High-Purchase Investors Not Exiting

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IRVINE, CA-The exit strategy for residential real estate investors during 2011-2013 varies according to the number of properties the investors have purchased, a recent RealtyTrac investor-insight report shows. Only 1% of properties have been resold by entities purchasing at least 1,000 properties; this percentage increases as the number of properties purchased decreases.

RealtyTrac reports that among all investor purchases during this time period, 57% have subsequently been resold, only 25% by entities purchasing at least 100 properties. But this figure is still significantly greater than the percentage sold by purchasers of at least 1,000 properties.

“These bigger investors are more committed to the original plan of holding onto these homes as rentals for at least three to five years, if not longer,” Daren Blomquist, VP of RealtyTrac, tells GlobeSt.com. “The mid-tier and smaller investors are more on the buy-to-rent bandwagon and are more likely to cash out as home prices continue to increase. In addition, the larger investors have more dollars to spend on the managing of these rental homes, whereas the mid-tier and smaller investors are more likely to be overwhelmed by that aspect of the business model.”

The report also revealed that, among entities that purchased at least 1,000 properties during the three-year period, 36% were in some stage of foreclosure, while 37% were underwater and 27% were regular equity sales. Also, the majority (54%) of properties purchased by investors were underwater, but not in foreclosure. Meanwhile, 24% of properties purchased by investors were in foreclosure or bank-owned, and 23% were regular equity purchases.

As GlobeSt.com reported earlier today, investors paying all cash make up a majority percentage of those buying housing, according to RealtyTrac's report. After studying real estate investor purchase and finance patterns between 2001 and 2013, the firm found that out of the more-than-950,000 purchases totaling more than $1 trillion made by investors during this time period, 54% were all-cash. When the data was filtered for just entities that purchased at least 1,000 properties, the all-cash percentage skyrocketed to 93%.

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