Investors making it tough for first time buyers

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Investors making it tough for first time buyers

Justin Scott
Rental Property Investor · Jacksonville, FL · Member since 2019 · 69 posts · 29 votes

Investors are buying more homes than ever which is making it hard for first time buyers to get a house. “They have vis­ited 25 prop­er­ties and bid on half a dozen but keep los­ing out to cash buy­ers.” What are you guys thoughts on this?

https://www.wsj.com/articles/investors-are-buying-more-of-the-u-s-housing-market-than-ever-before-11561023120?emailToken=73bec5f8bb5eb4b5a2df20315eb4e8faw+T2wk5K/EPlzmddfVePvNIfxY+dxX1aKU5ubrxqPVmL6pjmjZbh9KL7IyxTYeVO1Qq8tkQghZJ/LDDf5cXFHIR72eqa1mqzviYXgh2z2IrBEp3PAD2bN/in404L/uW8PYViRyl7mMWnhV11ThEBoA%3D%3D&reflink=article_copyURL_share

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Jake S.
Rental Property Investor · MN · Member since 2017 · 864 posts · 555 votes
7y

I don't believe this to be really true. Home buyers will generally pay more for a home since they become emotionally attached to it. Many (not all) investors base their offer/price on a property based on the numbers that work for them.

I almost feel it's the opposite, home buyers can make it tougher for investors to find a low priced cash flowing property, due to overpaying

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  • Jake S.
    Rental Property Investor · MN · Member since 2017 · 864 posts · 555 votes
    7y

    I don't believe this to be really true. Home buyers will generally pay more for a home since they become emotionally attached to it. Many (not all) investors base their offer/price on a property based on the numbers that work for them.

    I almost feel it's the opposite, home buyers can make it tougher for investors to find a low priced cash flowing property, due to overpaying

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Jake S.:

    I don't believe this to be really true. Home buyers will generally pay more for a home since they become emotionally attached to it. Many (not all) investors base their offer/price on a property based on the numbers that work for them.

    I almost feel it's the opposite, home buyers can make it tougher for investors to find a low priced cash flowing property, due to overpaying

    highly regional here in Portlandia SFR's are rarely bought by investors.. so homeowners have no issue buying a home.

    in Vegas this was certainly true a few years ago but prices sky rocketed and now home owners have a even playing field.  

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  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    7y

    Primary home buyers don’t have to be “irrational” or emotional attached to pay more than investors. They can bid you target price plus some of your profit and still be “reasonable” obviously. 

    Sounds like people who complain that the dealers are driving up the prices at any auction you go to. They have to add profit on top of their bid, they can’t outbid you and stay in business. 

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  • Anthony Wick
    Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
    7y

    @Justin Scott

    I keep losing out to first time home buyers (duplexes) that are bidding asking or higher. The bids seem to be too high to make any cash flow. But if you’re living in one side, I guess you don’t have to have cash flow immediately.

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  • Erik W.
    Real Estate Investor · Springfield, MO · Member since 2017 · 1k+ posts · 2k+ votes
    7y

    Depends on a lot of factors.  

    What kinds of homes?

    What are the investors looking for, cash flow or appreciation?

    Older inventor vs. new?

    Fixer vs. move-in ready?

    My experience is SFH investors mostly buy older properties that need significant work or costly updating so we can increase value, refi, get good cash flow and move-on. Few owner occupants want the hassle of buying a "fixer upper": many of them want move-in ready perfection on Day 1. Also, owner occupants wants features like granite counter tops and manicured laws that investors don't want since tenants do not care for them properly and rarely do they generate enough extra rent to make them worthwhile.

    So I don't see these two groups competing with each other frequently.  

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