Home purchases, rental conversions by investors increase

| May 17, 2012 More

More investors are buying single-family homes as they see opportunities abound across the country, due to the combination of low home prices and limited interest in homeownership.

Despite current mortgage rates, tight lending standards limit the eligibility of many potential owner-occupant homebuyers, which may contribute further to rental gains. While government efforts are moving slowly according to some, many private investors are already purchasing distressed single-family properties and renting them out, according to the National Association of Realtors.

NAR chief economist Lawrence Yun recently noted that investment sales in 2011 were 65 percent higher year-over-year. Experts say this is largely due to investors’ ability to buy in cash rather than deal with lenders, according to the Washington Post, which removes the credit restraints that are slowing residential mortgage lending.

Property management companies can help these eager investors turn their new acquisitions into profitable assets, with services that may be in greater demand as the number of single-family rentals available across the country rises. Investors are motivated partly by the perception that bonds and other opportunities are less profitable than real estate at the moment, according to research and analytics firm CoreLogic. The firm recently reported that converting foreclosures into rentals may become a $100 billion business this year. Activity in Arizona, California, Florida and other hard-hit markets is a potential driver of that growth.

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Category: Investment Property, Property Management, Real Estate Market, Rental Health Index (now called RPI Score)

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