Real Estate Investors Are Making a Difference Across the Country

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I got an interesting call last week from a reporter in New York. He is doing a story on real estate investors and the positive effects they are expected to have on home sales in the next couple of years while helping the housing market recover. I was happy to hear that someone was giving real estate investors and our industry as a whole some positive PR for a change.

NAR Statistics

This reporter quoted a NAR statistic that said, “Home purchases made by investors are up from 18% in 2010 to 24% at this time”. If you ask several different people you are likely to get several different answers on the exact percentage of houses for sale they believe real estate investors are buying. But there is no doubt they currently play a major role in helping move the staggering amount of inventory we have at this time.

That is a pretty big number!

I was a little surprised myself that the number was 24%.  I knew that real estate investors all across the country are actively buying up houses, but I didn’t know that almost one quarter of all sales today are closed by investors.  That’s a lot!

With that statistic in mind, I really thought about all of the good things that will come about as a result of this.

Making a Difference

There will be profit to be made by real estate investors. There’s no doubt about that. However, there are also just so many other benefits for homeowners, neighborhoods and families. I believe that when we look back on this time in history, there will be a very positive spin put on what our industry as a whole accomplished.

The list of benefits is much bigger than the one I have compiled below, but here are 4 big changes I believe we can expect to see as a result of those folks investing in real estate during this time.

4 Big Changes We Can Expect

  1. Vacant houses in neighborhoods are a magnet for vandalism and crime. Putting homeowners in these properties can do nothing but help the neighborhood and the folks that already live there. Families that have pride in their neighborhood tend to take better care of their homes.
  2. Homes that have fallen into a state of disrepair as a result of being vacant and/or vandalized, will begin to see property values climb as they are renovated and are once again occupied.
  3. With so many houses on the market that need to be filled with people that want to live in them, the banks are going to have to come up with an easier way to get folks into these houses. Getting a loan just has to get easier.
  4. Big investing groups will have great opportunities presented to them with bulk REO’s if everything goes according to plan. They will be poised to make a lot of money while helping a lot of folks.

What positive changes do you see on the horizon?

About Author

Sharon Vornholt

Sharon has been investing in real estate since 1998. She owned and operated a successful home inspection company for 17 years. In January of 2008 she took the leap of closing her business to become a full time real estate investor.

16 Comments

  1. Sharon: There is so much positive we do as investors for buyers, sellers, renters, and communities.

    What’s frustrating is exactly what you pointed out – it’s so rare to get credit for any of it. Banks charge more to loan on “investments.” Attorneys General think we’re all scammers. Legislators want to put a ceiling on profits. Crazy!

    Beyond what you’ve mentioned, it’s the peace of mind we offer: to sellers facing foreclosure when we can rescue them and save their credit, to buyers who can’t qualify for “traditional” financing yet we help them own, and to renters who are provided quality homes in safe neighborhoods for affordable rents.

    Real estate investors rock!

    • Yes they do! I can’t wait to see the article he is writing. He really seemed to “get it”. I plan on posting it when he sends me the link.

      I really believe that this is a time in history that we can change the perception of what real estate investors as a whole do to help folks.

  2. Sharon, great article. It’s interesting to note as well that some first-time buyers may be looking at investing as a strategy to becoming homeowners. Move, Inc. recently did a survey (http://bit.ly/rRFUnE) that showed investors will be outnumbering traditional homebuyers three to one in the next two years, however, 27 percent said they’ll buy a primary residence for a first-time buyer as their first real estate investment. And, nearly half (49%) plan to live in their investment property until it’s sold or turned into a rental property. Investors are certainly making wonderful contributions to local communities as they improve and maintain investment properties, which is beneficial to everyone’s home values.

