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Investors a Critical Part of Real Estate Recovery

News | 10th May 2012

Many areas of the U.S. are seeing continued inventories of foreclosures and REOs that are keeping local home prices down. In many markets, such as Phoenix, Las Vegas and Tampa, investors are out in droves looking a single family homes. Once shunned by the real estate investors, the record low home prices in some area represent an opportunity for many investors looking to improve returns. Many investors are purchasing homes, rehabbing them, and renting the or using lease-purchase options to get consumers into these homes. The investor hopes that the tenant will become a future owner of the home by offering a creative option that is not available to a consumer who is not able to get a mortgage.

Would-be buyers are being stymied by lending climate that is looking for stellar credit scores and down payments above 10%. These investors recognize that there is a creative way to put people into homes that is not being satisfied by banks. Banks are happy because investors want to pay cash, and are interested in buying multiple properties or large portfolios of properties. Experts estimate that 25% percent of all home purchases were made by investors in 2011. Many of these properties are being turned into rentals to satisfy the increased demand for rental homes.

Before entering into an agreement with an investor for a home, or signing a lease-purchase, it is a good idea to consult an attorney or real estate agent. Anyone purchasing a home or signing an agreement to lease-purchase a home should have the agreement reviewed by an expert. Most times investor’s lease-purchase agreements are written to the benefit of the investor-landlord, and may involve steep penalties and additional costs if the agreement is not followed exactly. A local realtor may be able to answer basic questions and advise the consumer whether they are paying too much for the property.

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