As real estate prices climb in the majority of markets throughout the country, investors are currently becoming more reluctant to purchase the same amount of inventory compared to last summer.
Among 3,020 respondents who participated in a survey conducted by ORC International for MemphisInvest.com, 48% said they plan to buy fewer properties in the next 12 months than their overall transaction total over the course of the last year. When the same survey was conducted in August 2012, this question came back with a 30% result.
Meanwhile, only 20% of investors said they would increase their purchases through April 2014 compared to 39% of survey respondents 10 months ago.
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Even though investors are forecasting to buy less assets in the year to come, over half who own rental properties or plan to acquire them in the next 12 months plan to hold the properties for at least five years or more. Furthermore, one-third of the survey respondents said they would like to hold these assets for at least 10 years.
“Cash flow is much more important than appreciation,” Clothier stated, for real estate investors, who have purchased 24% of all existing homes sold in 2012, according to the National Association of Realtors.
Additionally, the study revealed that the way purchases are being made has also changed over the last 10 months. For example, in August, nearly one out of four investors said they will use all cash on their next purchase and the rest of the survey respondents would use some sort of financing. Now, 37% of investors would pay for their investment properties they own with all cash.
Clothier said this strategy “makes sense” as prices increase since they “lower investors’ costs.”
