What is Your Opinion of Real Estate Investors?
No, it isn’t a trick question.
No, I’m not trying to sucker people into a bash-fest.
Yes, I am a real estate investor.
Yes, I am serious. I’d really like to know what your opinion of real estate investor is and how you came to that opinion.
Yes, I know the trolls will likely try to have their fun but technology is in place to help keep it under control.
This thread is here because RH made a great suggestion in a comment he(?) left yesterday.
So, let’s discuss the perception of real estate investors and how that perception came to be.
I’m posting this again, since it may become lost in the other thread.
I’d love to know what you guys (RE investors) think of value added profit.
IMHO, you don’t add any - you are just a middleman that can be taken out of the equation, with benefits to both buyer and seller.
In capitalism, you are supposed to deliver some value to the overall transaction. You guys just hike up property prices.
If I’m wrong, feel free to correct me.
Hi Tim - the hated Realtor here.
Actually, a lot of the real estate investors I run into are pretty great people to be around. I’ve learnt a lot from them. It’s the ones that think they have to snatch something out of someone else’s hands to get it in their own that bother me and I avoid those.
I also think the investors that get the most attention unfortunately are the ones who have failed. They’re most people’s dream come true and are made into examples.
By the way, whether you agree with me or not, I am a real estate investor too - and the reason for my hated blog is that I’m trying to get people in Sacramento to realise the opportunities they have now, instead of just hating the successful ones.
Bruno…Go away…you are trolling…
James Marks has a great question up above. One which I alluded to in my earlier post (or rant, I suppose). What value add do real estate investors (and one of their largest subsets, the “flippers”) bring to the process?
Let’s look at Wal-Mart as an example of value-add. Wal-Mart doesn’t manufacture goods, except for a few of its GreatValue brand products. Rather it serves as the distributor - it brings products to the geographic areas of the consumers. So it adds value by eliminating travel for the consumer. And it likewise uses its influence as a distributor to reduce prices for the consumer as well as create packaging standards, once again for the convenience of the consumer. Sure, we can argue over the morality of Wal-Mart’s Chinese suppliers, but the bottom line is retailers like Wal-Mart add some nominal value to the process.
Now, let’s look at the average real-estate investor. They buy properties, generally using as much leverage as they can, then slap on a few upgrades, and sell at a maximum profit. One could argue that they actually help people by putting in upgrades for them, by “packaging the house” if you will. But nobody really buys that argument at all. Anymore than thinking the car dealer is ‘adding value’ by providing deluxe car mats for free if you buy the premium sports upgrade package for an additional $1700.
In many cases, a flipper would buy a house, slap in $2000 of kitchen appliances and expect a $30K profit a few months later.
In short, 99% of real estate investors are the equivalent of stock speculators. They hope to buy low and sell high. At least stock speculators are honest enough to admit that is what they are: day traders, hoping to profit on the vagaries of market cycles.
Also, except for the very few who wish to become landlords, real estate “investors” usually have no intention of being OWNERS for long, just as most stock speculators have no intention of sharing ownership of the companies whose shares they buy. Contrast this with Warren Buffet, who buys and keeps the companies - and executes the duties of ownership. He is a true investor, not a day trader.
So what value do real estate “investors” add? Nothing IMO. They are there to profit on the tides of whim and time. They create nothing of value. It certainly is legal, and speculators are common around the world. But adding no value to me means they can be cut from the loop entirely, and the sooner the better. It is our hope the sub-prime blowout, and the soon coming Alt-A decline, will dry up the liquidity which allowed this bubble to continue.
The biggest societal problem the real estate “investors” have created is a run-up in house prices which has made homes unaffordable to working families across the country. We have seen home prices rise to 10x and more the average annual family income - a big reason why is the endless flipping and speculating, by people who have no intention of living in the house.
Yes, the sooner we return to mean the better. And it will be painful, but to good effect. A burned hand teaches best.
James Marks,
Value Added Profit…This means that you add value to a property.
2 houses right next door to each other built in 1990.
House A has been immaculatly cared for buy its original ower, beautiful landscape, hard wood floors, new kitchen recently, professionally finished basement etc…
House A sells for 210k other identical houses in varying condition in the neighborhood have recently sold for 185-200k.
House B has had 3 owners in the last 17 years and none have been overly active in keeping the house nice. The original landscaping by the builder has never really been trimmed or cared for. The original vinyl in the kitchen and carpet that was rarely vacuumed are in poor condition. The basement was finished by owner number 2 and he was a doityourselfer which is obvious to most people seeing it. There is a roof leak in the garage that has leaked down on the wall to the house leaving an ugly stain.
