the annual residential real estate investor...
TRANSCRIPT
Each year, leading residential real estate lender Visio Financial
Services conducts a survey of the residential investors in their
database to better understand their customers’ needs, as well as to
track growing trends in the ever-changing real estate market.
With more than 14 million single-family rental properties in the
United States, the residential real estate investment market is a
multi-billion dollar investor opportunity annually. Further, it is
highly fragmented, with 68% of investors owning fewer than seven
properties. Despite this market’s size, the fragmentation has meant
very little analysis of this space.
Visio Financial, in business since 2011, has originated more than
2,800 loans to investors exclusively, yielding a deep understanding
of the real estate investing space.
Thanks to Visio’s market knowledge and sizable database, they
conduct an annual survey of residential investors at the start of
each year. Real estate investors, whether they own two properties
or 200, share their experience and plans, giving valuable insight
into the residential real estate market. Visio provides the resulting
Annual Residential Real Estate Investor Report to investors, lenders,
analysts and anyone else interested in this massive market.
t h e a n n u a l r e s i d e n t i a l r e a l e s t a t e
I N V E S T O R R E P O R T
Investors Adapt to a Healthier Market
• Investment Portfolio Growth: 49% of investors are planning on
buying four or more houses in 2015, compared to the 25% who
actually bought four or more in 2014.
• Higher Price Bands: 63% more investors are considering
$200K-plus properties than last year, whereas interest in
sub-$40K properties has decreased.
• Broadened Property Searches: 34% of investors are searching for
investment property out of their home states as local property
deals dwindle.
Market Ripe for Rapid Growth
• Working Capital: 92% of full-time investors believe that access to
lower-cost loans could grow their businesses faster.
• Help Wanted: More than one-fifth of full-time investors need
more high-quality employees and contractors in order to sustain
their growth.
• Career Investors: 83% of part-time investors expressed interest in
going full time, provided they had more funding and quality deals.
• Minority Growth Sector: African-Americans comprise 22% of the
investor class, up from 15% in 2014, and significantly higher than
the general population (13%).
E X E C U T I V E S U M M A R Y
01. INVESTOR PROFILE
Who are residential investors?
full time part time
44% 56%
34% 66%
married widowed divorced/ single other separated
68%
2%
13% 7% 10%
49% 8% 17% 11% 15%
©2015, Visio Financial Services | www.visiolending.com 3
Investors mostly male, married
Compared to national averages, residential investors in the U.S. are more likely to be male,
married and African-American. At 64%, the percentage of white investors matches the
national average of 63%, but the proportion of investors who are black far exceeds the
national racial average of 13%. With the average number of married Americans hovering
around 50%, investors are 28% more likely to be married. While 68% of male investors are
married, only 49% of female investors are, with women more likely to be divorced (15% vs. 11%)
or single (11% vs. 7%). Men were also much more likely to be full-time investors versus women.
23%77%2.9 people in householdclose to the national average of 2.6
64% married
65% employedfull time
Average age52 years old
African-Americans make up 22% of the investor
class (up from 15% last year) versus 13% of the
general population. This shows an upward trend
of African-Americans entering the real estate
investment space.
22%13%
total population investorsDemographic highlights
02. INVESTOR INCOME
How much money are investors actually making?
©2015, Visio Financial Services | www.visiolending.com
0% 5% 10% 15% 20%
$0-$25K
$25K-$50K
$50K-$75K
$75K-$100K
$100K-$125K
$125K-$150K
$150K-$175K
$175K-$200K
$200K+
ann
ual
ho
use
ho
ld in
com
e
4
The median investor has a
total household income of
$100K-$125K, more than
twice the median income of
the average American.
• On average, 36% of totalhousehold (HH) income wasfrom residential investing
• 25% of investors make <10%of their total HH incomefrom investing
• 29% make 50% or more of HHincome from investing
• Only 4% make 100% of HHincome from investing
Investment income as percentage of total incomeBreakdown of total household income
25%
20%
15%
10%
5%
0%
percent of household income from investing
inve
sto
rs
100%<10%
Investor household income above national average, but success is concentrated
While the median income of the average American household is about $53K, median income
for residential investor households is at least twice that, falling in the $100K-$125K range.
However, investment income contributes only a fraction to their total income, with a quarter
of all investors making less than 10% of their total household income from investing. On
average, 36% of total household income was from residential investing, which means
investing doesn't pay all of the bills, even for the full-time investors.
03. FULL-TIME INVESTORS
Can full-time investors grow their businesses?
©2015, Visio Financial Services | www.visiolending.com
cheaper loans
more/better deals
more/better contractors & employees
faster financing
92%
38%
20%
20%
5
Full-time investors held back by capital and scarce deals
About 44% of residential investors engage in it full time; 56% do so on a part-time basis.
