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Real Estate Investors Shift Priorities in the Current Market

Posted by Jesus (Jesse) Gonzalez on September 11, 2023 at 5:07am

Recent data paints an intriguing picture of the real estate market, specifically in terms of investor behavior. The insights extracted from Dana's article reflect how investor dynamics are evolving, with some key trends standing out:

  1. A Significant Drop in Investor Purchases: The investment world witnessed a remarkable 31% decline in overall home sales this year, with investor purchases dropping by a whopping 45% in the second quarter. This drastic decrease is reminiscent of the 2008 slump. It signals a strategic shift away from the investment fervor experienced during the pandemic's peak in 2021 and early 2022.

  2. Investor Retreat from Hotspots: Places like Phoenix and Las Vegas, which flourished during the pandemic, are witnessing decreased interest from investors. Such Sun Belt metros are experiencing the most significant drop, showing a ripple effect as the housing market temperature dips.

  3. The Quantity and Value of Investment: There's a stark reduction in the number of homes acquired by investors, with figures sliding below pre-pandemic levels. However, in terms of dollar value, while there is a decrease, it's still marginally above figures from a few years prior to the pandemic.

  4. Rethinking Strategy Amid Economic Variables: High home prices, rising mortgage rates, and economic uncertainties are playing a significant role in investor decisions. Such factors are reshaping investment strategies, prompting investors to be more judicious. A resurgence in rental market strength is also worth noting, implying that investors might lean more towards rental properties than home flipping.

  5. Investors’ New Preferences: The data suggests a pronounced interest in low-priced homes, with a significant chunk of investor purchases catering to this category. The focus is on buying low and selling high, considering the current state of the market. Furthermore, single-family homes, despite the dip in their availability, continue to be a favorite, accounting for almost 70% of investor purchases.

  6. Metro-level Highlights: The metropolitan data showcases a clear disparity in investor activity. While investor presence has dwindled in historically popular markets like Phoenix, Las Vegas, and Atlanta, it’s shown a mild uptick in areas such as New York and Seattle. This suggests that investors are potentially exploring new territories that offer better yields.

What Does This Mean for the REO Network?

This data offers crucial insights for members of the REO Network:

  • Awareness and Adaptation: Understanding the current investor mindset can help in predicting market shifts and adapting strategies accordingly.

  • Targeting Opportunities: Given the apparent shift towards low-priced homes, there might be potential opportunities in targeting these properties, especially in metros with significant investor activity.

  • Rental Opportunities: The strength of the rental market can't be ignored. For those considering diversifying their portfolios, rental properties seem to be an avenue worth exploring.

  • Staying Informed on Metro Dynamics: Different metros are behaving differently. By staying updated on each area's specifics, one can make more informed decisions on where to invest or divest.

In conclusion, while investor activity is witnessing a discernible shift, it's not necessarily a cause for alarm. It's a signal for real estate professionals to adapt, innovate, and navigate the changing waters strategically. The current landscape offers both challenges and opportunities, and with the right insights, the latter can be effectively harnessed.

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Renting to Students in Santa Cruz, Ca: Pro's and Cons

Posted by Marcy Moyer on October 1, 2017 at 8:09am
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I am a realtor and a Santa Cruz rental property investor since 2000. There are many reasons to invest in Santa Cruz rental properties, some of which I have discussed in this article. Today I want to talk about what the pros and cons are in renting to UCSC students. 

 

Here are the pros that I have experienced.

1. Vacancies are virtually non existent: There are almost $18,000 UCSC students and in any given year there is only room to house about 8,000 of them on campus. There are always many thousands of students looking for a place to rent, so the potential pool leaves no vacancies in your Santa Cruz investment rental properties.

 

2. Students pay more money:  They frequently will pay more per bedroom and sleep 2-3 in a room just to have a place to stay. Here is a link to what students expect to pay from the UCSC community housing page. https://communityrentals.ucsc.edu/cost/index.html

 

3. The rent money is very secure: The students get financial aid and/or are supported by their parents. In 17 years and 4 rental properties as a Santa Cruz rental home investor I have only had a problem getting paid once.

 

4. UCSC makes the rental process very easy for a Santa Cruz rental investor: They give workshops to the students on what they need to do to look attractive to a Santa Cruz rental investor. They come to you with complete rental applications, credit reports, references, and certificates saying they understand what it takes to be a good renter. The university posts your rental for free so you have a large pool of possible renters.

 

5. Students replicate themselves making the rental process even easier: My experience has been when one student moves out they have another take their place making the process seamless for the Santa Cruz rental investor.