This house started for sale at 200k and was lowered slowly to 185k over 14 months. An investor comes in and offers 130k. They take it and run.
The investor spends 30k to beautify the landscape, floors, roof, reface of the kitchen and baths and paint throughout, fixing the basement to coverup the doityourselfer mistakes.
They then proceed to sell the property for 210k in 30 days.
Has value been added? I believe so.
Maybe you are speaking of a specific investing style…A wholesaler might be considered an unecessary middleman, providing no real and tangible benefit…but that is not necessarily true. If the wholesaler finds the buyer and seller and makes a profit in the middle, more power to them. The real issue is the end buyer, what are they doing with the property? Renting, fix&flip, Primary residence? If renting or fix&flip, it is the responsibilty of the buyer to know the numbers. If the numbers work, it will be profitable, if the numbers don’t work they are in trouble.
I beleive that too many people around 1998-2003 wanted out of the stock market Into RE investing. They quickly found out they didn’t know what they were doing and trusted the wrong people.
Individuals are to blame, not Investors as a group…
“They then proceed to sell the property for 210k in 30 days.
Has value been added? I believe so.”
IMO, no. Not any more than a car dealer who “adds value” when you purchase the premium sports upgrade package for your Lexus by throwing in some free deluxe carpet mats.
But you are right - the same mentality that drove the dot.com stock market speculation transferred over to the real estate market. And that is precisely what the vast majority of real estate “investors” are: speculators. They are not in the market to own, they are there to flip quickly and maximize profit. They are speculators. In my mind a real estate investor is one like the partnership that owns the office buildings in which I work, along with several other retail malls in the area. They buy, and then rent and maintain, and then perhaps sell the properties down the road. But more often than not, they don’t sell.
Your car example is right on. People can do the same things with cars as they can with RE on a smaller scale. Buy low, fix or make look pretty and sell for a profit. No difference, but fly by night dealers are not being blamed for the prices of cars…or the lows and highs in the auto markets.
I suppose if you could just trade in your house…which in reality you can with an investor, but you lose your shirt on the deal, just like when you trade in your car and they sell it for half again what they gave you for it.
It is all about the individuals. You can manipulate many things, but in the end, investing in the numbers is what makes a profitable investor.
Hey Tim,
Glad to see you started this thread. Judging from the number of comments about this topic on the previous post, which was not even directly related to this topic, it looks like this could develop into a lively discussion!
You ask what are our opinions and how did we come to have them.
For me, I have to admit that my opinion of real estate investors is not favorable. The reasons are two-fold. One reason is related to the subjects bought up recently by a few other posters of “adding value” and the other reason is more esoteric and philosophical.
I will admit that my feelings on the value-added issue are likely skewed by the excesses of the recent bubble, and may well be mis-informed. To keep the posts form becoming too long I’ll need multiple posts
“Value-Added”
You ask for the origin of our beliefs so I’ll tell the whole story. Its a real estate investing story so I hope it will be interesting t o he readers of this real estate investing blog.
I purchased my first ever house shortly after graduate school. The house was in Alexandria VA (actually in Huntington VA). For those familar with the D.C. area, the house was a few blocks from the Huntington metro, the last stop on the yellow line. I lived there a few years, rented it out for about 5-6 years, and then sold it for a $230,000 profit in the summer of 2005 (gotta love that crazy bubble!). The Huntington area in Alexandria at the time I purcahsed was what they call and “area in transition”. Many of the houses had become run-down over the preceding years and just then were in the process of being regentrified. I found out about this from my real estate agent who, while I was looking at a house a few blocks form the one I eventually purchased, commented that an investor had just purchased the house next to the one I was looking at. I asked her what she meant and she explained to me what was happening to the neighborhood. Investors were buying run-dwon houses on the cheap putting 10-20 K into them and selling them to middle class folks making profitting 5 K or so a pop. I don’t think they called this “flipping” back then, but it seems like that’s what it was. This seemed like a great idea to me and I considered doing it for about a year and so I learned more about it and tracked the purchases and sales of these types of houses in the area. Eventually I lost interest and never tried it.
