The market continues to be a bit on the crazy side. Retail resale values seem to be trending down with less than average activity, on the opposite side investors seem to be paying more and more for product. That seems like a scary convergence.
We have been pretty conservative and buying mostly “project houses” that need a lot of work or have a funky situation going on.
I read an article in Wall Street Journal earlier this week. They studied a pretty small sample pool of investors, but it has some interesting results:
- Farewell, flippers. Half of the investors surveyed say they plan to hang onto their properties for five or more years.
- Hello, newbies. A whopping 59% are new to real estate investing.
- Cash is king but… more than three-quarters plan to combine cash and credit to build their real estate empires.
- What happens when they all want to sell? Great expectations reign. Nearly half expect a profit of 20% or more.
So if 59% of the buyers are first time investors (“new” whatever that means) and 50% are planning to rent out the house that leaves a lot of new landlords out there. I wonder how many of them will do okay?