Investors have played a major role in California real estate since the financial crisis began and are continuing to fuel the housing recovery in that state. The California Association of Realtors® (C.A.R.) did not estimate the numbers or percentages of properties being purchased by investors today but did look at their current modus operandi through a survey conducted in April.
The survey was conducted among investors who had worked with a Realtor. It found that 64 percent of investors have a long-term strategy in investing, indicating they planned to keep their property for more than a year although three-quarters intend to resell within six years. About 36 percent of investors intend to flip the property.
Most California investors are of the small "mom and pop" type, owning one to 10 other investment properties. Fifteen percent own only one property, 46 percent own two to five, and 14 percent own six to ten. Seventy-eight percent of investor transactions involved single-family homes and 14 percent were multi-family purchases. Bulk sales made up only 1 percent of investor purchases. More than two-thirds of investors manage their properties themselves.
Investors spent a median of $272,500 to purchase their properties and eight out of 10 made repairs, spending a median of $10,000. The lower the purchase price the more the investor spent, as a percentage of that price, on repairs. Sixty-seven percent of investors paid cash at purchase.
Thirty-four percent of investors said their motive for purchasing was the profit potential, 26 percent said it was the favorable price, and 10 percent said low interest rates motivated them.
Foreign investors made up 27 percent of the total with China, India, and Mexico providing the largest numbers of buyers.
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