4 Property Investment Opportunities Created by the Downturn

After a persistent pullback in housing activity, some segments of the market have become distressed. That’s where your investor clients come in.
 
 
 
 
Housing activity is up and down, but one thing remains true: there still aren’t enough properties to choose from. Investors can play a critical role in helping to bring more homes to the market and balance the supply to meet the current demand. But first, they need to know where to find the opportunities. The market slowdown has actually created more chances for property investors to get in the investment game. Here are four sectors of the real estate market where investors may want to focus their efforts.
 

Baby Boomers Are Leaving Behind Fixer-Uppers

Baby boomers are the largest group of home buyers in the market. They're also one of the biggest groups of sellers, as many are moving on from their long-term homes, choosing instead to downsize and/or move closer to family. The homes they’re leaving behind, however, are often in need of repair. Many require significant roof repairs, plumbing upgrades, new insulation, modern windows or new HVAC.
 
The opportunity: One in five listings will be a home like this in need of TLC and may sit on the market. We’re entering the era of the “Great Renovation.” Homes between 20 and 39 years old are becoming in need of significant repairs; there are currently 25 million homes in the U.S. in this stage of their lives. Working with local investors who understand the market, have extensive networks and can get moving on renovations right away is key to bringing these houses back into the inventory pool. 
 

Single-Family Rentals Are in Demand

Rental prices have become more affordable than mortgages in some cities, and a few trends have popped up:
 
  • Investors are buying single-family homes in up-and-coming areas just outside major cities, flipping them and renting them out to families looking for more space.
  • Home buyers on the sidelines are renting while they wait for mortgage rates to drop and inventory to pick up.
  • Gen Z buyers are purchasing investment properties in more affordable cities rather than a primary residence.
The opportunity: Look at single-family homes as a product you can sell to a new category of customers who have a variety of needs. You won’t have to turn down a listing because it’s in need of major repair. You can help investors identify properties that they may resell when their strategy changes. That’s a double chance for you to work with them.
 

iBuyers Have Left the Neighborhood

Most iBuyers have either significantly reduced their operations or shut down. These companies joined the fix-and-flip scene but struggled to become profitable. In a lot of ways, iBuyers have given back the market to local flippers, investors and entrepreneurs who have the expertise—down to the block—in their markets.
 
The opportunity: The exit of large iBuyers not only benefits independent investors but also proves that their business model could not effectively replace the real estate agent in the transaction. Their exit also creates an expanded market share for agents, leaving behind the potential for more listings.
 

Expect More Distressed Inventory

When you think of infrastructure, you may think of roads and bridges rather than homes. But we, indeed, have a housing infrastructure problem that the government and large investment institutions can’t solve alone. But adding local investors into the mix can. There were 16 million vacant homes in the U.S. last year, according to industry research, which has created a megatrend where individual landlords are identifying uninhabitable houses, rehabbing them and returning them to the market as rentals.
 
The opportunity: You can partner with investors to get these homes back on the market. These investors live and work in their neighborhoods and have a deep understanding of what the end buyer needs. They are a crucial, boots-on-the-ground resource with hyperlocal skills and knowledge.
 

Kurt Carlton

Kurt Carlton is the president and co-founder of New Western, a nationwide real estate investment company. He oversees the New Western portfolio of companies, including all product, technology, marketing and growth initiatives.

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