Scott Corbridge, who manages rental properties through his company ? Sarasota Management & Leasing, sent the following message to the Herald-Tribune about all the big buyers entering the market to gobble up our inventory of unsold homes:
Two gentlemen from a large investment group were recently in our office to discuss their desire to invest in hundreds of single family homes in our area in Florida and put them into the rental market. This is the second firm that has come to us with this objective in the last few months.
That information was recently supported by a Realtor friend of mine who specializes in investment property acquisition. He said that there is currently a high demand in properties, and if a property is reasonably priced, there are often 7-8 offers in the first day, and the cash buyer walks away with the purchase. With big-money cash buyers flooding into the market, can individual investors compete and what does this mean for the rental market?
Foreclosures will Continue to Shape the Market
First of all, owners of current rental properties can expect to see their property values rising at long last. And those who want to buy properties should have plenty of inventory to choose from, regardless of how much investment money is out there. But is this the time to invest in rental properties? While there?s no clear answer, consider these facts:
CoreLogic, a national consumer information firm, reported 91,898 foreclosures in Florida in the past year.
11% of all remaining mortgaged homes in Florida are still in some form of foreclosure.
The ?smart money? is buying: the aforementioned venture capital firm has already raised $350 Million for Florida acquisitions, and plans to peak out at $600M.
There are still 70 million Baby Boomers entering retirement years and many like the idea of living in Florida.
There are still 1.8 million foreclosed homes across the country which have not hit the market, and 636 million current owners are still expected to default in the next few years, according to Stansberry & Associates.
There is an additional but unknown ?shadow inventory? of current owners who would love to unload their properties but are upside down and can?t afford to sell.
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At Sarasota Management and Leasing, we believe these facts indicate a bounce off the bottom of the real estate market. And with the huge inventory of foreclosed homes, continued buying opportunities will stay with us over the next few years.
Rental demand should remain steady or increase, because at least 30% of the population has historically chosen to rent instead of buy a home. And despite the government?s attempts to get more people into the ownership category (remember the subprime mortgage market disaster), many still have damaged credit, preventing them from owning their own homes.
Source: http://insiderealestate.heraldtribune.com/2012/11/08/big-buyers-entering-the-market-buoys-spirits/
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