A feast for vulture investors is being served by the depressed Americas housing market. Deflating home prices, rock-bottom mortgage rates and a rental market surging with individuals who have lost their homes are attracting swarms of vulture investors after distressed properties. But in this anemic economy, vulture investing has changed. In boom times, vulture investors were home flippers looking for quick payday. In these troubled times, they’re landlords raking in hefty, steady incomes.
Vulture investors pick at remains of housing market
Swooping down to purchase 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. These days, potential rental profits are looked at as the more stable long-term strategy. Vulture investors today may actually be helping stabilize neighborhoods.
Strategy changes for vulture investing
Several factors presently occurring in the United States of America housing market have changed vulture investing strategy from buyer and seller, to buyer and landlord. HSH.com, an online mortgage resource said the constantly increasing home prices that attracted house flippers are long gone. There’s no money in buying low and selling low. And because millions of foreclosed borrowers have to wait years before they can get a home loan, they become the ready tenants for vulture investors buying properties for pennies on the dollar.
Cash flow the main attraction for vulture investors
Vulture investors can start making money 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. Glenn Plantone, a vulture investor in Las Vegas, told CNN his net return on investment via money flow is 12-to-14 percent . The advantage of cash flow is that even if real estate prices decline further, the cash coming in stays the exact same.
money.cnn.com
blog.hsh.com
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