Investor.
The word alone inspires a host of reactions that run the full gamut between antipathy and, well, slightly lesser antipathy, depending on the audience.
Image From the Hubbel Telescope of Investors Invading Local Real Estate Market
As any semi-interested news watcher and industry blog reader can attest, the Real Estate investor is the greatest scourge to befall our fragile ecosystem since polybutylene plumbing. What, with the housing supply lines ill-equipped to handle the artificial demand, our flimsy pipes swell and burst when the pump and dump investment surge strikes a hapless market. Aside from the banks who flooded Wall Street with dubious mortgage backed securities that were chopped and reconstituted in more numerous and indiscernible ways than Joan Rivers' alleged face, the fount of no-money-down investors is the most vocally derided catalyst of the Great Real Estate Bubble of 2005 ©.
Well, guess what? The investor is back … and that’s a good thing.
Hold your rotten tomatoes and easy with the pitchforks, if you will. How can I possibly opine that the reemergence of the buyer subset that sent values through the roof, only to crash them through the basement when they left a valley of foreclosed “investments” in their wake is a good thing? Is the demand any less artificial now than it was when the previous incarnation of ne’er do wells spiked our collective punchbowl?
In a word, yes.
The 2010 investor is not the fly-by-night operator who purchased the nearest home for sale at the conclusion of a four hour seminar on how to get rich in Real Estate investing with no money down. Shoot, who needed money down when you barely needed a pulse and a job to buy a house back then? No, today’s investor, by and large, is showing up at trustee sales and plunking down cash on a barrel. He has the skin in the game that his counterpart of yesteryear did not. He is investing in a very real sense of the word.
In addition to securing an interest in the property with his own bankroll (thus making the prospects of simply walking away from a property that doesn’t return as hoped less palatable), the other crucial dynamic at play is the return of sanity to the overall investment arena. When investors were driving Scottsdale and Phoenix property values into the stratosphere back in 2005, there was little regard to the initial purchase price. Our entire market temporarily forgot that you make your money on the purchase. Buy a property right, and the return will be there when it’s time to sell. In the throes of insanity, investors were climbing over themselves and each other to purchase property, any property, for 50k over whatever ludicrous price was being sought by an apoplectic seller. Investors were betting on the come. Pay whatever now, and the joint will be worth 100k more in two months whether a hammer is ever swung in renovation or not. With the year long fervor, they got away with it … for awhile.
Today’s investor is not settling for just any property he can get his hands on, but is showing up at the courthouse and robbing the bank blind. Paying pennies on the dollar and rehabbing a previously dismantled home, his margin is large enough to bring the distressed apple of his eye to market at a price actually supported by recent sales comps.
The coup de grace? Today's investor fills a need that the banks won't. He is essentially financing the fix-up costs that many banks have abandoned in self-defense. Against a backdrop of tight lending purse strings, consider the difficulty many people have just in coming up with 3.5% or 20% down payments, let alone remodeling capital. With home equity lines all but vanished from the marketplace, that stripped bank-owned home bargain isn’t all that realistic for the buyer who doesn’t have the available cash to put it back together, regardless of how appealing the price tag. When you could tap a line of credit to finance improvements, it wasn’t that big of a deal to throw in some new carpet, counter tops and appliances after closing. Now, you have few options other than reaching into your own pockets. Thus, there is a sizable buyer pool for a move-in ready home. The well heeled investor who assumes the risk and fills that need is not to be derided.
Take the mom & pop homeowners who are unable to price their homes competitively due to high loan balances, mix with the interminable wait of short sales, fold in the distressed condition of much of the bank-owned inventory and bake at four hundred degrees to create a casserole of supreme frustration for many disenchanted home shoppers. A rehabbed home at an affordable price, if not the outright theft that was envisioned at the outset of their house hunt, begins to look more and more appealing to many buyers after getting an up close look at what the reputed bargains actually look like live and in color. In essence, by purchasing a property from an investor, a buyer has found an end-around to financing renovation costs.
If your last nickel is earmarked for your down payment, and you can purchase a renovated home at a fair market value that you can afford, don't begrudge the man his margin. While the stereotype of the lecherous vulture remains, we would be remiss not to acknowledge the good he can, and does, bring to a market like ours.
Investors: they’re not just for nuclear Real Estate holocausts anymore.
