Blomquist says smaller investors may leverage a purchase after they own it.

IRVINE, CA—Tapping self-directed IRAs and appealing to friends and family are two ways that smaller all-cash buyers making residential purchases, Daren Blomquist, VP of RealtyTrac, tells As fewer institutional buyers are making residential purchases, smaller all-cash investors are moving in.

As reported last week, the share of all-cash property sales reached a new high in the first quarter, but the share of institutional-investor purchases of these properties dropped to its lowest level since Q1 2012, according to RealtyTrac. In a recently released report, the firm says that 42.7% of all US residential property sales in the first quarter were all-cash purchases, up from 37.8% in the previous quarter and up from 19.1% in the first quarter of 2013 to the highest level since RealtyTrac began tracking all-cash purchases in the first quarter of 2011.

Different types of all-cash buyers are obtaining this cash in different ways, says Blomquist. “The institutional investors are backed by hedge funds and deep-pocketed private-equity money, so cash is readily available for them. The smaller investors and other cash buyers are finding creative ways to get cash, using vehicles like self-directed IRAs and even raising cash from friends and family.”

Blomquist adds that using all cash to purchase gives buyers an advantage over those who need leverage to purchase. “These cash buyers may go back after the purchase and leverage the property once they own it, but the cash is allowing them to get to the front of the line when purchasing the home.”

According to RealtyTrac’s report, among metropolitan statistical areas with a population of at least 500,000, those with the top five highest percentages of cash sales were all in Florida: Cape Coral-Fort Myers, Miami, Sarasota, Palm Bay and Lakeland. Other major metro areas with more than 50% all-cash sales included New York; Columbia, SC; Memphis; Detroit; Atlanta; and Las Vegas.

According to Craig King, COO of Chase International, which covers the Lake Tahoe and Reno, NV, markets, “The cash buyer segment of the Northern Nevada housing market is very strong. More than 50% of transactions in our Reno office were cash sales. High-end home sales are strong as well, and we typically see a higher percentage of those buyers purchase with cash. As the level of inventory dwindles in the price points sought after by the investors, so do the number of institutional investor sales. We continue to see a strong interest from investors, but the inventory to support the demand just isn’t there.”