InmanNews has just launched a new weekly online educational service called Inman Property Portfolio. The service focuses specifically on the “overlapping” worlds of real estate professionals and the growing property investment and management sector.
As a brief summary of Property Portfolio, here are some key points in its first newsletter. Bottom line…Property Portfolio offers tips to real estate professionals who currently are or intend to act on Tim and Julie Harris’s advice to learn while you earn.
Background
Zillow told Inman’s Jim Dalrymple II, the author of Property Portfolio’s newsletter that nearly 19% of homeowners have some kind of secondary property. Ten percent own a vacation home, six percent have investment property and three percent have some other kind of property beyond their primary residence.
National Association of REALTORS® data indicated that non-primary residential transactions equaled 18% of all real estate transactions in April 2019. Lawrence Yun, NAR’s chief economist said that June 2019 tied with April 2017 for having the highest percentage of non-primary residential transactions.
Why are investors putting their money into real estate?
- “It’s a safe place to put your money,” said Josh Higgins of Compass said. “And, there are some great tax benefits…(as well as)…it’s a hedge to Wall Street volatility…and…who doesn’t like cash flow?”
- Real estate tech is the “gateway to new property investors,” said Shawn Greer, senior director of real estate at the Vacasa rental company. His business offers a tech-enabled vacation rental platform to its clients so they can “…find, locate and rent a property now.”
- Families are worried about their children and grandchildren being able to afford homeownership so they are taking their “legacy money” and putting it into something that will last for generations.
Property Types?
- Long-term rentals.
- Multifamily buildings – Jeanette Rice, a researcher at the real estate analysis firm CBRE, told Dalrymple that multifamily acquisitions totaled $36.4B in Q1 2019, an increase of 1.3% y/y. Also during Q1 2019, the vacancy rate in the multifamily sector was only 4.6% and that rents had grown 3% y/y.
- Vacation homes and short-term rentals have been a game-changer. Think Airbnb, VRBO, Guesty, Vacas. HomeAway saw an uptick in their properties of +29% in 2018 y/y and $11.5B in grows bookings. Just imagine the number of properties and gross bookings combined for all of these sites! And, all of these sites believe this market is showing only the tip of the iceberg in terms of growth.
Which Markets?
Investors want property in places that are “cheap” to buy. Think Southern cities. Think Memphis, Phoenix, Baltimore, Bibb County in Georgia and Cumberland NJ, as ATTOM Data Solutions points to in its research.
Tips for Agents Working with Property Investors?
Experience is the name of the game here, not short cuts or magic. Scour MLSs to discover who the developers are in your market areas. Look to research firms such as ATTOM. When introducing yourselves to a developer, you might want to have a potential project in mind that you collectively could do together.
Partner or, at the very least, shadow an experienced professional who specializes in working with property investors. Property investors understand the market better than average homebuyers and they will ask their agents more “serious questions” and have more “advanced concerns.” There is no way to fake it here. Become fluent with any and all data, research, information pertaining to property investment opportunities.
And, become a property investor yourself. Lawrence Yun with NAR told Dalrymple that 40% of all real estate agents “…actually own second (and/or multiple) properties for rental income.” A rental property can be essential to an agent’s financial well-being AND a collateral benefit to an agent’s knowledge and expertise while simultaneously serving your clients.
Think Tim and Julie Harris’s advice…”earn while you learn.”