Read more of my Scottsdale Real Estate Missives or start your Scottsdale Home Search here!
Your source for Scottsdale Real Estate since the dawn of time ... or thereabouts.
Launch your Scottsdale Home Search now!
Another masterpiece.
In my market, the investor buyers isn't so much going to the courthouse steps because banks take the properties back to resell. That provides "fixer uppers" for investment buyers with clear title. Once the fixin' has been completed, the home goes on the market as a "renovated" home, move in ready which is what most home buyers in my area want.
Buyers in low price ranges, however, will have a difficult time competing with the cash investor buyers.
Who ever gets the property, it's a good thing. Just rotating the crops in neighborhoods where the crops have needed rotating for years..
The banks will take back a home (bid the amount owed on the note for book-keeping/ write-off purposes, I surmise) that are bid on here, Lenn, but often let a bidder buy it at auction for less. There are deals to be had in the MLS, but for flipping purposes, the margin is better if purchased at auction. Shining up those bombed out houses that would otherwise linger and continue to crush neighborhood values makes the investor pretty popular with the neighbors. It also affords the cash-strapped buyer an opportunity to roll the cost of the fix-up into his/her 30 year mortgage instead of writing personal checks. Sure, in a perfect world, the buyer would do the work him/herself to cut the investor's profit margin out of the equation, but that's just not realistic to the time and cash constraints of most. There is always a place for a professional anything, and that includes the Real Estate investor. Amateur hour, for the most part, is over in my market. There are some hinky goings on with short sales and deeds en lieu of forclosure, but the investors ponying up their own money for purchases are a boon to sellers (improve values) and buyers (increase opportunities) alike.
Paul, I love it. The title alone is grand. The rest is spot on.
All the investors I'm seeing in the Miami area are buying cash and most of them at auction. A small percentage are leveraging and putting down at least 30% down (at the REO stage after it's listed).
It's a shame the investor ended up with that tainted reputation. They've never done more than serve a need, whatever that was. I guess that's because I'm thinking of a real investor and not those that just called themselves that because they were able to qualify for a loan just because they were breathing and buying a property they did not intend to occupy. Glad those days are behind us.
Sounds like our markets are very similar right now, Maggie. Seeing much of the same with the properties at the REO stage. I've written more offers in the last 4 months than at any other stretch in my career. Most have been on the low-end bank properties, and my financed buyers (especially FHA, but even 20% down conventional) keep getting their teeth kicked in by investors. We've learned an important lesson: once the dust settles on the lower priced homes that are bid up, you often end up in the same ballpark as some of the higher priced homes in better condition that can be negotiated downwards. Buyers are ignoring the homes priced just slightly above the banks, which makes it a market segment ripe for the picking right now.
I am an investor and an agent. But I started as an investor, when buying houses was easier than getting a Best Buy card. Now though, you're right, cash is king and is definitly needed to do anything these days.
Paul:
This is a well-conceived post with lots of useful information -- and not just obvious information, either. Thanks.
Goodness, this completely shoots in the foot one of my first blog posts, ever.
However, you are absolutely right...there is a silver lining in the gray cloud of investor buyers.
Which is why I have somewhat overcome my reluctance to work with them on a regular basis to actually have some in my cadre of buyer clients...we'll see how it goes, though...
Paul, good post. But I'm not sure that Mr. Investor can successfully flip those houses in my area. It doesn't seem to be working here & buyers are snubbing their noses at these market beauties.
William, better to bring your buyers to their properties. I work with a couple of investors, but I don't make it a habit. It can take some trial and tribulation to figure out exactly who is legitimate and who is for real, so usually a better use of your time to sell their product while representing a user. That's been my experience, at least. I'm just thankful that the pros are around to supply my buyer clients with a worthwhile alternative to overpriced resale homes and underconditioned bank homes.
Lyn, sounds like a pricing issue, rather than with the process itself. Perhaps your investor/flippers are not in a position to purchase at a low enough price point to bring their rehabbed homes to market at an enticing price? As there is always a market for a well-priced, remodeled home, I can only imagine the margins are still out of whack in your area. That was the case here between from 2007 to mid 2009.
Paul, the similarities are definitely there.
I have also written so many offers in the past 12 months that I have lost count. What bugs me is that the so called "experts" continue to state it is a buyer's market but the actuality is that in the niche marketing I'm serving right now (buyers looking for a great deal), it is definitely not a buyer's market. Not when the seller is receiving dozens of offers on one property.
