Most Real Estate Investors in CA Plan on Selling Inside 6 Years

by devteam May 21st, 2013 | Share

Recognizing that real estate investors havernplayed a key role in the state’s housing market recovery, the CaliforniarnAssociation of Realtors® (C.A.R.) recently surveyed its members about theirrninteractions with investor customers and have developed a profile of investorsrnand their behavior.</p

Two-third of investors are following arnlong term strategy in investing, buying and holding property although three-quartersrnof intend to hold the property for less than six years.   About one-quarterrn(26 percent) of inventors buy property in order to flip it.  </p

Mostrninvestors, about 75 percent, are what C.A.R. termed small mom-and-pop type,rnowning between one and ten investment properties.  Fifteen percent own one property, 46 percentrnown two to five, and 14 percent own six to 10. rnOwners manage more than two-thirds of thernproperties rather than hire a professional manager.   </p

Single-family homes represent 78rnpercent of the investor purchases, 14 percent were multi-family properties andrn7 percent were other investor types.  Bulk-soldrnproperties made up only 1 percent of sales. rn</p

Investors spent a median of $272,000rnon their properties and 67 percent of transactions were all cash.  Eight out of ten buyers made repairs to thernproperty at a median cost of $10,000 or 4 percent of the median salesrnprice.  The more expensive the propertyrnthe less the investor spent on repairs with an average of 4.2 percent of thernmedian price spent on properties priced below $250,000 compared to 3.4 percentrnwhere the properties cost more than $500,000. </p

Among the reasons investors citedrnfor buying or selling include profit potential (cited by 34 percent), goodrnprice (26 percent), low interest rates (10 percent), personal (6 percent), andrnlocation (4 percent).  The median rate of return on investment was 14rnpercent.</p

Fifty-nine percent of investorsrnfound their property on a multiple listing service and 27 percent were foreignrninvestors.  China, India, and Mexico werernthe most common countries of origin for foreign investors.

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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