The relevant point in this story is how the investors did their business. These investors purchased truely run-down homes, performed needed, necessary repairs, and resold the houses for a reasonable price to people who wanted to live in them. They never made a lot of money on each individual transaction, but they did dozens (or more) transactions a year. Do 3 transactions like this a month and make a rather small $5,000 on each one and you pull down a very respectable $180,000 a year. It was win-win. The investor made money, the neighborhood was pulled back from the brink of blight, and a person or family got a reasonably priced house to live in. I have no problem with this!
Skip forward now to the bubble years.
Here is where my view of real estate investors becomes negative. Again, this feeling of mine may be skewed by bubble excess and may be mis-informed.
My impression is that there have been in the past 5 years or so, fewer investors in the real estate field doing what I described above. My impression is that now investors don’t really care if:
-the houses they buy are truly in need of repair or upgrades
-the alterations they make to houses actually are needed and necessary
- they sell to someone who actually wants to live in the house
I’ll detail why I believe this in my next post.
Hey Tim,
Glad to see you started this thread. Judging from the number of comments about this topic on the previous post, which was not even directly related to this topic, it looks like this could develop into a lively discussion!
You ask what are our opinions and how did we come to have them.
For me, I have to admit that my opinion of real estate investors is not favorable. The reasons are two-fold. One reason is related to the subjects bought up recently by a few other posters of “adding value” and the other reason is more esoteric and philosophical. I will admit that my feelings on the value-added issue are likely skewed by the excesses of the recent bubble, and may well be mis-informed. To keep the posts form becoming too long I’ll need multiple posts
“Value-Added”
You ask for the origin of our beliefs so I’ll tell the whole story. Its a real estate investing story so I hope it will be interesting t o he readers of this real estate investing blog.
I purchased my first ever house shortly after graduate school. The house was in Alexandria VA (actually in Huntington VA). For those familar with the D.C. area, the house was a few blocks from the Huntington metro, the last stop on the yellow line). I lived there a few years, rented it out for about 5-6 years, and then sold it for a $230,000 profit in the summer of 2005 (gotta love that crazy bubble!). The Huntington area in Alexandria at the time I purcahsed was what they call and “area in transition”. Many of the houses had become run-down over the preceding years and just then were in the process of being regentrified. I found out about this from my real estate agent who, while I was looking at a house a few blocks form the one I eventually purchased, commented that an investor had just purchased the house next to the one I was looking at. I asked her what she meant and she explained to me what was happening to the neighborhood. Investors were buying run-dwon houses on the cheap putting 10-20 K into them and selling them to middle class folks making profitting 5 K or so a pop. I don’t think they called this “flipping” back then, but it seems like that’s what it was. This seemed like a great idea to me and I considered doing it for about a year and so I learned more about it and tracked the purchases and sales of these types of houses in the area. Eventually I lost interest and never tried it.
The relevant point in this story is how the investors did their business. These investors purchased truely run-down homes, performed needed, necessary repairs, and resold the houses for a reasonable price to people who wanted to live in them. They never made a lot of money on each individual transactions, but they did dozens (or more) transactions a year. Do 3 transactions like this a month and make a rather small $5,000 on each one and you pull down a very respectable $180,000 a year. It was win-win. The investor made money, the neighborhood was pulled back from the brink of blight, and a person or family got a reasonably priced house to live in. I have no problem with this!
Skip forward now to the bubble years.
Here is where my view of real estate investors becomes negative. Again, this feeling of mine may be skewed by bubble excess and may be mis-informed.
My impression is that there have been in the past 5 years or so, fewer investors in the real estate field doing what I described above. My impression is that now investors don’t really care if:
-the houses they buy are truly in need of repair or upgrades
-the alterations they make to houses actually are needed and necessary
- they sell to someone who actually wants to live in the house
I’ll detail why I believe this in my next post.
From my last post:
“My impression is that there have been in the past 5 years or so, fewer investors in the real estate field doing what I described above. My impression is that now investors don’t really care if:
-the houses they buy are truly in need of repair or upgrades
-the alterations they make to houses actually are needed and necessary
- they sell to someone who actually wants to live in the house
I’ll detail why I believe this in my next post.”
O.K., so here is why I believe the above statements about real estate investors in todays environment. This believe is based on both personal experiences and, well, I’m ashamed to admit it, television. Yes, yes, I know, but before getting me about the television comment though, please read on.
