The continued decline in pricing in our SW Florida market has been bringing out more and more investors from the sidelines, now jumping into the game. And I’m not talking about speculators. Speculators are hoping and praying the prices will rise with no real plan or exit strategy. Often times they don’t have the staying power if their investment goes in the wrong direction (e.g. 2006 real estate market crash). These investors have a game plan.
Are these true investors great for everyone in the market and local economy or are they hurtful? You’ll often hear that investors drive the prices down since they are buying properties so cheaply that it hurts the whole neighborhood and home values.
This is where I think fact should be separated from fiction. Bottom line, investors step in and help for various reasons:
- They buy deteriorated homes and bring them back to life, actually beautifying the home which, in turn, gives a better look to the overall neighborhood. Foreclosures stick out like sore thumbs due to lack of maintenance.
- They rehab the homes, making the home better than it was before and giving a first time home buyer or family the opportunity to purchase a nice home at a low price.
- They bring income back into communities. Condo fees are going through the roof. When people let their homes go, they also stop paying their condo and HOA fees and this puts pressure on all the other homeowners in the community, causing fees to go up from lost revenue. When investors step in, they start paying the fees which generate income back to the community; a benefit for all residents.
- They create more jobs. With investors buying and fixing homes, they are creating jobs for contractors, handyman, painters, etc. This helps provide cash flow for local businesses and it’s a cycle that goes ‘round and ‘round.
- They improve our community. On deteriorating houses, property taxes often go unpaid. Those tax dollars fund so many wonderful things in our local economy that it really hurts to lose that revenue. When investors step in, taxes are made current and continue to get paid going forward helping our local economy.
- They create affordable rentals. Some investors are buying and renting to long- term tenants, creating affordable housing for families who may not be in a position to purchase.
- They have cash. They can purchase properties that banks are not willing to finance and most people can’t buy, once again improving the home and therefore the community and home values.
If you think that investors profit off the distress and misfortunes of others, think again. With reasons above, you’ll see there is more to our local economy and market. Happy Hunting!