And investors are not totally responsible for this shift in the market. If I had to guess, I'd say that 75% of those offers are other first-time homebuyers, purchasing with FHA, who are desperately trying to make the April 30th deadline for the $8K credit, and losing out, yet again.
Again, I love how you put this together.
I enjoyed your insights very much, Paul. As a new real estate agent from the fall I have had very good experiences with investors in our area. People buy a house in Lafayette, IN for the right reason-TO LIVE IN! With our bounteous cornstalks and pigs not too many people come here as a destination spot pumping up housing bubbles.
My first closing was a fellow educator who bought a Fannie NAY MAE and he fixed it up and now has rented it to a 20 year employee of still struggling Caterpillar. He reduced the rent to help him out! My wife Sharon has listed two beautiful homes that were fixed up by a builder who has turned the inside of both properties into brand new homes. Property values go up because of investors like these. I know there are many horror stories around the country, but I see very good things happening in our area because of the investors, and since I don't know any better as a new agent I am working the investors I know with CRUD HUD homes, Fannie NAYS, and REO's. Bring on the cockroaches and dead squirrels that seem to be a part of these investor gems that I am working with!
Now I can see why people were raving about your writing as my only exposure has been the tongue in cheek, rolling "Kelp in the undies" comments from the dilapidated beach house blog. Thanks!
I hear you! I am working with a lot of investors these days in all capacities! Rehab/flippers and multi-family buyers who are looking for cash cows.
Good post and thanks for sharing the insight. I believe investors are critical to our market and it is good to see them back in the game. I would like to see more of this.
I should have left on that high note, Bruce. Try as I may, I'll likely never top "kelp in my undies" as a contribution to the national discourse. ;)
That is Epitaph material, Paul! I am sure Thomas Jefferson regrets not having placed something like his own "Kelp in my undies" utterances on his memorial to mankind!
Good post Paul. As you are in the same market I am in I'm sure you're aware of the novice investors/home buyers that are still circulating out there expecting move-in ready homes in great neighborhoods at dirt cheap prices. The real investors who have come back in the market are the seasoned investors. You didn't mention it here in your post, but we are working with a lot of investors who understand cash flow. And rather than buying the properties to flip they are buying them for long term cash flow investments. Time itself will take care of the appreciation end of things. Best of luck to you.
I think every home buyer in our market, aside from the seasoned investor, starts the home buying process prone to that wide-eyed delusion, Jerry. With every news release or updated sales tracker, buyers are bombarded with the promise of the million dollar home for the piggy bank price. As anyone who works this market knows, it all depends on what type of housing being sought. Here in Scottsdale, slap a sub 400k price tag on anything in a newer neighborhood, and out come the wolves. Try to give away that 7000 square foot, 2008-built spec in Paradise Valley right now for $2 million, however, and you get nothing but crickets. No demand, no jumbo money, too much supply, etc. Reality eventually settles in for the lower end shopper that this is not the buyer's market for them that they had anticipated. Even saying that is a misnomer, however, because the values are still often great when they get bid up, but buyers mistakenly expect to knock the bank prices DOWN from the already absurdly low starting points. They are in for a rude awakening when placing that first offer in on a bank property that attracts 15 other offers, six of them cash. For the professional investors, buy and hold is always sound strategy. Those with foresight and deep enough pockets were buying for the past two years with an eye to holding for the next 5-10 years, at least. Cash-flowing their investments is just a bonus. In the interim, I am pleased to see the flippers engaged in the market again for the reasons mentioned in the post.
Like the concept, and I've toured properties that have been bought low, but the old adage of "sell high" isn't in this market just year. And the investors can't turn them as fast. As the saying goes, each market is different. Rentals are glutting and the long-term rental owner is seeing rents off. I've had to reduce rents to attract renters in the past year.
That sounds like us circa 2008, Carla. I've actually noticed rents climbing a bit as many have already walked away from their investment properties (decreasing the supply of rental housing from the apex of a year or two ago when people were desperately fighting to keep their properties). The short term investors who are having success here are those who have traded the adage "buy low, sell high" for "sell low, buy lower." The premium for a remodeled house is not what it was, but working within the proper margins allows the investor to affix a price tag that is slightly below market value and move it.
