What do you think of when you hear the word "investor"? A large entity such as a corporation or company where individual names and identities are not easily known or seen? But according to a recent California survey, three-fourths of all investors are "mom and pop" type of investors who own from 1 to 10 properties, and the preferred type of property purchase is most often a single family home. Low yields on alternative investments is one reason for the demand for real estate investments. These investors are looking for profit potential, as the median purchase price was under $300,000, which was the most frequent reason, with location being the least frequent reason for buying. (Often, when first time investors say they want to buy an investment property, they frequently object to the location. There might be a good reason for doing so, but selecting a location based on personal identification with a certain area is perhaps a sign the "investor" is looking for a place to move into some day.)
The five top reasons for an investor purchase in this survey were:
1. Profit potential
2. Good price
3. Low interest rates
4. Personal
5. Location
The majority of these investors were interested in long-term potential of about six years, and over two-thirds in the survey rented out their properties after purchase. About 25% of investors fixed and re-sold their purchases for profit, or "flipped" them, a phenomenon seen frequently in the less expensive housing markets in some cities.
The top countries of origin for foreign investors--27% of the total--were China, India and Mexico. For all investors, the median rate of return was about 14% and the majority self-managed their properties.
Most investors found their properties through the MLS, so for an opportunity to find a property by working with a local real estate agent who knows the local market and can help you "pencil out" your investment figures, contact me via phone or e-mail! 562-896-2609.