 

6. Santa Cruz students are often long term renter: If you get the students early, in their sophomore or junior year they often stay for 3-4 years or more. making the cost of turnover very low.

 

7. Santa Cruz students can vacate in the summer if you want a summer beach home that is rented for 9 or 10 months: If you are a Santa Cruz rental property investor who wants a place in the summer for yourself you can rent to students during the school year and keep it for yourself in the summers. Many students go home in the summers, and the ones who don't can always find a sublet from another student who is going home. It is a way to have a vacation home that more than pays for itself.

 

Cons of renting to UCSC students:

 

1. Insurance on the house can be tricky: Recently many insurance companies, including the one I have always used, State Farm have decided they do not want to insure homes that are filled to the brim with students in college towns. They see them as Frat houses and won't write new policies. You can get commercial insurance, which is more expensive than residential or find the rare insurer who will do it. I found that CIG insurance out of Monterrey was willing to write a residential policy at competitive prices.

 

2. Large homes can be a hot bed of petty emotional issues for the Santa Cruz rental property investor.: If you are the owner of a large home with 6-10 students they may turn to you when there is a spat between the tenants. It is a time and emotional drain. I put one person in charge and have that person deal with issues like who is going to clean the house, noise complaints, bullying, etc. They have the final say. It works pretty well.

 

3. Students are often unaware of what it takes to take care of a house: Students do not always understand what it takes to care of a home and things can be damaged by mistake, even without large parties or Frat behavior. The way to ameliorate this is to buy a house that does not have delicate finishes and educate the students on basic home maintenance. My tenants know they need to call me right away if something is wrong and not let a small problem get out of hand. I would rather be over called than under called, and they know it.

So as a long time owner of Santa Cruz rental property I can enthusiastically say that renting to Santa Cruz students is a good thing from an investor perspective and not something to be afraid of.

 

If you have any questions about becoming a Santa Cruz rental property investor please feel free to contact me.

Marcy Moyer

eXp Realty of California

650-619-9285

marcy@marcymoyer.com

www.marcymoyer.com

Specializing in Probate, Trust, and Investment Properties

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$1,500.00 And You Can Become and Investor with a Guaranteed 10% Minimum Retrun

Posted by Jesus (Jesse) Gonzalez on January 30, 2013 at 4:04am

 

Many of you may have heard something about Self Direct Investing or buying a tax lien however, never really understood what it was all about because, you didn't have any resource. That has changed, REOPro is launching a new network www.MatherNetwork.com.

www.MatherNetwork.com is a network focused on giving you information on Self Directed Investing. Using money you already have, money you aren't paying your bills with and, showing you how to grow tax free wealth that you can retire on and leave to your family when you're gone.

It may all sound like a pipe dream but, I assure you, it isn't. I am a self directed investor myself and as the headline on this blog suggest, I have helped people with as little as $1,500.00 in their retirement account buy a tax lien and make a minimum 10% once the person whom the lien was against paid it. FYI: that 10% is law by the way....guaranteed.

So, if you want to learn more about Investing in Tennessee Tax Liens, visit my educational blogs on www.MatherNetwork.com of by visiting these links....

http://mathernetwork.com/profiles/blogs/investing-in-tennessee-tax-liens-101

http://mathernetwork.com/profiles/blogs/investing-in-tennessee-tax-liens-102

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Is It Wrong to Make a Profit as a Real Estate Investor?