Paul, our market is similar to Lenn's. The better properties to buy are bought back by the bank and then resold.
The investors are back here, too. Most of my buyer pool are looking for 2nd homes or homes to retire to in a few years and are not concerned so much with the tax credit, but they are competing with the investors. I have written dozens of full price offers in the last few months, I haven't had so many rejection letters since I applied for college in the the 80's. Bidding wars are exhausting, time consuming, and frustrating for my non-investor buyers. Banks here are accepting the lower cash offers so they don't have to further negotiate after an appraisal - often done by out of area appraisers who are comparing our market to Solds in Las Vegas, 80 miles away and depressed with a capital D - but that is another subject, which you have written about.
Can I borrow that hammer?
Paul: This is an interesting take on things . . . bacteria, nuclear holocausts, etc. Some investors are definitely filling a void; others are just bottom feeders looking for a get rich quick scheme.
S of the S and L Team (Paul)...
Now I could sit here and write a lengthy comment that only you'll read or I can type one word. I'm going with the one word:
Virus :)
P.S. Not everyone is lucky enough to have been nicknamed by me. Lucky you and Lenza :)
TLW...ROAR!
I wish the investors would return to my market, P. We still have entire neighborhoods that need someone with the capital to purchase, fix and flip - especially in an entry level price range (which, by the way, is not $400k in NOLA). While I don't relish a return to mulitiple phone calls from those who fancied themselves an investor, the real deal could do very well here in the long run.
S & L ... we sound like our own financial crisis, TLW. I like it. Don't miss Lenza and I on our barnstorm tour of the midwest with our uproarious vaudeville act! Kids get in free, but pay with their innocence!
Pretty soon we'll get all Goodwill Hunting'd out, and his Ben Affleck will cease speaking to my Matt Damon out of vain respective need to make it on our own. Kobe & Shaq, Ike & Tina, Ben & Jerry ... sooner or later, every duo wants to establish who is the barnacle and who is the ship. Suffer the entertainer. <tear>
Lisa - 400k is NOT entry level in these parts anymore, but it is a hotbed for step up activity. I have been working with more than my share of 200k buyers. Talk about diving into a mosh pit with a pacifist. By the time the bidding gets done in that range, the poor first-time FHA buyer doesn't know whether to report a mugging or a tornado.
Paul.. the song that Kris Kristopherson sings in A Star is Born says Admission's Free... you pay to get out! That's how I envision the S & L show, so dubbed by TLW... although I do prefer the Paul and Andy Show... sounds Andy Griffinish. I'd gladly pay to get out after enjoying the give and take of you two. Hysterical! Getting back to investors... hopefully they will be taking better care of their investments than the bank owned properties I tried to show to a first time buyer today in my area. 3 to 4 feet of snow and no driveways or walkways cleared to the front door. One on a busy road with nowhere to pull over! Total waste of my time and the buyer's! I wouldn't begrudge the investor his margin for a home in decent showing condition.
Susan, gladly paying to get out is the most honestly backhanded compliment I've been paid since I've been a member here. ;)
While we don't have such showing constraints here in the desert, of course, some bank properties do require a machete to blaze a path to the front door through the overgrown jungle out front. Amazing how I can't keep a plant alive to save my life, but Wells Fargo has found the secret to the Sonoran green thumb: ignore and let thrive.
ROTFLOL!!!! I guess that didn't come out right, now that I see it from your point of view!!! LOL!!! I know you know what I meant! Hahahahaha!
;)
Paul, The biggest difference is that the folks during the boom were speculators. They were buying future appreciation. Today's investors are making money going in. I love working with investors. Flipping is actually making a big come back in my market.
I also have investors I'm working with that are getting good deals and tghen instread of renting the propertty out we are placing them back on the market with owner financing. It's agood deal for the investor, new buyer and me :)
Not a bad play at all, BB. Providing an appealing product and more liberal financing terms under the same roof strikes me as a lucrative, and needed endeavor. Well construed practice in my estimation.
Paul: Thank you! For a minute there I thought you were going to say pond scum! Seriously, I think it's great the investor is returning. Amen to the return to the start of a normal market. And thanks for the post!
That is an interesting perspective on the investor cycle we have been through. Well written article, too. I am with you that most, due to the lacdk of easy money, are putting money into the game and that will turn out better for everybody.
