CICADA OVERSEAS PROPERTY USA Foreclosure Investment Opportunities
Buy-to-let property investments offering fixed monthly returns. Option of a 5 year rental guarantee agreement with a 13% gross yield. A fully managed investment for UK investors.
Outright purchase 3 bed properties for just 27,500 Cicada Overseas Property is a city based company, specialising in US foreclosed property investments. The global recession has created major new investment opportunities around the world with the chance of securing phenomenal returns. History shows that conditions such as these can offer great opportunities to those with the vision and resources to capitalise on them. Redundancies and a reduction in easily available credit have led to previously unseen numbers of mortgage foreclosures in the USA. As a result banks, mortgage lenders and the IRS (Internal Revenue Service) have record numbers of foreclosed properties, assets which they need to liquidate as a matter of urgency. Through our partners in the US, Cicada source quality foreclosed properties direct from key Asset Managers at 5% to 15% of current market value. Cicada has privileged access to these foreclosures and has tailored an exclusive investment opportunity for UK investors with unprecedented returns. By managing all aspects of the buying and rental process on your behalf, Cicada have removed the barriers to entry for UK investors, offering you access to one of the most profitable buy-to-let opportunities in the USA from a secure UK base. Many agree that US property prices will continue to rise sharply over the next 12 to 18 months as the US economy recovers. Now is the time to take advantage and build a highly profitable portfolio at rates that have not been enjoyed for 30 years. If you would like to register your interest in property investment, or if you are looking for property investors, please contact us: by emailing: info@cicadaoverseasproperty.co.uk or by calling us on: 0207 481 6875 2-3
The Proposal The current global recession has led to property foreclosures on an unprecedented scale in the USA. This in turn has led to Cicada being able to offer an outstanding overseas investment opportunity. Through exclusive agreements we have access to foreclosed properties across the state of Michigan at 5% to 15% of current market value. Working with established local realtors Cicada identifies the three bedroom properties that are likely to yield the strongest rental returns. Each property undergoes a thorough inspection and valuation. Then providing that the property can meet the required target rental income we will begin the purchase process. Once your bid has been approved we immediately begin the process of removing any existing legal charges on the property. At the same time our dedicated construction team working to full City inspection standards will complete any necessary repairs and refurbishments so that the property can be immediately tenanted. Upon completion of this process we can offer you the choice of several rental options for your property. We can arrange for the property to be tenanted and managed by an established local lettings company with potential yields of around 30% per annum. Alternatively we can provide a Rental Guarantee Agreement which assures a yield of 13% per annum. Or if you prefer you can choose to manage the entire letting process yourself. Our unique investment package includes: Full title deeds and outright ownership Sourcing of 3 bedroom properties with high rental demand Removal of any existing legal charges Internal and external refurbishment of the property to full City inspection standards All properties fully managed and tenanted at market rates The option of a rental agreement, guaranteeing yields of 13% per annum Our complete purchase and rental package removes all of the usual obstacles of running an overseas buy-to-let investment. Plus you receive all the benef and peace of mind that comes from dealing with proven experts in both the US and UK. 4-5
Why Michigan? Why Michigan - quite simply because of Detroit. The economic, social and political factors effecting Detroit have combined to create a unique investment opportunity that no other US city can rival. It is all too easy to follow the popular view that Detroit is a troubled motor city that has seen better days and to over look the potential that this location has to offer private investors. The key reasons to invest in Detroit rather than any other US city are as follows: 1. Low Entry Level Detroit has seen an unparalleled number of residential property foreclosures as a direct result of the problems faced by its automobile manufacturers. This in turn has driven property prices down lower than any other US region. 