Market Heating Up for Investors
Most Active Real Estate Investors Plan to Buy as Many or More Properties over Next 12 Months
Despite rising prices and shrinking foreclosure inventories, 65 percent of active real estate investors plan to buy as many or more residential properties in the next 12 months as they did in the past year.
This finding comes from a new joint BiggerPockets.com/Memphis Invest national survey conducted by ORC International for BiggerPockets.com, the nation’s largest and most active real estate investing social network, and Memphis Invest, one of the nation’s leading providers of single-family rental real estate investment services. Founded in 1938, ORC International is a leading global market research firm and since 2007 has conducted the CNN|ORC International poll.
More than a Third of Investors Plan to Buy More
The survey found that 39 percent of active investors intend to increase their purchases over the next twelve months while 26 percent plan to buy as many in the year to come as they did in the past year. The 65 percent of investors who plan to buy the same amount or more in the next twelve months than they did in the past represents 4.5 million investors. Only 30 percent said they plan to buy fewer properties than they have in the past. Last year investors purchased 1.23 million homes, a 64.5 percent increase over 749,000 in 2010, according to the National Association of Realtors.
Some 3 percent of American adults, or 7 million people, consider themselves to be real estate investors. an additional 9 percent of all Americans own investment property today but have no current plans to buy more. Thus, one out of eight, or 28.1 million Americans, either consider themselves to be residential real estate investors or own residential investment properties today, according the survey .
“Though housing markets are changing across the nation, investors are still seeing great opportunities. Hundreds of thousands of foreclosures and short sales are coming to market and rents are continuing to improve in most markets, creating a positive environment for the nation’s 28.1 million residential real estate investors. They will certainly continue to be major players in the nation’s housing economy for the foreseeable future,” said Joshua Dorkin, founder and CEO of BiggerPockets.com. “We’re talking about a group of Americans that is about the same in number as the number of Americans who own Roth IRAs (28.5 million) or the total number of money market fund shareholders (29 million). They have significant buying power.”
Investors Spend $9.2 Billion a Year to Repair Housing
The survey also found that real estate investors are spending more than four times as much as the federal Neighborhood Stabilization Program to repair and rehabilitate the nation’s housing stock. At a median expenditure of $7500 per property, investors are spending a total of $9.2 billion per year to repair the damage caused by foreclosures and rehabilitate the nation’s housing stock.
“This survey puts some hard numbers behind the contribution that investors are making towards not only improving neighborhoods and fighting blight, but also the towards driving the economy. Investors are purchasing homes that in some cases sit for months and add a drag on local home prices. This survey shows that those investors are driving their local economies by spending billions in repair costs with local electricians, plumbers, flooring companies and laborers just to name a few. Those dollars provide jobs and put money into local economies with local companies. It’s clear that investors are the ones who have risking their own money to improve and stabilize neighborhoods for new owners or tenants,” said Chris Clothier, a partner with Memphis Invest.
Lower Interest Rates and Access to Credit Top Investor Incentives
The survey found that lower interest rates and the removal of limits on access to financing would provide incentives for investors to be even more active in the nation’s housing markets. Lower interest rates topped the list of incentives that would make active investors more willing to invest in additional properties (70 percent). A distant second was additional tax incentives for capital spent to purchase, rehab or renovate investment properties (54 percent). Third place went to elimination of limits imposed by lenders on the amount they will lend an investor (46 percent) and fourth to easing of rules on section 1031 Exchanges (44 percent). Only 30 percent said that the easing of securities laws limiting the pooling of capital by investors for purchases would encourage them to buy more.
About Memphis Invest
Memphis Invest provides single-family rental real estate investment services to domestic and international clients looking to include residential real estate ownership in their investment portfolios. Founded in 2004, the company is a full-service investment company that provides all of the essential services for an investor from acquisition, renovation, rental and on-going property management for individuals looking to build their real estate investment portfolio. A privately held, family-owned business based in Memphis, Tenn., the company is led by three generations of the Clothier family. Memphis Invest is committed to providing a personal level of customer service to investors that are looking for a company that mitigates risk while protecting investment capital.
BiggerPockets is the nation’s largest and most active real estate investing social network, designed to simplify and enhance networking, deal making, data evaluation, education, marketing and transactions for investors, consumers and professionals. Its mission is to help educate people in all aspects of real estate and real estate investing and to provide tools and resources to enhance real estate knowledge, networking, deal making, and marketing. Since its founding in 2004, BiggerPockets has revolutionized the way people in the real estate world network.
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