The depressed United States of America housing market is serving up a feast for vulture traders. Deflating home prices, rock-bottom mortgage rates and a rental market surging with people who have lost their homes are attracting swarms of vulture investors after distressed properties. But in this anemic economy, vulture investing has changed.Vulture investors flipped homes for a quick payout in good times. 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 pick at remains of housing market
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. A more stable, long-term investment these days are potential rental profits. Today, vulture investing may serve as more of a stabilizing force for neighborhoods.
Vulture investors wearing a different hat
Vulture investors have switched from flipping to renting due to a number of factors in the current housing market. Mortgage resource HSH.com said ever-rising home prices, the meal ticket for house flippers, are a distant memory. Getting cheap just to sell cheap doesn’t make sense. Plus, millions of foreclosed borrowers have to wait years before they can purchase again have no choice but to rent, often from vulture investors who bought the properties for pennies on the dollar.
Cash flow: the vulture investment payoff
By paying in cash, rental returns start rolling in right away for vulture investors. Las Vegas, where prices have fallen nearly 70 percent and rents have only dropped about 20 percent, is held as an example in the CNN article. Glenn Plantone, a vulture investor in Las Vegas, told CNN his net return on investment via money flow is 12-to-14 percent . Cash flow is the ultimate hedge against a further decline in prices, since the return on the investment just keeps rolling along.
Further reading
money.cnn.com
blog.hsh.com
No comments:
Post a Comment