2. High Demand for Rental Property A lack of readily available credit and high mortgage deposits keep the opportunity of buying a home out of reach of many of the local population. For this reason the Detroit lettings market is currently producing very high rental yields. 3. Government Support During the last 12 months the American Government has injected billions of dollars into the US economy in order to support its key industries. The $6.7 billion dollars of capital support pledged by the US Government in March 2009 to get the Detroit s motor industry pumping again has helped create stability and protect jobs. This is not considered to be a one off pledge as the Obama administration has created a dedicated task force focussed on rebuilding the automotive community in addition to promoting new business opportunities in the region. 4. Market Diversity The greater Detroit metropolitan area has a population of 4.4 million people and like any large residential area the quality of real estate is diverse. Cicada only buys foreclosed property in the western suburbs, an area generally considered to represent some of the best quality housing for young professionals and working families. 5. Strong Recovery National year-over-year price increases for US property reached 5.0% in 2009, even despite the large falls experienced in the earlier part of the year. The median sales price for homes in Detroit MI for Dec 09 to Feb 10 was $71,254. This represents an increase of 18.2%, compared to the prior quarter and an increase of 6.3% compared to the prior year (Trulia.com March 2010). These combined factors make this investment opportunity more accessible, secure and far more profitable than anything available outside of this region. 6-7
Investment Structure Our packaged product is designed to deliver a US buy-to-let investment free of the difficulties associated with managing an overseas property on your own. By purchasing foreclosed properties at 5% to 15% of market value, we are able to complete all necessary refurbishments and remove any existing charges, whilst still maintaining a sale price well below what is available on the open market. Investing with Cicada allows you to benefit from the expertise of both our US partners in the Detroit region as well as our established London team. Our key advantage is that through our US partners we are able to purchase foreclosed properties direct from Asset Managers. We do not purchase at open market auctions. The benefits of this are; that we get first refusal on all foreclosures, we are offered the best rates and most importantly can secure properties that meet the required target rental income. How does the bidding process work? The Asset Managers release lists of foreclosed properties which they need to liquidate. From these lists Cicada identify the individual properties with the highest earning potential. We assess only three bedroom properties as these are the most likely to meet our required target rental income. Providing that on inspection the property meets with our requirements we will submit a bid at what we consider to be the best price. Due to demand, high competition and our capped bidding level, not all bids will be accepted. However this process allows for a fast sale which is beneficial to all parties concerned and helps to ensure a high success rate. What are the purchase options? There is one investment option available, which carries a fixed cost. The three bedroom property investment package costs 27,500. By operating with fixed costs we can ensure that all stages of the buying and preparation for rental process are completed as quickly as possible. More importantly, working in this way means that you are aware of all necessary charges from day one. There are absolutely no requests for additional funds at any time. Refurbishment and preparation for rental As we specialise in foreclosed properties we have a number of construction companies who carry out all necessary internal and exterior refurbishment and repairs. All work on your property is completed to City Inspection Standards and is included in your single package fee. We remove any existing charges As with repossessed property in the UK, foreclosed property in the US can sometimes carry existing charges. This may include the previous owner s outstanding utility bills, tax bills, plumbing costs etc. Cicada use a US Title Closing company to clear any existing charges on the property. What are my rental options? Cicada offer several rental options for your property. As the outright owner of the property the choice is entirely yours. We can arrange for the property to be tenanted and managed by an established local lettings company with potential yields of around 30% per annum. We can provide a five year Rental Guarantee Agreement which offers investors a yield of 13% per annum paid monthly into their preferred bank account. Or if you prefer you can choose to manage the entire letting process yourself.
