Vulture investors are feasting on the depressed U.S. housing market. Deflating home prices, rock-bottom personal property rates and a rental market surging with people who have lost their homes are attracting swarms of vulture investors after distressed properties. However, typical vulture investing strategies are changing with the bad economy.Vulture investors flipped homes for a quick payout in good times. Current circumstances compel them to hold on to properties and reap rich rental profits.
Vulture investors swoop down on dead housing market
Vulture investors get their name because they swoop down and purchase distressed properties on the cheap. 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. Home prices often were driven unrealistically high by their frequent flipping. These days, potential rental profits are looked at as the more stable long-term strategy. Today, vulture investing may serve as more of a stabilizing force for neighborhoods.
Vulture investing changes with the times
Vulture investors have switched from flipping to renting due to a number of factors in today’s housing market. Home prices increasing in perpetuity, the main lure for house flippers, are a thing of the past, said mortgage resource HSH.com. cash in buying low and selling low. 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.
Vulture investing: the money flow advantage
Vulture investors can start making cash the first month they rent their properties when they pay in cash. The CNN article uses Las Vegas as an example, where prices have fallen about 70 percent and rents have only declined about 20 percent. Las Vegas vulture investor Glenn Plantone, according to CNN, is getting a 12-to-14 percent net money flow return on investment . The beauty of money flow is that if real estate values continue to fall, the return for the vulture investor holds steady.
Further reading
money.cnn.com
blog.hsh.com