When asked to name two to three things that would help them grow their businesses, a huge
majority (92%) of full-time investors cited better access to cheaper loans. The full-timers also
would like to see better deals (38%) and faster loan origination (20%). Interestingly, slightly
more than 20% said that if they had more high-quality employees and contractors, they
would be able to grow faster. Comments like, “Desperately need more workers,” were not
uncommon. Looking at the breakdown in investing strategy, full-timers are much more likely
to focus on flipping houses (44%) than are part-time investors (39%). Relying on rental
properties is much more preferred by part-timers (52%) than by full-timers (43%).
What do you most need to accelerate your business? Strategy preference
full time
part time
equal
prefer flip
prefer rent
PT56%
FT44%
investors part time
52%
39%
9%
full time
43%
44%
13%
04. PART-TIME INVESTORS
Can part-time investors turn full time?
©2015, Visio Financial Services | www.visiolending.com
Lack of moneyto do more deals
Lack of accessto lender capitalto do more deals
Lack ofquality deals
No desire to be afull-time investor
58%
35%
19%
17%
PT56%
6
Part-time investors lack capital, deals to go full time
Part-time residential investors cited a lack of access to capital (35%) and lack of money to do
more deals (58%) as major impediments to going full time, whereas the full-time investors
had greater access to capital but bemoaned the cost. Like the full-timers, part-timers also
saw a need for more quality deals. A small number (17%) of part-timers stated that they have
no desire to become full-time investors, regardless of deals and capital. We asked part-time
investors what their full-time jobs were and received a huge diversity of responses, although
1/5 of them have sales-related jobs. Not surprisingly, jobs that aid in residential investment
success like construction, finance and real estate were cited by nearly 25% of respondents.
sales
construction
finance
management
realtor
other
20%
9%
8%
7%
7%
49%
Why are part-time residential investors not full time? What are the full-time jobs of part-time investors?
05. PROPERTY OWNERSHIP
Will investors' portfolios grow in 2015?
©2015, Visio Financial Services | www.visiolending.com 7
2013 did buy
2014 planned to buy
2014 did buy
2015 plan to buy
26% 50% 12% 4% 8%
5% 57% 18% 8% 12%
50% 12% 7% 6%25%
6% 20%45% 12% 17%
0 1-3 4-6 7-10 11+
Investor confidence increases in 2015
Last year, we asked investors how many investment properties they bought in 2013 and how
many they planned to buy in 2014. Optimism was evident. Even though only 24% bought four
or more houses in 2013, 38% planned to buy that many in 2014. A year later, we find only 25%
actually bought the four or more properties they expected to buy, about the same as in 2013.
And this year? Optimism returns even stronger, with 49% of investors planning to buy at least
four houses this year. In fact, the number of investors planning to buy eleven or more houses
saw the most impressive increase this year, from 12% in 2014 to 17% in 2015.
Investors who bought or plan to buy four or more housesHow many investment properties did you or do you plan to buy? x4
60%
50%
40%
30%
20%
2013 actual 2014 planned 2014 actual 2015 planned
24% 25%
38%
49%
06. INVESTMENT PROPERTY PRICES
How are investors adapting to a healthier market?
©2015, Visio Financial Services | www.visiolending.com 8
0% 10% 20% 30% 40% 50%
$0-$20K
$20K-$40K
$40K-$60K
$60K-$80K
$80K-$100K
$100K-$150K
$150K-$200K
$200K+
39%30%
51%46%
41%44%
30%34%
24%28%
17%22%
9%14%
8%13%
2014 price ranges considered
2015 price ranges considered
In what price ranges will you consider investment properties? Price ranges considered, by number of 2014 property purchases
0
1-3
4-6
7-10
11+
28% 47% 43% 30% 24% 13% 10%12%
32% 43% 44% 32% 25% 21% 13% 11%
18% 43% 43% 38% 33% 25% 17% 13%
49% 49% 51% 46% 37% 29% 23%57%
33% 57% 40% 30% 20% 17%40%40%
$0-$20K
$20K-$40K
$40K-$60K
$60K-$80K
$80K-$100K
$100K-$150K
$150K-$200K
$200K+
Investors increasingly look toward higher-priced properties
What price ranges do investors consider? More investors are looking at higher-priced houses
this year versus last year, with houses $40K and lower getting less attention. This is
likely in response to generally rising property prices and picked-over inventory. Interestingly, the
higher the price band, the greater the increase in the number of investors considering homes
in that range, with 63% more investors looking at $200K-plus houses this year than in 2014. We
asked investors in which price ranges they search for investment properties, and we found that
investors who are more active search the full spectrum of housing prices to find deals.
Investors who bought fewer than seven properties mostly searched in the sub-$100K ranges.
07. PROPERTY PURCHASES
Are investors broadening their property searches?
©2015, Visio Financial Services | www.visiolending.com
2014 2015
23%25%
<10 mileshome
50% 49%
citywide
34%32%
statewide
34%31%
other states
9
Top 10 states for residential investing
2015: FL GA TX NC SC TN OH AZ CA MI67% 43% 36% 33% 30% 29% 28% 24% 22% 22%
vs. 2014: = = = = = +4 +2 = -3 +1
Financing sources that investors consider vary by geographic distance, but cash is king whether an investor buys in- or out-of-state.
