Most Real Estate Investors in CA Plan on Selling Inside 6 Years

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. 

Most 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 percent.

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.