High Desert Gold Corporation to Initiate Drill Program on the San Antonio Gold Property in Sonora, Mexico
High Desert Gold Corporation to Initiate Drill Program on the San Antonio Gold Property in Sonora, Mexico
VANCOUVER, BRITISH COLUMBIA–(Marketwire – Feb. 10, 2011) – High Desert Gold Corporation (“HDG” or the “Company”) (TSX VENTURE:HDG)(PINK SHEETS:HDGCF) is initiating a Phase I drill program at the Company’s 100%-owned San Antonio gold property in Sonora state, Mexico, and anticipates having the drill rig onsite by February 15. The 1,500-metre reverse-circulation drill program is planned to test …
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Categories: Silver Springs Tags: Antonio, Corporation, Desert, drill, gold, HIGH, Initiate, Mexico, Program, property, Sonora
Where Do Yield Investors Put Their Money Today? Where can you find 10%+ Yields from property?
Where Do Yield Investors Put Their Money Today? Where can you find 10%+ Yields from property?
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Home Page > Finance > Investing > Where Do Yield Investors Put Their Money Today? Where can you find 10%+ Yields from property?
Where Do Yield Investors Put Their Money Today? Where can you find 10%+ Yields from property?
Posted: Sep 14, 2010 |Comments: 0
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Where Do Yield Investors Put Their Money Today? Where can you find 10%+ Yields from property?
About the Author
Mat has been an active property investor since 1993 – with a portfolio of UK and German investments. The founder of ProVenture Property and a very nice man. In his spare time, when not buying property, or writing articles on property investment, Mat likes to visit properties.
(ArticlesBase SC #3264752)
Article Source: http://www.articlesbase.com/ – Where Do Yield Investors Put Their Money Today? Where can you find 10%+ Yields from property?
With the property markets now under-going correction from their highs in 2006-2007 across most of the developed world, and savings rates at an all-time low, cash-rich investors are seeking returns on their capital like never before. Gone are the days of investments baked with the expectation of capital growth, investments now need to “stack up” in terms of cashflow from day 1. That’s not to say capital values are being ignored, far from it. Investors increasingly seek stable investments that provide a measurable and regular return. So markets should be in some sort of equilibrium in terms of supply versus demand, and capital values holding steady. In many ways then, conditions are back to normal in many respects for serious portfolio landlords.
So where are yield investors looking today? Working on the ProVenture team, we get to talk to yield investors every day from across the world and it is interesting to pick up on trends in their strategies. We hear about where investors have placed their hard-earned cash in the past, and where and why they are looking to invest in the coming years. Inevitably, many of the investors we speak to are focused on Germany as a place to invest for the coming years as this is our main area of operation as property consultants. But increasingly, we discuss investments in eastern Europe, other parts of western Europe and the USA as viable investment locations.
Let’s look at some different markets and find out what is drawing investors to them at this stage of the economic cycle.
USA
What an interesting market to look at, as we write this piece in August 2010. The USA is the home of raw capitalism, and this harsh approach applies to the property market in much the same way as the money and equity markets. Despite the assets in question being people’s homes and security, they seem exposed to harsh write-downs more than other countries, and this brings sorrow and hardship for those shielding loses and inevitable opportunities for investors.
Taking a historical perspective on the market, we see that the USA has typically had an average level of owner-occupation between 1960-1990 of around 60%. Home ownership was a realistic aspiration for many, but not an imperative like in other markets such as UK or Spain where owner-occupation rates have been as high as 85-90%. This led to, in most locations, a stable market to invest within and a ready supply of short to longer term tenants. The credit bubble of 1996-2006 changed all this.