When I sold my Huntington house it was pretty much the peak of the bubble (which was total luck and zero skill on my part!). I knew there were some things I needed to do to the house before selling it given that it had been rented for the past 5+ years. I knew it needed new carpeting and the yard needed a lot of work for example. When I chose a realtor I explained this to her. She didn’t need much explanation. She already had a contractor whom she had worked with in the past who did all kinds of fix-up work on houses and she already had a list of upgrades she thought I perform on the house. She wanted the whole nine yards. All new kitchen appliances, new kitchen cabinets, counters, and tile. She wanted the bathroom tub and wall ripped out and a new, very fancy, shower insert to replace it. New exterior doors. Her list went on and on. Her list of renovations would have cost around $45,000. This for a house I originally paid $111,000 only 7 or so years before. I explained to her that I was not an investor and did not have access to that kind of cash. I explained to her that many of the items she wanted were simply not necessary. Her only response to my concerns was a consistent, “this is what everyone is doing”, “If you want top dollar you need all new cabinets” or all new appliances, or whatever it was she wanted done. I ended up not doing most of the things she wanted done and spent about $10,000 on repairs/renovations.
About this time my wife began working part-time as an assistant for a local ReMax realtor and became very interested in real estate. She began watched all those stupid “Flip This House” type shows on TV. Now, normally, even with with “reality”-tyope shows like these, I realize that they are entermainent above all else and I view them as such rather than viewing them as slice of real-life.
However, as I watched these shows and the things the people were doing to these houses I was reminded very much of my experience selling the Huntington house. The people on the shows always made the same un-necessary upgrades, they always had the same excuses for doing. For example, it seemed like every house on every one of those shows got new appliances. They’d show the old appliances, and nine times out of ten they would look new and it not appear that there was a darn thing wrong with them. But, they’re not stainless steel and if you want the top-price you need the best, the people on the show would say.
Then when the flipper would go to sell the property it seemed like often the person they would be selling to was – another investor! Actually, its not just on TV that I’ve heard about this. I’ve read a couple newspaper articles that talked about the condo craze in Miami and how the great majority of the condo transactions were one investors selling back and forth amoungst each other.
I know these stupid shows are just TV, but they were very reflective of my own real life experience, so I’m left to wonder if maybe this really is how things have gotten.
Is this just bubble excess? Or are we really at the point the many (most?) real estate investors care ONLY about making money and really don’t give a crap if:
-the houses they buy are truly in need of repair or upgrades
-the alterations they make to houses actually are needed and necessary
- they sell to someone who actually wants to live in the house?
As others has said: are we at the point were real estate investors are no longer adding value to the transactions?
My impression we are at that point now, and that is one of the two reasons why I have a negative view of real estate investors.
With myself being a newbie RE investor (I’m not young, just very new at doing this stuff) I do not have a negative OR positive view about investors. I will begin by saying that lawyers, accountants, tax preparers and the like are all middlemen occupations. You do not NEED a tax preparer to do your taxes but it sure helps when you are dealing with a good one. The time and money saved using one can more that make up the fees that you pay them for. You may not NEED an RE investor but that investor may hold the solution to your problem, a solution that the seller was not aware of, even if he/she is pursuing a profit margin. There are good lawyers and bad ones just as there are good RE investors and bad ones. Also, just like in the law field there is specialties (RE, probate, criminal) in RE investing (short sales, buy and hold, pre-foreclosure) no one field is better than the other. RE like law is just so huge that you cannot possibly know it all so you must specialize. When I was in computer sales, in a warehouse, I had to overcome a ton of negative stereotypes about computer salesmen, in a warehouse, (most came from “Consumer Reports”) that we did not know our product or that we cannot help them if their computer goes down, etc. I hope that people get to know the investor that they are dealing with to find out if that person is on the up-and-up before assuming that, because he/she is an investor, is a skunk.
I certainly don’t want to derail this because it has taken a bit of an unexpected turn for me but on the value add (or lack thereof) issue, I have some questions.
If an investor buys a house for $75,000 in a neighborhood of $150,000+ houses why is he able to buy it for $75K?
If this same investor then spends say $30,000 in rehabbing plus several months of carrying costs plus paying for project management and oversight. What do you think an acceptable maximum profit for that investor should be?
On the investor as the middleman issue.
If someone needs or wants to sell a house now, as in as soon as possible, meaning today would be great… It is impossible to do that type of deal with anything but a middleman. The end buyer, the consumer, the one who will live in the house is not likely to be in a position to pay cash for the house. In that scenario, what is the acceptable maximum profit for that investor?
I have a problem with this whole idea of an investor not adding value. Taken to the extreme the same could be said for the homeowner so why should they make a profit when they sell?
