Recognizing that real estate investors have
played a key role in the state's housing market recovery, the California
Association of Realtors® (C.A.R.) recently surveyed its members about their
interactions with investor customers and have developed a profile of investors
and their behavior.
Two-third of investors are following a
long term strategy in investing, buying and holding property although three-quarters
of intend to hold the property for less than six years. About one-quarter
(26 percent) of inventors buy property in order to flip it.
investors, about 75 percent, are what C.A.R. termed small mom-and-pop type,
owning between one and ten investment properties. Fifteen percent own one property, 46 percent
own two to five, and 14 percent own six to 10.
Owners manage more than two-thirds of the
properties rather than hire a professional manager.
Single-family homes represent 78
percent of the investor purchases, 14 percent were multi-family properties and
7 percent were other investor types. Bulk-sold
properties made up only 1 percent of sales.
Investors spent a median of $272,000
on their properties and 67 percent of transactions were all cash. Eight out of ten buyers made repairs to the
property at a median cost of $10,000 or 4 percent of the median sales
price. The more expensive the property
the less the investor spent on repairs with an average of 4.2 percent of the
median price spent on properties priced below $250,000 compared to 3.4 percent
where the properties cost more than $500,000.
Among the reasons investors cited
for buying or selling include profit potential (cited by 34 percent), good
price (26 percent), low interest rates (10 percent), personal (6 percent), and
location (4 percent). The median rate of return on investment was 14
Fifty-nine percent of investors
found their property on a multiple listing service and 27 percent were foreign
investors. China, India, and Mexico were
the most common countries of origin for foreign investors.