As a person who invests in real estate, I believe there is no better market than this one in which to buy and resale homes. I expect a banner year. Thanks for your post.
Cal
This is a very articulate, well thought-out post, Paul. Probably one of the more enjoyable ones I have read recently. Our market has been fortunate not to be overwhelmed by foreclosures, short sales, etc (the exist but not widespread). I agree that investors have their place in this market. As you mentioned, the opportunity for flip investors to rehab properties and resell to buyers is a good thing. They make their profits and those buyers are willing to pay more in order to do less work (so long as it's not just a lipstick job). Thanks for sharing your insight.
Much to think about there - thanks for the good insights! I've worked with the investors who began to come into our market in 2005 with the game plan of buying new construction in the presale stage and then flipping it within the first year after completion as prices were shooting up fast enough for that to be profitable. Some of them came a little too late and got stung by how fast the market changed & have found themselves searching for tenants or going the short sale route. I've also got some long time investor clients whose goal is to buy, rent it out and hold it much longer term in their portfolio. For them the biggest hurdle is the more stringent financing rules, higher down payments, & challenges if they have more than 4 rentals financed...
Paul, we need everyone to come back to the table- first timer buyers, 2nd homes, move ups and inventors. Many of the bubble "investors" were speculators, not investors in the true sense.
Good investors have always contributed to the ecosystem. Not glamorous, but needed.
I am seeing a significant increase in my local market of courthouse steps purchases - and competitive bidding by these investors. It is definitely a sign of pricing stabilization in my area as some of these bids get quite close to the automated values that are available on the home.
Paul, as an investor, your title caught my attention. I am glad I read the entire post before I shot from the hip. Yes, there are some not so good investors. I have seen the ones that come in with ten gallons of white paint. Paint everything and say they have rehabbed a house. Those investors don't give the true investor and good name. The investor can be a companion to the realtor. The ability to get a deal done in a non conventional arena keeps home buyers buying which keeps homes occupied which keeps home values from declining further. The successful investor has the ability to bring a run down property of to a live-in level.
Successful investors have a multitude of exit strategies to take advantage of. These exit strategies range from a traditional sale, to owner financing, lease optioning, renting, and wholesaling the deal for quick cash. Realtors that are open minded are huge assets to investors. Investors are open to a realtor learning more about what they are looking to do, and being flexible with multiple exit strategies is a huge key to being successful.
Investors are often able to come up with non-conventional solutions to problems. Some realtors are too set in their mindset to accept a subject to, owner financing, or short sale offer. Unfortunately, most realtors will assume an idea is illegal when the idea is completely legal, viable, and their clients are protected with legal documents.
The biggest hurdle that most investors face is finding intelligent, open minded, and flexible realtors. Realtors and investors often need a period of mutual training and getting used to working with each other. Those realtors that take the time to learn what the investor truly needs can be a huge asset and a way to separate themselves from the competition. This separation can also lead to the realtor making more money than they are used to by chasing conventional home buyers. This can be a two way street. The investor can bring deals to the realtor that do not meet their criteria and vice versa.
A lot of investors are looking to purchase more than one property at a time. What makes more sense. Chasing five buyers to close five deals or having one investor that will buy five deals?
Great post Paul! I would say probiotic especially because some buyers buying a primary residence don't want to fool around with a rehab loan like the 203k.
THe investors are the ones that have the patience to sit around 6 mos. to get an answer on a short-sale. The buyers usually can't wait that long.
Investors are necessary, just like sharks. In our market, the real deals are drying up.
kp
I started in real estate as a commercial investor and then switched to residential sales. I'm the prototypical half-empty guy. If I found that elusive unicorn I'd sell his horn to the East. If I came across a leprechaun I'd have that little green guy on a scaffold troweling drywall. No powdered optimism for this cynic.
I scuttle for value along the ocean floor with the best of the wide, gum-mouthed catfish.
The troubling aspect for me is housing glut. Not MLS inventory, mind you, but that we've engineered our real estate ecosystem (while you're copyrighting I'll take that one -- recosystem) to freakish proportions. Quite simply we have more houses than people and we don't need the excess.
Like a real estate neutron bomb befell us -- kills homeowners, leaves houses. Think of the banks as Erico Fermi, us agents as the crew of the Enola Gay and the mortgage brokers as the mechanics.
