With stories of investors losing their investments in apartments, condo conversions, one wonders why there are still a number of people investing in condo conversions. These buyers must be seeing something other people can’t see.
Socially Responsible Investing (SRI), also known as sustainable investing or ethical investing has origins dating back to as far as the early18th century and was motivated mostly through religious reasons. The modern SRI movement, as we know it today, started in the 1960s. The movement spawned out of an increased awareness of social and environmental issues. It eventually became a marketing gimmick for many multinational corporations attempting improve their image to the outside world, regardless of their actual policies. Not until the 1990’s did a serious social/environmental paragraph in business plans and prospectuses became apparent, and was the positive effect on business performance acknowledged. During this time, socially responsible mutual funds, or social funds were starting to emerge. In the years since the number of social funds has increased significantly, and not for no reason, as proven by the Domini 400, a benchmark that measures the impact of social screening on financial performance. Since its start in 1990 the index has continuously outperformed the S&P 500. The companies in this basket just seem to adapt to volatile market conditions better than ordinary companies.
The way typical corporations develop their business can expose them to risks that may not be detectable using conventional techniques of financial analysis. Extra-financial factors – such as environmental, social or governance performance – are those which are likely to have at least a long-term effect on business results, but which lie outside the customary span of variables that get integrated into investment decisions, irrespective of whether they are part of the research process. Such an enhanced analysis or more holistic investment approach improves the longer-term performance of a company’s assets on behalf of its shareholders by helping to generate increased out-performance, but also by improving overall market returns by ensuring more efficient allocation of capital and eventually more profit.
Though, on a more critical note, more extensive studies are needed to explore the causal mechanisms linking SRI to profitability and to determine whether or not those relationships individually hold up consistently over time. The source of the connection between SRI and profitability has rarely been systematically investigated. It will also be important to investigate the timing in the relationship, since it would be valuable to investigate and to ascertain how long it takes for the impact of SRI on financial performance to be revealed.
Brokers who negotiated the sale of condo conversions recently in Florida said that investors bought the properties because of the following:
- They believe the residential real estate market will recover in a few to several years.
- They believe they can earn 20 to 30 percent from their investments, so they’re willing to wait.
- Rental rates in certain places in Florida have risen so converted-condo investors can rent out their properties while waiting for the time they can sell them at the profit they want.
- Observers also speculate that these types of investors in Florida have deep pockets. They can afford to wait.
Recently, the Israel-based investment company Gamla-Cedron Group completed the purchase of its fourth condominium conversion in the Tampa area since the middle of last year – the 392-unit Class A complex called Preserve at Temple Terrace. This property is also the fifth distressed multifamily it has acquired during the period.
In 2006, the condo-conversion investor was looking for an apartment for rent opportunity, and acquired this apartment complex for $46 million or $287,500 per unit. Since similarly-fractured properties are being sold for about 30 cents on the dollar, certainly Gamla-Cedron bought this complex at a substantial discount. They convert these condos by using a commercial tenant improvement contractor.
All in all, the firm has already bought almost 800 troubled units from six lending institutions, and is still looking to purchase another 1,000 units across Florida and other potentially-profitable Class A properties in key housing markets in the Southeastern part of the U.S.
According to the Florida Department of Business and Professional Regulation, a total of 1,330 apartment complexes statewide were purchased and converted into condominiums over the five-year period from 2005 , with conversions reaching their peak level of activity in 2006. Condo conversions became popular among real estate investors during this time because the process of buying land and developing a condo complex on it is far more complex and you can even buy property in Benidorm! is less expensive than buying an apartment property in the USA and remodeling it into a condo asset. Sydney Property Valuations services will provide you with an accurate value of the subject property, potentially saving you thousands of dollars. Sydney Property Valuers Metro is considered the pioneer of offering property valuations for accounting purposes such as for audit or internal accounting.
It’s not only the Israeli firm that is acquiring properties for rental and eventual sale opportunities. Condo brokers in Florida counties and cities are negotiating condo acquisitions for various investors looking for bargain-priced troubled blocks of residential properties, including condo conversions.
Individual investors can get in on the condo conversion bandwagon, but they need to make thorough studies of their own finances. They have to make sure they can pay for the property for some years as they wait for the time they can sell at a profit. Or better yet, they can explore condos that are built as condos from the beginning. If you’re looking to buy a condos in Thailand at the best price , we recommend bangkok real estate.
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