Investment Options By managing all aspects of the buying and rental process on your behalf, Cicada have removed the barriers to entry for UK investors, offering you access to one of the most profitable buy-to-let opportunities in the USA from a secure UK base. Cicada offers a fixed cost investment package, on three bedroom properties for 27,500. A fixed price means that you are aware of all necessary charges from day one. There are no requests for additional funds at any time. We can arrange a 5 year Rental Guarantee Agreement with a 13% gross yield per annum. Below are the details of our investment package listing all costs and rental income: Fixed 3 bed property Investment Package Detroit 27,500 Foreclosed Price of House 7,500 Charge Removal & Closing Costs 4,500 Refurbishment & Repairs 9,000 Inspection & Service Fees 4,000 Agency Management Fees 2,500 Average Gross Annual Rental Income 7,200 Total: 27,500 Average Gross Monthly Rental Income Average value of 3 bed 18 months ago 600 58,000 8-9
Purchase Process Our purchase process could not be easier. On your behalf we manage all aspects of the transaction and keep you updated at every stage. Once you have paid your 1,000 reservation fee, we will require two further instalments. The first will be the outstanding balance on the property. The second and final payment will be to meet the overall total package cost. The process is broken down as follows: 1. Choose our three bedroom investment property package, and reserve your property with a 1,000 fully refundable reservation fee. At this time we require you to sign and return the Reservation Contract with proof of identification. 2. In order to place a recognised bid on the property that you have chosen we will require the outstanding balance of the property within three working days. The balance of a three bedroom property will be 6,500. At this point your agreement will be confirmed. 3. Once your property is secured you will be required to pay the total remaining balance within a 14 day period. 4. We will then instruct our US Title Closing company to commence with all legalities, searches on the property and the clearing of any charges on the house. An inspection by the City Inspector will follow and a clearance certificate will be issued. 5. All other necessary legal documents will then be managed on your behalf by our US team. 6. Closing documents which demonstrate ownership of the property will follow within 8 weeks. Full title deeds will be received approximately 12 weeks later. 7. During this time the refurbishment takes place and the letting agent arranges tenants for the property. 8. The entire purchase process takes between 6 to 8 weeks. Our experienced London based team will be happy to answer any queries you may have. Please contact us on: 0207 481 6875 10-11
The International Monetary Fund (IMF) has said the US economy will recover more strongly and more quickly, than it previously thought. With a solid recovery projected to emerge only in mid-2010. BBC News June 2009 The median sales price for homes in Detroit MI for Dec 09 to Feb 10 was $71,254. This represents an increase of 18.2%, compared to the prior quarter and an increase of 6.3% compared to the prior year. Trulia.com March 2010
Investment Specifics Rental Guarantee Agreement Cicada can provide a rental guarantee agreement which assures a 13% yield on our 3 bedroom investment package. If you decide on this option you will be provided with an Appointment of Letting Agents Agreement and a Rental Guarantee Agreement. The appointment of Letting Agents Agreement enables the letting agent to conduct all day to day tasks associated with managing the property on your behalf. The Rental Guarantee Agreement details the monthly terms in which you will be paid on your investment. Other Management Options If you would prefer to have a greater level of involvement with the letting of your property, and the potential to secure higher rental returns then we can arrange for the property to be managed by an established letting agent. This service includes: The collection of rent Remittance to the appointed bank account Dealing with any disputes the tenant may have The handling of any non-payments Maintenance repairs to the property As with lettings contracts in the UK the first month s rent is taken by the letting agent as payment for all administration costs. Beyond the first month, the management charge for this service will be around 75 per month. Tenants Cicada s investment properties are concentrated in the western suburbs of Detroit, this is an area well suited to both working families and young professionals alike. Tenants here are working Americans requiring rental property for a longer term. All properties are rented on an unfurnished basis. This is standard practise in the US where the majority of tenants tend to furnish rental properties themselves (including white goods). SEV Tax (Council Tax) State Equalised Value Tax, which is the equivalent of council tax in the UK, is applicable to all home owners. SEV rates for the properties that Cicada handle average around 1,500 per annum. The payment of SEV tax up to the first renewal period is included within the 5 year rental guarantee agreement terms. You will need to consider this charge beyond the first renewal