During the period of low interest rates, sectors of the population who up until then could not aspire to home ownership at their stage of life, if at all, entered the market on “teaser” loans, affordable for the first few years of the loan but become crippling as the loan rates reverted to usual market rates or higher. This greed on lenders parts, and their shocking lack of due diligence into individual’s ability to pay, had a now famous global effect. Currently, 14% of the population are behind on mortgage payments or are in foreclosure. This is an average, and some markets have double this rate. That’s 9 million homes in trouble, double that are households sitting on negative-equity. So where are we now, and is the USA a place worthy of investment research? It is safe to say, the market is still largely bereft of confidence and sharp declines have been felt pretty much across the board. But are there areas that have suffered steeper declines than are justified?
Well, the USA is a huge market. Let’s focus on one city, Orlando [Florida] as a case study.
The Orlando region derives much of its economic power from tourism, business conventions, medial and hi-tech research and the “grey dollar” or those retiring to the warm climes from more northern states or from abroad. The property market has grown with the huge rise in population, up 30% in the last decade alone. Typical in this region have been gated developments and condominiums growing mainly to the south of the city and spreading at an alarming pace in the empty land. The city or downtown area is well-established with some property dating back 100 years or more, broken up only by the high-rise developments which seemed viable during the credit bubble.
Construction of property can be standard construction, or more rapidly built units from pre-fabrication section. Use of wood in structural elements is often seen.
During the credit binge, Orlando was front and centre, financing and constructing homes to service both the local and tourist market. Depending on location and subdivision, property soared 200-300% from 1995-2005, unheard of growth rates in this market which has no scarcity value and seemingly limitless land in which to develop. Commercial development went just as mad. Business plans for “strip malls”, small malls by the road side took off. Some areas of the city boast 10 Taco Bell franchised outlets in a 1km radius. All sectors of the property market, even in downtown locations, could be said to be very over supplied.
In terms of pricing, let’s look at the price history of a high-end 2-bedroom apartment in the downtown district using the excellent zillo.com tool:
The graph shows that such a unit was being sold off plan in excess of $400k, now priced around $200k [or even cheaper navigating the foreclosure route].
In terms of rental potential, the downtown area enjoys solid demand. Around $1800-2000 should be expected per month, bringing a healthly 12% or so yield.
Why would you buy this? Well, the current low capital value is compelling, as is the location of the unit in the downtown area which enjoys some degree of scarcity value. It is an interesting proposition.
Why wouldn’t you buy? Well, considering the lack of confidence in the marketplace, finance will be very difficult for the first few years of the hold. It should be best considered a cash purchase, so the power of leverage is not as easy here. Additionally, it really is not clear where capital values will go, but for a cash investor looking for a sustainable yield, this is a strong option.
The German Market
Over the last 10 years or so, property markets around the world have experienced rates of capital growth typically between 200-300%, fuelled by cheap and plentiful credit. There are few exceptions to this trend, one of them being Germany. Due to re-unification some 20 years ago, the property market in Germany, particularly in the old east, has been operating out of sync with other markets. Speculation by mainly western German buyers fuelled a boom which ended around 1996. As investors were chasing rents that were not achievable, the German market gave way and went into decline from around 1996 – 2001. This was the same time that most markets around the world experienced their greatest growth rates. Prices have stabilised in most areas from 2001 and shown some capital appreciation in certain areas, particularly the good locations in the bigger cities such as Munich, Hamburg, Frankfurt and Berlin.
Market Features:
The residential market differs considerably from other locations, with more robust tenant laws and longer typical residence times. Typically, a residential unit will be offered for letting totally unfurnished, without kitchen units, light fittings or even flooring. The incoming tenant will provide all their own furnishings and stay for a longer period, typically on average about 7 years. Tenants sign contracts of a defined period but are effectively on a lifetime lease thereafter, only needing to move out if they are not regular with their payments or the landlord (or close family) which to occupy the unit. Tenants must give 3 month’s notice to quit and will repair and decorate the unit to a good condition when vacating.
Finance for Nationals and international buyers is usually set around 60-80% loan to value. The level of finance depending on the client’s income and the rental value of the property. Typical interest rates are fixed for 5 or 10 years and around 1.3% above the Euro 5 or 10 year swap rate. So at present rates are around 3% for a 5 year fix and 3.8% for a 10 year fix.
