Vulture investors are feasting on the depressed America’s housing market. Deflating home prices, rock-bottom home loan rates and a rental market surging with individuals who have lost their homes are attracting swarms of vulture investors after distressed properties. But in this anemic economy, vulture investing has changed.When times were good, vulture investors bought and sold homes quickly. Now that times are bad, using properties to generate healthy rental incomes is the preferred approach. Article resource – Vulture investors move from flippers to landlords in down market by Personal Money Store.
Vulture investors flock to a housing market in distress
Swooping down to buy distressed properties cheap is how vulture investors got their name. Places where home prices have dropped as much as 70 percent because of short sales and foreclosures, like Las Vegas, Phoenix and Miami, are lucrative markets. Vulture investors used to be known for flipping often and helping to bid up home prices to unsustainable heights. These days, potential rental profits are looked at as the more stable long-term strategy. Vulture investors today may actually be helping stabilize neighborhoods.
Vulture investing changes strategy
Several factors presently occurring in the Americas housing market have changed vulture investing strategy from buyer and seller, to buyer and landlord. Home prices rising in perpetuity, the primary lure for house flippers, are a thing of the past, said mortgage resource HSH.com. Buying cheap just to sell cheap doesn’t make sense. And because millions of foreclosed borrowers have to wait years before they can get a home loan, they become the ready tenants for vulture investors purchasing properties for pennies on the dollar.
Cash flow the primary attraction for vulture investors
By paying in money, rental returns start rolling in right away for vulture investors. CNN uses Las Vegas as a case study, where home prices have plummeted 70 percent when rents have only fallen about 20 percent. Las Vegas vulture investor Glenn Plantone told CNN he is getting cash flow, or net return on investment, of 12-to-14 percent . Money flow is the ultimate hedge against a further decline in prices, because the return on the investment just keeps rolling along.
money.cnn.com
blog.hsh.com
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