Residential Investors Broadening Their Strategies

Recap of VFS 2014 Residential Investor/Ownership Survey

Earlier this year we asked our customers to spend a couple minutes giving us their thoughts on residential investing and ownership, and over 1,270 of them responded. 

The 1,270 people responding live in 46 states, are 52 years old on average, and 53% have annual household incomes over $100,000.

Of those respondents who were investors, we found them generally more optimistic about their business in 2014 than last year, with 76% of those buying no properties last year expecting to buy 1-3 this year. At the other end, 12% of respondents expect to buy 11 or more investment properties this year, vs. just 8% in 2013.

Not only are residential investors planning on buying more properties this year, they’re also diversifying their investment strategies. The folks who exclusively focused on buy-to-rent properties in 2013 are casting their net wider in 2014, with 28% of them planning buy-to-flip purchases this year. The strategy shift also applies to those investors who exclusively bought properties last year to fix and flip them, with 37% expecting to add some buy-to-rent properties this year.

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Nearly 92% currently own at least one investment property, with a little over 18% of the respondents owning 11 or more.

We also wanted to gain insight into investors’ preference for financing sources. When we asked how they typically finance the purchase of an investment property, 64% say they use cash, with the next most frequent source being private-lender financing at 38% (multiple responses were allowed for this question, leading to a total over 100%).

Interestingly, the more properties owned, the more likely cash is to be used, with 61% of investors owning one to three tapping their own cash reserves, vs. 77% of those with 11 or more. These two groups both borrow from private lenders about equally, 38% and 37%, respectively.

Finally, residential investing continues to be a primarily local pursuit, with only 31% of responding investors willing to purchase outside their home state. The top state for these folks? Florida, followed by Georgia, Texas, North Carolina and South Carolina.

We appreciate the time everyone took to complete the survey and we look forward to digging deeper in future surveys. If you want to read the entire report, you can download it here.