According to a report by CoreLogic, over 11% of homebuyers are investors. While it could be speculated that conglomerate investment firms such as Blackstone and American Homes 4 Rent account for a large portion of these sales, data indicates that is not the case. CoreLogic’s research indicates that most investors in real estate properties have purchased between one and ten properties in a ten year period. Their data indicates that 61.6% of investment properties are owned by “mom and pop” investors vs just 15.8% being owned by institutions, with professional investors making up the other 22.7%. Many houses purchased by investors are bought to diversity their investment portfolio, to function as a landlord, or by someone who will fix the home up and flip it to an owner occupier.
It is important to note that CoreLogic only considers buyers who use a corporate, non-individual identifier on the deed at time of purchase. What that means is buyers who use their names when purchasing investment properties as opposed to that of an LLC, corporation, or other business entity, are not included in this report.
Home purchasing activity of investors has been on the rise in the US, and in 2018 it reached its highest level in two decades. CoreLogic’s research indicates that most investor activity is being seen in the entry level home tier, also targeting areas with higher than average rents. What this does to potential owner occupant homebuyers is create a shortage of available houses, and drive rental prices even higher. 20.3% of investor purchases were in the entry level housing market in 2018, compared to 6.3% of upper end homes.
So what does this mean for renters and potential homebuyers in the Reno housing market? It means that there is more competition now to get into an entry level home that there has been in 20 years. What I have personally witnessed in Reno is great number of out of state investors who have purchased properties in the downtown Reno area, and either use them as rentals, or simply let them fall into disrepair, waiting for their value to increase for resale.
Many of these properties end up boarded up and condemned. These investors take the money they earn in our community elsewhere, leaving blight in our city with very little short or long term benefit to our city.
If you are a first time homebuyer, or a homebuyer looking to get into an entry level home, there are things you can do to help your chances of getting into an affordable home. Working with a licensed real estate agent to closely watch the market will give you an advantage over home seekers simply using the internet to find homes. Agents have access to more up to date and accurate listing information. Additionally, working with a qualified and competent lending institution can give you an advantage over other buyers. Sellers in a competitive market can be more picky about the sales contracts they choose to accept, and having a reputable lender backing your offer with a financial pre-qualification letter makes your offer much more likely to be accepted. As always, if you need help, get in touch with me here any time. I am here to help.