When people start "rationalizing residences" -- moving back home to Mom and Dad or borrowing a couch from a fraternity brother -- then the message is clear: I care more about making a living right now than I do owning or renting.
No fear, Andrew. I give the boomerang effect 6-12 months in most instances before ma tells junior one too many time that his fiance can't cook and to put away his gym socks. Watch everyone on a life raft dive back into the Atlantic and reboard the Titanic. The hull might prove irreparable, but the string quartet never sounded better.
"Recosystem" ... damn, that's good. How about, "Realtourniquet" for the investor stop-gap to falling prices?
"R-enema"-- after Paulson sh_t the Fed's bed.
"R-egyptions" -- today's investors who are leaving their tombs, their pockets wiggling with scarab beetles for the down payment.
"R-emu" -- flightless Australian mortgage broker who can't outrun a state regulator.
"R-epoxy" -- the $8,000 tax credit, the only synthetic banding this market together.
"R-Equus" -- now the horse blinds the boy, who grows up to manage an REO department at a bank.
I'm going to answer the title: Bacterium
We are seeing the Investor activity pick up here as well. And as you say, they are a different breed. They have seen what has happened and are making educated decisions on these properties.
"R-egurgitate" -- See: Lawrence Yun
"R-efi" -- Short for "Re-fi-no-fun, I smell the blood of an Englishman's 5:1 ARM."
"R-ecola" -- Herbal throat lozenge for the Real Estate market
"R-ecoli" -- Pestilence that worked its way into the housing sector from tainted fast food hamburger meat.
"R-evolve" -- Series of How-To tapes from failed Real Estate bloggers that will sweep the nation in 2011.
"R-Epsom salts" -- real estate syndicate stool softener.
"R-eat" -- what REIT investors hope to do again.
"R-en masse" -- influx of new Saint fans puking in New Orleans' alleyways.
"R-ecstasy" -- the drug of choice for upside down sellers.
"R-ergonomics" -- the study of real estate workplace environment, most notably the manager deleting Bejweled off the company computers.
"R-ESP" -- "Hey piker, I know you're not going to perform on this contract."
Paul - I knew the mortgage crisis was big, but Hubble Telescope Big?? Now THAT's something my friend. A thing of beauty. :) Thanks for the laugh.
Oh, and investors can be vultures....but even vultures serve a purpose. Can you imagine how many stanky carcasses we'd have to deal with if they weren't around?
"R-eefer" -- Self-medicated seller with a personally developed pricing algorithm for commanding 500k more than his next door neighbor. Walk-in pantries are heavily weighted.
"R-execution" -- Listing agent walking into an appointment with a R-eefer with a CMA.
"R-eo speedwagon" -- Defunct rock syndicate reassembled as "foreclosure and short sale experts." Their 3 months collective experience trumps 99% of the competition.
"R-espirator"-- Artifical breathing device which enriches breathable air with pure oxygen. See also, "First Time Homebuyer Credit."
"R-esuscitate"-- Forget it, Gomer, patient's dead.
Investors are providing a much needed service in this market. The sooner we get rid of all this distressed property, the better.
Coleen & Wayne - That is correct. Without remoras, there'd be no clean sharks.
Oh man...you two cutting up continues to crack me up and yes that IS Joan's face!
As far as investors, these days banks are requiring a considerable amount of "skin" As weird as it sounds I have quaffed some of the kool-aid and sprung for some developed lots. Though they appraised for DOUBLE the sale price we still had to pay 35% down! So...I'm doing the right thing...RIGHT???
Gentlemen, let me stake this one out: REconomics -- (pronounced "wreck onomics" or recon-omics) as I have been sitting on a blog series for awhile of economics for Realtors® but I have been too lazy to move forward.
You're doing the right thing, Russ. I worry about the guy who has to flip before the first mortgage payment is due. The guy who is looking at the far off horizon will do just fine. Hard to argue that purchasing during the doldrums (generally speaking) will somehow see the long-term investment go awry. As I happen to know and respect your agent, I tend to assume you made shrewd purchases. ;)
Bruce, you've got dibs, fair and square. Reminds me of my own series that I have been putting off about a swirling vortex of evil set in Phoenix circa 2009 entitled, "REddy."
We have had investors inquiring and buying bank-owned properties for long term investment. We have also seen banks renting their assets rather than selling them. Paul ROTFL - you and Lenza, what a team!