I do believe bill_fogarty has some valid points. The differences between an “investor” and a “speculator” is somewhat correct, unless you apply the following logic:
“All speculators are investors but not all investors are speculators”
A spectator goes all out on an investment in hopes to achieve a short term gain. Like stock speculators/investors, RE “speculators” ARE influenced by the changes of the market more than the “buy, hold and rent-out” investor but he/she is still risking investment capitol (even if it is not his own) into the market in hopes of making a profit and make no mistake, even “buy and hold” investors are in it to make profit. Since the speculator has such a short window of opportunity, he also has a greater chance to take in a loss. In the end, an investment vehicle, whether it is a certificate of stock, single family home or a put option on “beans” pushes money from one hand to another. That is NOT a bad thing.
It depends. Flippers have helped to screwed a good fraction of a generation out of home ownership. Those of us who sat this out are lucky, the most unlucky are the ones who bought “its your last chance ever” and will now lose the home. I earn a good salary and even the cheapest condo would consume most of my income.
I have no problem with honest land lords, they provide a service to those unable to jump into the housing market, and the like.
However even there you can get dishonest landlords. For example our building was purchased at the top of the boom (guy probably planned to flip it). He knew what people where paying for rent, and bought anyways even though the rent doesn’t pay the mortgage.
His solution owner move in eviction (he has never moved in as required by law). Sleeze bag lawyers and games like losing rent checks, we now send it certified mail every month. Or holding a checks for long periods then depositing them all at once hoping one will bounce. He managed to catch our disabled and elderly neighbors in his games, sued for eviction and then dropped it when he realized they had a good lawyer. But now they are out the money for the lawyer, all because this guy bought something he couldn’t afford. I expect some day soon we will be paying rent to the bank.
Reading these posts it looks like one theme that is emerging is that persons views of real estate investors can vary depending on the type of investor you are talking about.
Heck, a person who buys 100 shares of a REIT could be considered a real estate investor; yet I have a hard time imaging that anyone would dislike or have a lack of respect for a person simply because they purchased shares of a pubicaly-traded REIT.
It seems like what is really disliked by the people is a specific type of real estate investor - the infamous “Flipper”. Actually, probably many would say flippers aren’t investors at all but speculators. In any case, flippers have given a bad name to real estate investing.
Tim has alluded to this idea in the posts a few days ago where he expressed concern that Casey’s publicity and media attention would only re-enforce peoples negative perceptions of real estate investing.
Its an issue. I have no data to show what percent of the real estate investing communtiy can be considered “flippers”. For all I know its a number as low a 1% or as high as 100%. One thing that does seem evident though is that flippers have become the face of real estate investing to the nation as a whole.
There may be lots of other types of real estate investors out there besides just flippers, but flippers are what gets the media attention and flippers are what people think of when they think of real estate investing. Since the public does not have a favorable view of flippers they thus don’t have favorable view of real estate investors.
Is real estate not worth what someone is willing to pay for it?
I am confused. This Flipper thing is more of a perseved problem to me. It is the end buyer that is the problem to me. If someone buys a product low and sells it fair or even high, is he the problem with an industry?
If a flipper pays 10 cents on the dollar for a property and sells it for 90cents, do you blame them? I sure don’t, I would love to do it all day long.
Whether its cars houses or stocks…its all the same to me…the least educated and/or most speculative generally are the ones stuck with the bag. That equates to the end buyer in many cases…in other cases like casey’s it ends up being the rehabber.
Let’s be clear about Larry’s “Landlord” - That guy IS a skunk. It is investors/landlords like him that put a bad name to all investors. I also have met very good landlords who take pride in their investment property. With myself being on the receiving end of a skunk landlord and his tactics makes me want to work that much harder to be a good investor.
The reason I said this took an interesting turn is the issue of what value a real estate investor brings to the party came up. I was happy to see that since I wrote a newsletter article discussing that on Sunday 7/29 to send out yesterday 8/1.
I didn’t want to post the article here before it went out to the newsletter members.
I will add a new post, but if you want to read the article you can find it at…
http://reitactics.com/august-1-2007
To respond to some of the questions:
“If an investor buys a house for $75,000 in a neighborhood of $150,000+ houses why is he able to buy it for $75K?”
We all know the answer to that. Probably because the house was run-down and needed work.
“What do you think an acceptable maximum profit for that investor should be?”