Bank money, however, remains more local, with only 14% of out-of-state buyers considering it, versus 20% of those searching close to home.
50%
40%
30%
20%
10%
0%
<10 miles citywide statewide other states
cash
private lender
partner
bank
More investors venturing beyond home state for deals
Compared with last year, fewer investors are looking locally for properties, with less than half
saying they would consider searching citywide. In a sign that deals are getting more di�cult
to find, more investors are looking statewide and even outside their home state this year,
with 34% venturing that broadly.
For those investors who do consider properties outside their home state, Florida remains the
No. 1 location. While this year's top five states kept their 2014 ranking, Tennessee jumped
four spots this year, with rust belt states Ohio and Michigan gaining rank as well.
Cash preferred, regardless of locationProperty search distance from home
08. INVESTMENT STRATEGIES
Is the grass greener with another strategy?
©2015, Visio Financial Services | www.visiolending.com 10
2013 actual strategy
2014 expected strategy
2014 actual strategy
2015 expected strategy
31% 21% 21% 17% 11%
25% 18% 23% 22% 12%
24% 22% 18% 11%27%
21% 21%21% 24% 13%
buy to rent only buy to flip only both, but primarily rent both, but primarily flip both equally
60%
55%
50%
45%
40%
2013 actual 2014 planned 2014 actual 2015 planned
50% 50%
58%59%
Investors want to expand their strategies but seldom do
In 2013, only 50% of investors pursued a non-exclusive strategy (i.e., mixing both rental and
flip properties), but 58% expected to do so in 2014. However, it turns out that they didn't
pursue multiple strategies like they planned, with 50% reporting non-exclusive strategies in
2014, mirroring the number in 2013.
And do investors again think their businesses might be enhanced this year if they expand
their investment strategies? They do, with 59% planning to pursue non-exclusive strategies.
Based on last year's trend, we expect the actual percentage to remain around 50% in 2015.
Investors who pursued or plan to pursue a non-exclusive strategyWhat is your primary residential investment strategy?
09. INVESTOR FINANCING
Do flippers and landlords finance differently?
©2015, Visio Financial Services | www.visiolending.com 11
Flippers love private money, landlords love banks
About 40% of investors get at least some of their purchase financing from private lenders,
but investors who focus on rental properties are less likely to work with a private lender or
partner than flippers are. In fact, only 27% of investors purchasing houses exclusively for
renting use private money, while 49% of the flip-exclusive investors will turn to a private
lender. On the other hand, flippers access bank capital much less frequently than landlords
do, and also resort to cash less often.
Typical sources of financing, by strategy
both equally
primarily flip
flip only
primarily rent
rent only
46% 21% 48% 25% 8%
62% 12% 51% 40% 10%
64% 38% 27% 12% 9%
68% 28% 37% 19% 9%
56% 12% 49% 30% 6%
cash bank private lender partner other
60%
45%
30%
15%
0%
cash bank private lender partner other
How do you typically finance investment property purchases?
10. RENTER PROFILE
How does renter behavior a�ect investors?FOR
RENT
©2015, Visio Financial Services | www.visiolending.com 12
Most renters hope to purchase, but many prefer renting
To better help our landlord customers understand their renters, we analyzed the data we
received from non-investor survey respondents. We weren't surprised to find that poor credit
has forced many people into rentals and that most of them hope to be able to buy a home
within the next three years. But 22% of the respondents who identified themselves as renters
simply prefer renting, which is great news for the 88% of respondents who currently own at
least one investment property.
When did you last own your own home?
When do you expect to next purchase a home?
What’s your primary reason for renting?
What was your total household income last year?
last 3 yrs
3-5 yrs ago
5-10 yrs ago
never
17%
8%
25%
50%
<1 yr
1-3 yrs
3-5 yrs
5+ yrs
never
29%
44%
9%
9%9% poor credit
income
between homepurchases
prefer to rent
53%
14%
8%
22%
<$10K
$10K-$25K
$25K-$50K
$50K-$75K
$75K-$100K
$100K-$125K
$125K-$150K
18%
7%
7%
28%14%
14%
12%
$
Simply put, we thrive on real estate. We’ve bought, sold or financed
more than $250 million in residential real estate nationwide, and we
understand the unique needs of residential investors.
Drawing on years of experience in the distressed property field, we
crafted our loan products with three words in mind: fast, simple,
dependable. As the fifth-largest hard money lender in the U.S. (as
ranked by Scotsman Guide), Visio o�ers unique mortgage loans
l o a n s f o r i n v e s t o r s , b y i n v e s t o r s
designed to meet the needs of investors purchasing single-family
residences. Since our founding in 2011, we have originated more
than 2,800 loans to investors nationwide. Our mission is to deliver
fast, simple and dependable mortgage financing that assists investors
in the redevelopment of houses into quality, a�ordable homes.
For more information about this report or Visio Financial, please
contact us at [email protected] .