Typical Prices:
Property, both commercial and residential tends to be priced per sqm and not by room or bedroom number. Therefore, investments can be easily compared by size, price and location. Residential property can be purchased either on a single basis or by purchasing a complete block of apartments. Purchasing a complete block tends to reduce the price per sqm paid. Some typical prices per sqm in the major cities, depending on size and location:
Berlin – 1.000 – 2.000 Eur psm
Frankfurt – 2.500 – 4.000 Eur psm
Munich – 3.500 – 5.000 Eur psm
Locations to the east of Germany (Dresden, Leipzig, Chemnitz for example) have properties in a good refurbished condition from 500 Eur psm. Remarkable value and the most undervalues market in the world according to the OECD. Location in terms of sustainability of rent is crucial in these locations.
As an example apartment block, below is a unit in Leipzig with 19 apartments. The purchase price is 420k euro and a yield of around 12% net is achieved.
Typical Yields:
In the same way that property is marketed for sale, rental property is priced per sqm. The rental is often broken down in to “cold” and “warm” rent, with the cold rent being the income to the investor and the warm rent covering all bills including ground tax and routine property maintenance. Cold rents start at around 4 Eur psm in the very cheapest parts of cities to the east of Germany with cold rents in cities such as Munich reaching 12 Eur psm and above in many cases. Yields range between around 5% for single apartments in Munich, Frankfurt and Hamburg to around 10-12% when bought as a block in cities such as Dresden, Leipzig and Chemnitz. Berlin offers the complete range of yields and is a very diverse market.
Running Costs:
Costs during ownership are transparent and are comparatively low. The majority of deductions to run the property are taken from the “warm rent” or ancillary cost and should not be included in yield calculations. This includes basic building maintenance, communal area cleaning, buildings insurance and property tax. From the net rent, apart from unplanned maintenance, the cost of letting management is the primary deduction. There are a variety of fee structures for letting management including a flat fee per apartment or a percentage of the rent collected. Letting management typically costs between 5-10% of net rents, depending on area and fee structure chosen.
Positive Investment Aspects:
Hands-off investment – long-term tenants, unfurnished propertyletting
Well regulated and robust tenant and property management practices
High rental yields possible, to fit all investor types
Good finance available, at competitive levels of interest
Reliable legal and land registry system
Transparent running costs
Negative Investment Aspects:
Robust tenant laws – a tenant cannot just be removed unless they do not pay rent
High purchase costs (between 10-12%)
High yielding properties can be subject to a forced sell and can be problematic to deliver
View on Market:
Very good yields, underpinned by strong legal system and high levels of finance. Capital values very low in comparison with anywhere in the developed world. Truly unfurnished property allows for significant holdings to be built up in a relatively “hands-off” manner.
Where Next??
In terms of property in Europe, beyond Germany, yield investors have very few options. Markets are either stable but producing yields in the 3-6% range, or falling in capital value and difficult to predict the floor. Markets across the Eurozone and UK have a few years to run you would say before re-entering the market for yield and stability in capital value. Places that have experienced huge capital falls, but stabilise well in the coming years [with increasing wages as a key index] should be kept in mind. The following locations could be worth noting in years to come, with capital falls experienced in last 3 years:
Lithuania [Vilinus, Kaunas] – 55% price fall
Latvia [Riga] – 70% price fall
Ukraine, Kiev – 55% price fall
Further afield, yields on 8%+ can be found in: Sao Paolo, Brazil 8.1%
Santiago, Chile 8.7%
Jakarta, Indonesia 11.1%
Kuala Lumpur, Malaysia 8.7%
The diligence here should include analysis of finance availability, interest rates payable and currency stability. No good getting a 10% yield when the interest rate is 12%, or if the currency weakens significantly during the period of your hold.