period. Payment of the SEV tax can be arranged through our letting agent partner. Capital Gains & Income Tax Cicada are not authorised to give advice on tax and we suggest you seek your own advice. A dual tax treaty is in place between the UK & USA which can mean investors only pay Capital Gains Tax in one country (in the US this is 15%). You will need to consult a recognised tax advisor to confirm whether this is applicable to you. This is also the case for investors outside of the UK region. Should you require we can recommend an accountant in Detroit to assist you with your returns. Insurance We also work closely with an insurance broker who has tailored a package that includes buildings, contents and landlords insurance which we highly recommend. Alternatively you can arrange your own insurance cover. 12-13
Investment Case Study 3 Bedroom Investment Package 27,500 Location: 15501 Pinehurst Street, Detroit, 48238-1068, Michigan Property Description Well presented 3 bedroom house, on a family friendly residential street. Large basement, front and rear gardens and off street parking. Finished to a high standard with re-modelled bathroom and kitchen, and new carpeting throughout. Well positioned within commutable distance to Detroit city centre. Investment Specifics Total Investment Cost: 27,500 Gross Annual Rental Income: 6,399.90 Gross Monthly Rental Income: 566.66 Local Amenities: Detroit City Centre: 9.8 Miles Train Station: 5.5 Miles Airport: 14.6 Miles Community College: 3.0 Miles Central Michigan University: 2.2 Miles Hospital: 1.2 Miles Shopping Mall: 1.8 Miles Features: Year Built: 1928 Exterior: Brick Garage: No Garage Road Frontage: Paved Interior SQ Ft: 1,365 Annual SEV Tax Charge: 644.24 ($1,063)
Refurbishment Example All properties are refurbished to full City inspection standards. This is a necessary requirement to legally tenant a property in the USA and ensures that all work is carried out to the highest standards. The pictures below demonstrate the quality of work carried out Cicada s dedicated construction team. Before & After 15-16
Detroit Inspection Visit In response to high demand from our clients Cicada are now able to offer inspection visits to Detroit. The three day trip is intended to allow our customers to see firsthand the quality of properties that Cicada source and refurbish for the rental market. Why not see for yourself why so many property investors are making the decision to build a portfolio in Detroit with Cicada Overseas Property. Typical Itinerary Day 1: Meet & Greet Departure: 08h50 London Heathrow Direct to Detroit Meet and Greet Transfers to Hotel Afternoon viewing available properties Evening Meal Day 2: Viewing Day View properties before refurbishment View properties during and after refurbishment View properties for sale Meet with contractors Meet with American Partners Evening Meal in Greek Town Day 3: Grosse Point Morning trip to Grosse Point Viewing of homes for sale Transfer to Airport Departure: 18h40 Detroit Direct to London Heathrow Total cost of visit: 899 899 payment includes return flight to Detroit 2 night stay at Westin Hotel, transfers to and from hotel Breakfast and evening meals 3 day transport Please note this does not include hotel expenses Please note that places are limited on these trips and therefore we cannot offer more than one place per potential purchase (additional associates or family members are welcome to join the trip at their own expense). For further information about the Detroit inspection visit please contact a member of our team: 0207 481 6875
Frequently Asked Questions We have compiled this list of frequently asked questions to assist you with any queries that you may have. If you cannot find the information that you require please do not hesitate to contact one of our consultants who will be happy to clarify any aspect of this investment opportunity. Why invest with Cicada? The advantages of investing in the US at this time are no secret. Investors have the opportunity to benefit from some of the lowest property prices for nearly 30 years. Low prices however do not guarantee good value, and properties that carry a low price tag at public auction often do so for good reason. Our main objective when purchasing property is to ensure that they can meet the required target rental income. The local knowledge of our US realty partners, and the extensive research which we conduct prior to purchase helps to ensure that this is the case. We only buy high quality 3 bedroom foreclosed properties direct from Asset Managers at 5% - 15% of market value. We manage all necessary interior and exterior refurbishments to a very high standard in order to meet all the necessary legal rental requirements. Crucially we also assist with letting the property and can even provide a 5 year Rental Guarantee Agreement with a fixed 13% yield. The Cicada service is designed as a turn-key investment that removes all of the obstacles usually associated with being a buy-to-let landlord. Will I own the property freehold and hold a copy of the Title Deeds? Yes. Upon completion you will receive full title deeds for the property. All properties are sold on a freehold basis. What is the total cost and are there any hidden charges? Cicada offers a three bed fixed cost investment