November 22, 2017

Investors Cash In

A recent article from Realtor® Magazine reports that the number the number of investors and international buyers taking advantage of real estate bargains has reached a record number in all-cash purchases — and some experts predict that number will only grow higher.

Across the nation, a record 33% of existing-home sales were made to cash buyers in February, the National Association of Realtors® reported. The total proportion of cash deals by real estate investors could hit 40% by year end of 2011, predicts Thomas Popik, research director for Campbell Communications in Washington, which conducts monthly surveys of 3,000 real estate brokers.

Many of these cash deals are also coming from a growing number of international buyers – Canadians and Australians making up a large part of this group. About 55% of international buyers paying cash for real estate in the US, according to an April 2010 report by NAR.

The Cash Buyer Advantage?

Cities around the US where about half of all purchases were done with cash include Detroit, Miami, Las Vegas, and Phoenix, in which prices have dropped considerably and foreclosure rates remain high, says Oliver Chang, a housing market analyst with Morgan Stanley.

In some areas of Arizona, house prices have dropped about 70% from the 2006-2007 prices.  However, specifically in the Phoenix investment real estate market, we are seeing A LOT of buyer activity and as a result most homes are selling for list price or above list price.  in March 2011, 55% of the purchase made in Phoenix were investor buyers and of that 55%, 85% were cash sales.

Short sales and foreclosures accounted for 59 percent of last year’s cash sales, according to a report by Morgan Stanley.

If you buy the house at a discount with cash, then you can either buy and hold it as a positive cash flows rental property or you could flip it almost immediately to a homeowner getting a mortgage who is interested in getting into a move in ready home.

With tightened lending standards, cash purchases can provide buyers with more leverage and allow buyers to close properties more quickly.

If you’re interested in more information about our local Phoenix real estate market, please contact Jason Dawson directly at 480.620.8874 or send us an email.  We specialize in Chandler buy and hold real estate investments and Gilbert buy and hold investments.

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