Good luck in your hunt for yield.
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ProVenture Property – Mat -
About the Author:
Mat has been an active property investor since 1993 – with a portfolio of UK and German investments. The founder of ProVenture Property and a very nice man. In his spare time, when not buying property, or writing articles on property investment, Mat likes to visit properties.
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Categories: Orlando Tourism Tags: 10%+, find, from, Investors, Money, property, their, today, Yield, Yields
Leaving The Walt Disney World Resort Property
Image taken on 2008-08-31 00:00:05 by JoshMcConnell.
Staying at Hotels Off of Disney Property
hotels.orlandovacation.com Staying at Hotels Off of Disney Property has plenty of advantages. For 1, you can money on your vacation.
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Renting a Vacation Property in Orlando
Well have you ever stayed in a single hotel room as a family of 4 or more? There is one television to cater for all 4 tastes, one bathroom so you must organise a rota to get washed and dressed. If you are lucky you may be allowed to pay extra to rent a fridge – failing that you may just need to buy everyone in your party a cool drink from the hotel as and when they require one – a cost which can mount up for a family of 4 over say a two week stay. Is there a better way to holiday?
We believe so – rent an Orlando vacation home! These homes range from 3 bedrooms upwards. A 3 bedroom villa could have 2 or 3 bathrooms, thus everyone can shower and get ready at their leisure. Usually a T.V. is situated in EVERY bedroom so everyone can suit himself or herself as to what to watch, without having to compromise. With your Orlando vacation home having a fully equipped kitchen, the choice is always yours if you want to eat out or thoroughly relax at home or by the pool with a bite to eat.
The options for food in Orlando are endless – close to your rental villa will be an abundance of food options. There are plenty of supermarket styled shops where you can buy ready made hot meals which you can take back to your beautiful rental home to enjoy with your family or you can buy the ingredients to cook the meal of your choice. Alternatively there are plenty of carry out / take away restaurants so you can bring your food home to eat or even phone and have your meal delivered straight to your door, thus really making your rental villa a true home from home.
Relax in your own private swimming pool
Unlike hotels, there is no longer a need to pack a bag full of everything you might need just to make a trip to the pool, since at your vacation rental villa everything you require is only an arm’s length away whether it be more suntan lotion or a lovely cool drink or ice cream as you continue to enjoy that lovely Floridian sunshine.
Want to wear your favourite outfit to meet Mickey & Minnie? Not a problem – you can wear it as often as you like since laundry facilities are supplied in your holiday rental villa at NO extra cost. No more buying tokens or saving up quarters for washing machines in selected hotels! This is all included in your rental price for your vacation villa.
Why vacation anywhere else!
With a private pool at your vacation home, anyone in your party can have a dip before breakfast or before turning in at night. Many home’s pools are enclosed with a net to keep insects out, allowing you absolute freedom to swim day or night. A swim or soak in the spa is particularly appealing after a long day at the attractions.
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Situated alongside the picturesque Lake Davenport – with its palm trees, white sands and shimmering waters – Bahama Bay provides year-round holiday enjoyment for those wishing to indulge in Orlando’s theme parks, or just chill out in a fully serviced resort. Bahama Bay is just a shuttle-bus, or a 10 minute drive away from all the popular Orlando theme parks including Disney World, Universal Studios and Sea World Resort.
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AWARD WINNING TROPICAL RESORT
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Categories: Disney Vacation Club Tags: Bahama, Condo, Davenport, florida, Greendale, luxury, Management, Offer, property, This, Vacation
Commercial Loan for Your Hotel Property
Getting a commercial mortgage for a hotel property is very similar to getting a commercial mortgage for an owner occupied commercial property with a few subtle differences. The driving force for the majority of most hotel income is the RevPar or revenue per available room. RevPar is most commonly calculated by multiplying a hotels average daily room rate (ADR) by it occupancy rate and is a key indicator of performance. Rising RevPar is an indication that either occupancy is improving; the ADR is increasing, or a combination of the two.