  3. Sharon,

    Zig Zigler talks frequently about being proud to be a salesman. He lets everyone know of the great things salesman do for our country. I think those in the real estate industry should do the same. I take pride in the fact that my rentals are nicer than many most owner occupied homes in my neighborhood. I take pride in the fact that I take run down properties and make them into homes. I get excited in seeing rolloffs in driveways. I let everyone know the good that investors do for communities.
    -we hire local contractors keeping money in the local economy, 10’s of thousands of dollars on each home
    -we take unlivable properties and make them competitive with new builds.
    -we revitalize neighborhoods by eliminating eyesores.
    -we increase energy efficiency of older homes thereby helping the environment
    -we help distressed homeowners get out from their property burdens
    -we are the true definition of free market capitalism. We fill a huge need by providing quality affordable homes.
    -as you said, we deter crime by reducing vacant properties.
    -we provide jobs for real estate agents, mortgage brokers, title agents, county recorders, inspectors, insurance agents, appraisers, plumbers, electricians, handymen, flooring specialists, carpenters, hardware store workers, cabinet makers, paint suppliers, landscapers, cpa’s, attorneys, and even the folks at the gas station with all the extra driving we do. All this for 1 property. Yeah, I say we do our part.

    Jason

    • Those are great points Jason. I feel like we have been “preaching to the choir” for years now. For the most part, I don’t think real estate investors have ever gotten the well deserved credit for all they do to improve individual lives, properties and neighborhoods in general.

      I am going to put the link to the article that I got today from The Fiscal Times. He sure gets it!

  4. Here is the link to the article just put out by The Fiscal Times about real estate investors and the role they play in fixing the current housing problems. This particular reporter told me that he has two income producing properties himself. He has did his homework for this article, and he definitely understands just how valuable real estate investors are.

    http://www.thefiscaltimes.com/Articles/2012/03/06/Big-Investors-Snatch-Up-Americas-Housing-Market.aspx#page1

  5. As a broker in Camas, about 20% to 25% of my client’s purchases were for investment purposes. However, many of the first time buyers felt their purchase would be turned into a rental after they had owned it for a few years. Either way, it is certainly good four our community to have these properties occupied and taken good care of!

    • John –

      I think that is an excellent plan for first time homebuyers. Buy a house that would be a solid rental when they move, live “lean” and save money to move up in a few years, and turn that original house into a rental. I only wish I had this plan in my 20’s.

      A lot of folks know that I owned and operated a successful home inspection company for 17 years. I got to know one of the managing brokers of a large real estate company during that time. One day many years ago, he told me about his retirement plan.

      He said that his plan was to buy 4 rental houses a year. He had 20 year mortgages on all of them. And all of the houses had 3 bedrooms and were in good solid middle class neighborhoods, but they were all bargains when he bought them.

      On the year that the homes “turned 5”, he sold three and put the proceeds toward paying off the 4th. He did this over and over. So that in 20 years when he planned to retire, he had a bunch of houses that were paid off, and a few that were close if not completely paid off. His plan then was to keep the best 10 or 15 and that was going to be his passive income for his retirement. I thought that was a good solid plan then, and it is still a good plan today.

      I think I’ll have to do a blog post on this subject!

  6. What everyone seems to be sayinig in these comments SOUNDS great, but it is not what I am seeing in reality (City official in Southern California). What I see is investors snatching the great buys out of the hands of many potential and qualified homebuyers. Those homeowners would be more likely to rebuild these houses to LIVE in them, thereby making sure they are kept in good condition. Investors buy them cheap, fix them quick, and put renters in them (many of them Section 8), who for the most part could care less about the property and let them fall back into disrepair. Many times these neighborhoods of renters bring crime into neighborhoods. I work for a City government in Development, and have SEEN this over and over, too many times to count! Thanks investors!

    • John –

      I can’t speak for your area, but in my area and in many more that isn’t the case. These houses are in such bad condition in many instances, a homeowner can’t get a mortgage on them. Only an investor will take on this level of repairs.

      If it is a section 8 neighborhood, then an investor will certainly put in less expensive finishes. The reality of the situation is that in these areas they will just tear the heck out of most of these properties.

      Most of the investors I wholesale houses to, fix the houses up and use quality finishes. You can do this when you buy in nicer neighvborhoods and your intent is to sell to an owner occupant. The vast majority of my investor buyers are looking for retail buyers. And if they have to rent one of the houses at this level (because it hasn’t sold), they won’t be looking for a section 8 tenant. They will be asking for a higher rent and a higher quality tenant.

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