Smaller and retail residential real estate investors are continuing to adapt and thrive as the housing market rebounds, Visio Financial Services reported Wednesday.
These investors are picking up the slack as institutional investors seek to capture gains from their single-family housing portfolios, Visio said in a statement.
Visio’s annual residential real estate investor report found that investor confidence had increased in 2015.
Last year, 24% of investors told Visio they had bought four or more houses in 2013, while 38% said they planned to buy that many in 2014.
The new report found that only 25% had done so, but this year 49% planned to buy at least four houses. Moreover, 17% planned to buy 11 or more houses, up five percentage points from the number who said this in 2014.
According to the report, investors are looking for higher-priced properties than they were last year. Sixty-three percent more investors were looking at $200,000-plus properties than in 2014.
Houses in the $40,000 and lower range were a faint blip on investors’ radar. Visio said this had to do with rising prices and picked-over inventory.
The survey found that more active investors sought deals across the full spectrum of housing prices, whereas those who bought fewer than seven properties looked mostly at prices below $100,000.
Thirty-four percent of investors in the survey said they were searching for investment property outside their home states as local prospects dwindled.
For those investors who considered properties outside their home state, Florida remained the No. 1 location, followed by Georgia, Texas, North Carolina and South Carolina—Nos. 2 through 5 last year.
Tennessee jumped four spots this year to No. 6, while California fell back three to No. 9.
Ripe for Growth
According to Visio, 44% of residential investors engage in the activity full time.
Ninety-two percent of the full-timers said access to cheaper loans would help them grow their businesses. Thirty-eight percent said they would like to see better deals, and 20% would like faster loan origination.
More than one-fifth of full-time investors reported that they needed more high-quality employees and contractors in order to sustain their growth.
Eighty-three percent of part-timers said they would like to go full time, but major impediments stood in their way. A third cited lack of access to capital, and more than half lack of money to do more deals.
Only 17% said they did not want to become full-time investors, no matter what deals or capital were available. In terms of investment strategy, 44% of full-timers focused on flipping houses, compared with 39% of part-time investors, while 52% of the latter relied on rental properties versus 43% of full-time investors.
Seventy-seven percent of investors surveyed were men, and 23% women. Sixty-eight percent of male investors were married, compared with 49% of female ones, with women likelier to be divorced or single.
The new survey found an upward trend of African-Americans entering the real estate investment arena: 22% in 2015, up from 15% the year before, and significantly higher than the general population of 13%.
The 64% of white investors matched that demographic’s national average.
The median investor reported a total household income of $100,000 to $125,000, more than twice the median income of the average American.
A fifth of the part-timers said that they worked full time in sales, while nearly a quarter had jobs in construction, finance and real estate.
— Check out With Likely Fed Rise Delay, Where to Invest Now on ThinkAdvisor.