As far as I’m concerned, there is no maximum. My issue isn’t with the AMOUNT of profit made, its with HOW the profit is made. When an investor makes a profit because they spent the time, money and effort to make needed and necessary upgrades and repairs, I am content with them getting any profit the market will bear.
My problem is investors (flippers?) who purchase a property, make few or un-necessary (every house simply MUST have granite kitchen counter tops) alterations, frequently with shoddy work, and then sell to someone who is, frequently another investor whose plan is to do exactly the same thing.
“Taken to the extreme the same could be said for the homeowner so why should they make a profit when they sell?”
I don’t know what you mean by “taken to the extreme” so it hard to say I think you are incorrect. I will say that the majority of homeowners do add value to their homes. The simple act of living in a home, replacing worn out and broken equiptment, making the usual upgrades, performing the normal maintenance, all these items prevent a home from deteriorating and help it hold it value, and slowly increase in value with the market/economy.
Of course, there are some homeowners who do not upkeep their home. Some of these people may still be able to sell their homes at a profit despite their lack of upkeep. Clearly though, the odds of making a profit are much better if the homeowner takes care of their home, providing normal maintenance and repairs.
I don’t have any problem with homeowners being rewarded with a profit for spending time and money to upkeep their home over the years; just like I have no problem with investors who make a profit because they spent time and money to make needed and necessary upgrades/repairs to a home.
My issue is with what I said in a previous post. Investors who don’t really care if:
-the houses they buy are truly in need of repair or upgrades
-the alterations they make to houses actually are needed and necessary
- they sell to someone who actually wants to live in the house
RH Said:
This is where you lose me. What you see as an unneccessary alteration may be expected by the people buying in a price range. When my brother or I buy a house to sell or rent it really does not matter to us if the counters were replaced the day before closing. If they don’t match with our tenant or buyers expectations we change them. In that case, we are adding value right then and there because the person who is going to live there wants it.
No, I don’t put granite in every house but with the current pricing of granite it is finding its way into lower and lower priced homes we do.
I also take issue with your implying an investor should only buy houses that actually need some repairs. That is not the only thing that can cause a home to sell at a discount. There are lots of reasons a homeonwer might be willing to sell to me, right now, today, instead of holding out for the highest price.
Just something to think about.
Jim Greene
One half of the Sub2 Brothers.
bill_fogarty …I think that in general, I agree with your views of “flippers”, but I do believe there needs to be some distinction between flippers/speculators, and investors.
There was an analogy made between day traders and Warren Buffet, and I think that comparison really sums it up. I myself am not an investor, flipper, or anything else. At the moment I don’t even own my own home. However owning multifamily property that I can rent out to qualified tennants is something that I will be getting involved in over the next 2 to 3 years and I don’t agree that eveyone who truly invests in property that was built with the intention of being rented does not add value to the property or process.
You must live on the west coast someplace where there has been a lot of speculation. I live in Chicago, and there is absoulutely no money IMO in renting out single family homes or flipping them for that matter in this market. We do however have an abundance of properties from 2 unit buildings on up that were built specifically for being rented out to people who don’t want to own property.
In that instance how do you classify the landlord as a middleman who adds no value and is not needed in the transaction?
In any case, flippers/speculators are not 99% of the industry, but actually make up a small part of the RE Invenstment community. But as it is in many industries, they have gotten a lot of media attention precisly because of the Real Estate boom that they and mostly the mortgage banking industry helped create.
Don’t let their high level of activity over the last few years fool you into believing that they make up the majority of Real Estate “Investors” in this country. Quite frankly how can you call someone an investor who essentially doesn’t maintain ownership in the object/asset that they “invest” in?
I guess all I am saying is that if you don’t like flippers/speculators, say that. Don’t lump them in with legitimate investors though.
I think the main fault in running up prices is all the money being thrown at whoever can fill out an loan application and then giving them loans that they won’t be able to afford a couple years later.
Some rehab RE investors are similar to real estate developers. This is one of the safest was to invest. It’s similar to the idea that you should buy the worst house in a good neighborhood. A lot of people would like to live in the neighborhood, but don’t have the time or can’t be inconvenienced to buy a run down house and make it new and modern. Maybe they could find a 75k house in a 150k neighborhood, but then after they get a loan for the value of the house as is, they will have to come up with the 30k or more to get it into livable shape. While doing this they and their family have to live in a construction zone for months. Maybe they won’t be able to use a bathroom for a few weeks. Anyway, the RE investors profit is justified by their financial risk and time spent managing the project.
Other RE investors rent out apartments, which we need.