Posted by Allan S Glass on February 1, 2010 at 7:00pm
As a nation on edge and in the midst of the worst economic crisis since the Great Depression, many of the daily aspects reflected in “Americana” seem to have become taboo. For the past two years our stunned and gun-shy population has wandered through news of continued job losses, store closings, grim foreclosure statistics driving the economy south, and consumer confidence to all time lows.In times of chaos and turmoil it’s normal to wonder who is to blame for our collective misery as it is expected that we all seek solutions to our temporary slump. However, one unfortunate by-product of this circumstance is the blurred distinctions between actions that lead to recovery and those that caused our loss. In the real estate industry this has become most evident in the grouping of profit with greed, and investment with speculation.Profit vs. GreedIn a recent article for the Washington Post, conservative columnist George Will writes, “Greed, we are agreed, is bad. It also is strange. It has long been included among the Seven Deadly Sins, which suggests that it is a universal and perennial facet of the human fabric.” He continues on with the example of ticket brokers, like Stub Hub, to illustrate his point that the open market properly punishes greed with missed opportunities and sudden collapse due to improper timing. “Greed is worse than a moral defect, it is a cause of foolish pricing. That is why markets know it when they see it.”Without entering a conversation about regulation versus free markets I would concur that greed unchecked leads to downfall. Further, the collapse of the US housing market shows that the unfortunate side effect of unchecked greed is the collateral damage done to those who were not greedy but remain caught in the crossfire.Profit on the other hand is a basic tenet of Capitalism and the cornerstone to our free market society. Profit is the engine that propels entrepreneurs, investors, and jobs, manufacturing, creativity, and expansion alike. In his seminal book “The Science of Getting Rich” Wallace Wattles explains that one must always give more in “Use Value” than they receive in “Cash Value.” His clear yet sometimes lost point among business ventures is that a properly functioning marketplace allows for a reasonable entrepreneurial profit to those who add value to the business process. This distinctive balance lies within the intent of the business performing the service.In illustration of this point can be found in the real estate industry by comparing investors to speculators.Investor vs. SpeculatorA real estate investor is an individual or entity that invests equity into a real estate asset for the purpose of generating income from or adding value to the existing improvements. Investors can have long term or short-term strategies. They may use their own capital or they may borrow (leverage) equity to varying degrees. Some create value by curing defects either physical (dilapidation) or financial (cash buyers with quick closings), while others employ long-term hold strategies that gather value from timing and appreciation. Yet all prudent investors share the distinction of returning to the marketplace “Use Value” for the profits or “Cash Value” they earn.Speculators can share timing and leverage strategies with investors, yet that is where the similarities end. The intent of a speculator is not to add value to the economic engine; rather they look to take advantage of the marketplace by simply getting in line first. The speculator is driven by greed. Profit margins and financial gain are not based on business strategies that help balance supply and demand, thus making the business plan viable in the long term. Instead the speculator looks to horde or corner markets to their advantage intending to reap exceptional short term profits before quickly exiting the marketplace without regard to what is left behind.The Soap AnalogyMost all of us bathe on a regular basis. To do so effectively we use water and some form of cleaning agent. For this example let’s assume we all use soap.If one were to plan for a shower and find all the soap gone, the reasonable response would be to go down to a convenience store (grocery store, warehouse store, or drug store) and buy another bar. Most of us would look for the best bargain or our favorite brand and gladly pay the store’s asking price. For this transaction to occur we realize that some other business distributed the bars of soap in large bulk quantities to that store to accommodate our smaller purchase. Before that, a manufacturer bought raw materials mixing together bars of soap to later package and sell to that same distributor.Each step along the way a business invested their capital to provide a service both for the entity before them and customer who comes after them in the economic process. For this privilege and purpose each investment entity earns a tidy profit. By charging too much for their service they lose customers and go out of business. By contrast, not charging enough leads to loss, inhibiting the ability to remain a viable and profitable concern. Either way, free market forces act to keep profits in balance and all of us clean. Further we support these profits and welcome the service provided by continuing to buy bars of soap.But what happens when someone only seeks to take advantage of system for the short term and their own personal gain. Let’s imagine we’ve all taken a two-week cruise across the Pacific Ocean. Forced to share close quarters for an extended period of time it would quickly become apparent that good hygiene practices are necessary to the shared enjoyment of the passengers. Again, enter the need for soap.For this example let’s assume that the passengers did not realize this need until the boat was long to sea and the boat’s sundry shop was grossly undersupplied with the sudsy necessity. Enter the speculator. Realizing that other passengers have nowhere to turn, too little supply and extraordinary demand, he quickly gathers all of the available soap and waits for the pandemonium to begin. Beyond the myriad of possible disasters awaiting the group one outcome remains certain – Imbalance and market failure.The Real Estate WorldExamples of our ship bound soap pirate were seen all across America this past real estate cycle. From Brooklyn to Las Vegas, Florida to California speculators bought or reserved condominium units before homeowners could find their place in line. Speculators bought income property that did not earn enough income to support the prices paid intending to sell it in short order by way of rapid appreciation. Eventually the music stopped. The result – Imbalance and market failure.Yet amid the ashes born of greed and speculation, comes the profitable investor intent on creating value within the economic system. Recognizing a need and providing a valuable service, the investor uses free markets to find balance in the economy and provide profits for its coffers. Identifying “Use Value” in exchange for “Cash Value” the profitable investor solves problems, creates jobs, provides a service, fuels growth, inspires innovation, and is the cornerstone to the American Capitalist System.That is never wrong.

Allan S. Glass is a real estate broker in Los Angeles, Californiaspecializing in REO and Short Sale transactions. Allan is also a featured blogger on Realtor.com. The ASG Real Group has over $1 billion and 17+ years of transaction experience.
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