Real estate investors have developed a slightly negative reputation over the years; some people see them as dispassionate swindlers looking to take advantage of the housing crisis by buying up foreclosures. I’ll be the first to admit that there are some crooks in the industry, just like any other; however that is the very rare exception, not the rule. Most real estate investors are hard working people looking to earn a living and help get the housing market back on its feet. The following are four critical contributions that real estate investors offer the communities they work in (for this article we will focus on investment in residential real estate, specifically single family homes).
Purchase Foreclosures and other Distressed Property
Real estate investors purchase all sort of distressed properties, the most well known being foreclosures, or properties where the current owner is behind on their mortgage and the lender has decided to claim the property to satisfy the loan. After the housing market crashed in 2008 large quantities of foreclosures began to come up for sale, further depressing the housing market since foreclosed homes typically sell well below fair market value. Seeing this trend Investors jumped in to help reduce the excessive number of distressed homes then turned them into affordable housing for renters. By keeping the number of distressed properties for sale at a manageable level real estate investors help prop up values for all homes.
Rehab Rundown Homes
We have all seen those houses that have boarded up windows, overgrown grass, and junk all over the yard, they are an eyesore to anyone that passes by. These sorts of distressed houses can be in any neighborhood, regardless of how nice, and one thing they all have in common is that they have a very negative impact on the value of surrounding homes. In the real estate market a property’s value is based on what comparable properties have recently sold for, so a run down house that sells at a steep discount drives down the price for future listings. Now let’s see what would happen if a real estate investor purchased that house and fixed it up then resold it to a family that was looking for a new home. Since the house has been completely updated it is one of the nicest in the neighborhood, so it is understandable that the value of the house is significantly higher than it was when originally purchased. In its rehabbed condition, this house helps increase the value of all the other houses in the area by the same comparable pricing strategy as before.
Provide Houses for Renters
Most people think of apartments when talking about renting a place to live, however the reality is that a large number of people living in single family homes are renters, and ever since the housing market crash this has been a growing trend. Given the choice, most people would prefer to live in a house rather than an apartment; real estate investors have realized this demand for well maintained rental homes and are working to ensure a healthy supply to choose from.
Help Rebuild Credit Scores
Real estate investors help many people rebuild their credit score through using lease options. This is where a tenant moves in as a renter initially, however it is agreed that after the initial lease is over they will have the option to purchase the house from the investor for a predetermined price. This sort of arrangement is perfect for people who lost their home to foreclosure, they are used to owning their own home but don’t have the money for a down payment or a healthy credit score. During the lease period the renter can save up the required down payment, rebuild their credit score by making timely payments on credit cards and establish a solid rental history.
After reading about the positive impact that real estate investors have on the communities they invest in, it is our hope that if you are considering selling your house, for any reason, you will give us a call to discuss your situation and see if we can be of assistance to you.