package for 27,500. A fixed price means that you are aware of all necessary charges from day one. There are no requests for additional funds at any time. When can I sell my property, will Cicada assist me in this process? You can sell the property at any time subject to any tenancy agreement you have in place. Cicada will happily assist you with this process. Will I require a solicitor to purchase the property? No, as Cicada use the services of a US notary for all transactions on your behalf. However Cicada does recommend that you also seek your own legal advice. Why are foreclosed properties so cheap? Redundancies and a reduction in easily available credit have led to previously unseen numbers of mortgage foreclosures in the USA. As a result banks, mortgage lenders and the IRS (Internal Revenue Service) have record numbers of foreclosed properties, assets which they need to liquidate as a matter of urgency. A quick sell is also required as properties that are not inhabited deteriorate very quickly, devaluing them further. How does the bidding process work? As stated Cicada purchase foreclosed property direct from key Asset Managers. In order to place a recognised bid directly with the Asset Manager we will require prior payment for the property in full. For our three bedroom property package this will be a total of 7,500 (inclusive of the initial holding fee of 1,000). Once the property is secured in your name you will be required to pay the total remaining investment balance within a 14 day period. Can I view the properties prior to purchase? Yes, properties are presented to clients on a weekly basis with full specification details and pictures. For those that choose to we can also arrange a subsidised inspection trip. 17-18
What are my rental options? Cicada offer several rental options for your property. As the outright owner of the property the choice is entirely yours. We can arrange for the property to be tenanted and managed by an established local lettings company with potential yields of up to 30% per annum. Alternatively we can offer you a five year Rental Guarantee Agreement with a rental yield of 13% per annum. Or if you prefer you can choose to manage the entire letting process yourself. How can Cicada guarantee tenancy? Demand is high enough in the Detroit region for our partners to guarantee fixed rental returns at 13% yield on your investment. These fixed rental yields will be fully documented in the Rental Guarantee Agreement supplied. How will I receive my rental income? Whichever rental option you choose, the rental income from your property will be paid monthly into your preferred bank account. Do I need to furnish the property? All properties are rented on an unfurnished basis. This is standard practise in the US where the majority of tenants tend to furnish rental properties themselves (including white goods). How soon will I make a return on my investment? With many types of investment you only make a return when selling on the asset, investors may have to wait years to see their stocks mature or the property market rise. This is not the case with Cicada s property investments for two key reasons. Firstly, we only buy foreclosed property direct from Asset Managers at 5%-15% of current market value. For this reason you do not need the market to improve in order to make a profit at sale. Secondly, the investment pays a monthly rental income direct to your bank account (guaranteed minimum 13% gross yield per annum). If the investment opportunity is so good why don t you buy the property yourselves? We are a property brokerage and know that if we provide our clients with a good return on their investment they will continually reinvest. So confident are we with potential returns from the Detroit region that we are also currently building an extensive investment portfolio. Can I visit Cicada s offices and meet the staff? Certainly, we welcome all potential investors to visit our offices in London. We appreciate that much of our business is conducted over the telephone, but we also recognise the value of face-to-face meetings. How many properties can I buy? As many properties as suits your personal investment strategy. Our ability to offer a guaranteed rental yield of 15% per annum makes this opportunity a straight forward and secure investment from day one. Can anyone invest in Cicada s US property investment package? Yes, provided that you can supply the required proof of identity documentation (copy of passport or driving license) prior to purchase.
CICADA OVERSEAS PROPERTY www.cicadaoverseasproperty.co.uk info@cicadaoverseasproperty.co.uk 4 Royal Mint Court, London, EC3N 4HJ T // 0207 481 6875 F // 0207 481 6876 Cicada Overseas Property will always present investments with the utmost integrity however you should always seek legal advice. All investment opportunities are independent. Cicada cannot accept responsibility for the Rental Guarantee Agreement. The Rental Guarantee Agreement is honoured by the property management company detailed in the contract. Cicada Overseas Property is a division of Cicada Investments Limited. Cicada Investments Limited Registered in England and Wales No. 06733833. Cicada Investments Limited is registered under the Data Protection Act 1998, registration number Z1824137.