From the desk of David Dee,
Paul, great post and commentary. With the influx of investors coming back, it is actually helping the market. Don't have any problems with them as they are turning the ugly ducklings into eye candy and this in turn is helping the market value.
LOL...
Here we go again with the S and L Team. You two are Flippin' Hilarious :)
TLW...ROAR!
Paul,
Great post. I think there might be more than one kind of investor. True, there were a flood of "speculator" investors 3-5 years ago that drove up prices dramatically in a number of areas hoping to get right. That has completely crashed and burned in that market.
However, having cash and being savvy about what to buy, keep, flip, lease is always a good thing. Prices are just low enough that folks are jumping back into the market! I love investors.
All the best, Michelle
S & L - ROTFLMBO, hysterically!!! OMG, you two are sooo funny...who knew, besides the ever lovely Billie Bryant?
Great post! So full of good information. investors sure are helping parts of my area.
As someone who has specialized in investment properties for the last 16 years of my real estate career, I have definite ideas about investors. Investors made up abour 40% of ther subprime loans, many in overheated areas like Florida. Many of those were speculators looking for the quick score, but like the ganme of musical chairs, they couldn't find a chair to sit in when the bust came. Manyinvestors were the tradition long term hold people who play it conservative and unfortunately they got the same bad rap. In a three year period out of state and out of country investors bought over 400 properties through me in Oklahoma, and 95% of them are still owned and renting. They are now buying lower priced distressed properties, and spending on the average about $12,000 to fix up, and improving hard hit areas. Good investors are the savvy ones who know the best time to buy is now, the down time and not at the peak. Fannie is still punishing these investors who own over 4 properties. Get rid of the 6 months PITI reserve that is retroactive even on previous bought homes. My apology for this comment turning into a blog post, but this I am passionate about.
Paul, as usual, you write very thought provoking posts! At least the investors are now required to come up with some real money and prep the homes for our low end buyers. ;-)
I think I like your comments with Lenza more than the post....which was good.
Our investors are out, but we are still behind your market since we fell later.
Nice post Paul! We love working with investors here... and they do serve a niche. It's a shame that sometimes they have problems buying some homes (HUD or FHA) because they favor owners not investors.
I noticed, (unless Lenza is from here) that no else is from AZ. If you are a buyer in the under 100k market, good luck unless you have cash, or are willing to go over asking price. Paul, have you noticed, especially in the last week, how many houses are 1 or 2 days on market and gone? You are talking about 20+ offers on a move in ready house offered at 75k, and 2-5 on a house priced 250-325k if it is in decent condition.
An investor here must be ready to write 15+ offers to get one at the price that they want (REO or short sale, and good luck at the auction if you don't know somebody there), and spend 4-7k to get that house tenantable, 10k to flip. Paul, let me know if I am off, but this is my experience over the last year. My clients are ready to start flipping now, if we could find the right house.
Bruce, Wreck-o-nomics! I love it. Either you start writing or I'll hijack your idea. I'm giving you 12 hours.
Nic, no. I am not from Arizona but I'm jealous. The average home in my county goes for $400,000 but rents can go up to $2,500 to $4,000 in some towns.
Andrew:
How about giving me a week? I am leaving for the Keller Williams convention in New Orleans on Saturday and I won't get back till next Thursday.
I have been putting the series off because I can't get myself to go back to my old classroom(I retired from teaching Economics and US History in August after 31 years in the classroom) and take a picture of myself in front of the blackboard/podium in a sportcoat.
Pretty stupid, huh? I am making progress. I almost have a business card now. ^_~ My wife won't let me use my school yearbook "prison photo" from last year and I just had a photo shoot. So things are really ramping up for the marketing scene. Go ahead though-I was thinking about some two minute series over economic concepts that impact Realtors® and their business.
Bruce, I'm joshing. I don't co-op other people's plans. You sound adroitly qualified to write your series. Make sure you send me the link (or I can subscribe).
"Image From the Hubbel Telescope of Investors Invading Local Real Estate Market" HAHAHAAA! This cracked me up! Dude! You can totally expect some ongoing, annoying fun comments from me on you posts. I just subscribed. But I AM working with some international buyers who will be investing and low-balling some properties during Bike Week >.> *looks up and plays dumb*
Thanks for the information you have provided here i love the post ......awesome guys.....