Is this a good sign or a bad sign?
I think it shows that institutional investors are starting to view this channel as a viable moderate to risk-adverse long-term option for the foreseeable future.
The Wall Street Journal recently published, "Investors Are Buying More of the U.S. Housing Market Than Ever Before," written by Laura Kusisto. Below is a brief summary of the article followed by my opinion on the matter:
Economic analysts generally opined that investment property purchases would decrease as the real estate market rebounded after the 2008 recession. A temporary spike was expected after the recession because of the rock-bottom prices it allowed investors. Alternatively, this demand has only heightened as the rebound progressed.
"Strong rental demand, technology that facilitates buying homes online and low interest rates that make other investments less appealing have fueled investor appetite."
Here is a list of the biggest investor markets listed:
These markets have high rental demand with low enough price points for investors to profit. Also, another reason investors are targeting Philadelphia is because of the extremely slow foreclosure process compared to other markets.
(My favorite markets are in bullet-point-form at the end of this post.)
What does this mean?
Does this mean we are headed to another correction? Possibly. That is not my opinion. There used to be a somewhat negative view associated with full-time real estate investors. "High-risk, comparatively uneducated, cowboys, nontraditional, alternative." These are all becoming opinions of the past. Single family investment real estate is starting to get deserved credibility as a legitimate and moderate to risk-adverse investment channel. The increase in traditional investment group popularity, and investment real estate purchasing being at an all time high proves this theory.
This popularity also holds business owners, specializing in providing individual investors with rental property, accountable, myself included. Co-owning Turnkey Property Group has never been a more fulfilling challenge as our competition grows. An increase in competition is a result from this boom of popularity.
The only way for companies providing investment real estate to others to be around for the long term, is to have a very structured and integrity driven approach. Standardization, quality, set out policies, and the ability handle difficult situations, is the only way to survive.
Additionally, there should be an increase in investor confidence in residential investment real estate.
If an investor spends time researching areas with the right formula: B class sub-markets, high rental demand, and the ability to cash flow, in the positive after debt service. There is no reason to see this channel losing any steam in the foreseeable future.
My Favorite Rental Markets:
1. Kansas City
5. Oklahoma City