place to invest in at the moment with the US census bureau predicting that the local population is going to grow in the next 15 years from 1.4 million to an incredible 2.3 million people.
"That alone is going to raise property prices and, not surprisingly, we have every major builder in the country in Austin right now.
And while the credit crunch has made apartments readily available and rents are low, investors can still make a six per cent return."
Ultimately, for investors who are wondering if 1,000 $100 properties in Detroit are better than one substantial property anywhere else, it is worth paraphrasing American general Philip Henry Sheridan's axiom: "If I owned Detroit and Hell, I'd rent out Detroit and live in Hell".