Although RevPar only evaluates the strength of room revenue, it is typically the most relevant indicator of performance. While many full service hotels generate revenue through other means such as restaurants, casinos, conferences, spas, or other amenities the majority of hotel properties are either limited service flagged properties or limited service unflagged properties. A limited service hotel is simply a hotel with out a restaurant. Because the operating costs of the restaurant component generally run higher than that of the hotel operations, it is common for the net operating income (NOI) as a percentage of total sales to be lower for a full service than a limited service hotel. For this reason the majority of commercial lenders prefer to finance limited service hotels.
Flagged vs. Unflagged Properties:
A flagged hotel property is simply a hotel that belongs to a national franchise. An example of a flagged property would be a Holiday Inn or a Best Western. For the guest, a flagged property provides the benefits of a uniform standard that is upheld by the franchisor. A guest could stay in a flagged property on the east coast and could expect the same flag on the west coast to have the same standard of cleanliness and amenities. The owner of the property gets the benefit of a nationwide reservation system and marketing. For this benefit the operator is expected to pay a franchise fee which can typically range anywhere from 5% to 10% of room revenue. Because of the advantages that a flagged property has, most commercial lenders prefer to finance them over an unflagged property. Sometimes it can be extremely difficult to get a commercial loan for an unflagged property, especially if the property isnt in what is considered a destination resort area. A destination resort area would be an area like Miami, Myrtle Beach, or Orlando FL. An unflagged property in a destination resort is easier to obtain a commercial loan on than an unflagged property in other areas of the country.
Exterior Corridor vs. Interior Corridor:
An exterior corridor property is a hotel property where you can actually see the door to the rooms from the exterior of the property. These are sometimes referred to as a motel instead of a hotel. The term motel is actually derived from the term motor hotel where most travelers would park their vehicle directly in front of their room. While there are disagreements between what defines a motel and what defines a hotel, there is typically very little difference between the two outside of a lenders perception.
Most exterior corridor properties are older and subsequently will not have the quality of furnishings and will have more deferred maintenance than an interior corridor property. An interior corridor property is going to be more energy efficient and would have a lower utility expense as a percentage of gross revenue.
Financing Your Hotel Property:
When trying to get a commercial loan for your hotel property there are a few distinct differences you can expect as opposed to financing other commercial properties. A hotel property is considered special purpose in nature which simply means that it is generally cost prohibitive to convert it to alternate use. An office building or retail space can accommodate numerous types of businesses whereas a hotel property can only accommodate a hotel. Because of this a commercial mortgage for a hotel is going to be considered riskier to the lender than a commercial mortgage for other general purpose property types. A lender will mediate this risk by taking a more conservative approach to underwriting a hotel property.
The loan to value (LTV) for a hotel property will be lower than other general purpose property types. For a limited service, flagged property 65% LTV is typical and that number can go down depending upon the age of the property and whether its interior or exterior corridor. The LTV is simply a ratio calculated by dividing the loan amount by the value of the property. The debt service coverage ratio (DSCR) for a hotel will also need to be higher than that of a general purpose property type. The DSCR is a ratio that determines the strength of the property or business income in relation to the proposed mortgage payment. A typical required DSCR for a hotel property by a commercial lender is 1.30 which simply means that for every $1.00 in proposed mortgage expense there should be $1.30 available to pay it. For other general purpose property types the DSCR is lower. A DSCR of 1.20 is common for general purpose property types and can go oven lower for a less risky property such as an apartment building.
Because the acquisition of a hotel property under a conventional program requires a large capital injection, many borrowers prefer to purchase a hotel property by utilizing the SBA 504 program. This program enables the borrower to put in as little as 15% and still obtain a better interest rate than a traditional commercial mortgage for a hotel.
Categories: Orlando Hotels Tags: commercial, hotel, loan, property