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Investors Shift to New Homes for Rental Properties

for-saleThere is a housing shift occurring in the investment market. Major investors are gravitating toward purchasing new homes for rental use.

During the housing crash, big investors stocked up on thousands of foreclosed properties for single family rentals with intentions of selling them when home prices recovered. But they didn’t.

"They are buying more, and now they are buying new."

Now that the housing market is recovering, foreclosures are low and prices are up, but investors are not selling their properties.

Instead, NBC News says “they are buying more, and now they are buying new.”

“That fruit—cheap foreclosures—offered investors a relatively low-risk play, because they could buy homes at well below the cost of replacement, and not only would they see rental revenue but also property price appreciation,” NBC News reporter Diana Olick noted. “As this new interest develops, however, builders are starting to offer institutional buyers bulk discounts. Not only does it help builders grow revenue, but it gets them closer to normal levels of production, which has been a real struggle thus far.”

In July, Auction.com reported different the investors were flipping the properties they purchased more often than renting.

Investors bidding on properties online and at live events nationwide appear to prefer flipping these purchased properties more than renting them. Auction.com, LLC, recently revealed the findings from its second quarter 2015 Real Estate Investor Activity Report, a nationwide survey of real estate investors.

The data collected determined that flipping is still going strong, edging out the hold-to-rent strategy for the third consecutive quarter, a trend that has been consistent since the company began tracking investor intent.

"Although Auction.com’s findings for the second quarter reveal a propensity toward flipping among investors overall, investor intent varies considerably by the type of auction (live event versus online auction) and investor profile," the report said. "Survey respondents who indicated that they were making a one-time purchase clearly preferred a hold-to-rent strategy, while respondents identifying themselves as full-time 'real estate investors' and those indicating that they were working on behalf of another investor favored flipping."

About Author: Xhevrije West

Xhevrije West is a writer and editor based in Dallas, Texas. She has worked for a number of publications including The Syracuse New Times, Dallas Flow Magazine, and Bellwethr Magazine. She completed her Bachelors at Alcorn State University and went on to complete her Masters at Syracuse University.

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