While investors believe they will be able to outbid first-time buyers in the “rush” to snap up houses at today’s bargain-basement prices, a large majority apparently plan to use a combination of cash and credit to purchase properties as they build their inventories.
According to a new survey by Move Inc., which operates a number of key real estate-related web sites, three out of every four investors will finance at least part of their deals. And more than half will put up less than half the purchase price out of their own pockets.
That flies in the face of conventional wisdom that today’s investors are mostly cash buyers, said Steve Berkowitz, CEO of the Campbell, Calif.-based company, which runs Realtor.com, the official website of the National Association of Realtors, and Mortgagematch.com, a site which helps consumers find financing.
And it suggests, Berkowitz says, that investors are tapping into their credit sources, including taking out second trusts or home equity loans on properties they already own, to take advantage of what they see once-in-a-lifetime opportunities.
The survey also found that even though just one in five investors will be all-cash buyers, they believe the difficulties first-time buyers are experiencing in qualifying for financing will make it easier for them to compete for properties.
Another interesting finding: Today’s investors are not “flippers” who buy and sell right away. Instead, only 11% plan to hold for less than a year, whereas two-thirds say they are in their deals for the long-term. In addition, three out of five are new to real estate investment.