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C O V E R S T O R Y / S A N D R A L A N E
P
It seems that more Americans today think that real estate is the best option
for long-term investments than in the past, ranking it ahead of gold and stocks,
according to a recent Gallup poll. In addition, many investors are turning to
real estate as they perceive stocks becoming more expensive and interest rates on
CDs and treasuries remaining low or even declining.
While it's true there are many real estate
investment opportunities available, some caution
must be observed, and investors are well advised
to perform some due diligence before investing.
REOS TO RENTALS STILL POPULAR, BUT
DECLINING
During the past two years, various funds,
trusts, and REITs have invested more than $20
billion to buy approximately 200,000 rental
homes. is seemed to be a good investment
when prices had declined as much as 35 percent
from home values back in 2006.
Now as foreclosures decline, the supply of
REOs has diminished even though there is a
considerable shadow inventory still available.
As a result of this decline in foreclosed
properties, major players in the rental market
such as Blackstone Group have curtailed their
acquisitions in 2014 by as much as 70 percent.
RealtyTrac reports that the number of
foreclosures in May 2014 was 5 percent lower
than the previous month and 26 percent lower
than the same time last year. It is estimated that
6 to 10 percent of foreclosures were purchased
by corporate investors. e remainder was
purchased by individual investors.
According to the Mortgage Bankers
Association, another reason conversion
of REOs into rentals has declined is that,
beginning in the fourth quarter of 2013, prices
on homes increased, allowing many delinquent
While data shows that the housing industry is making a
significant rebound, some housing market investors are finding
that in the realm of purchasing of non-performing notes is
a mere fantasy.
Housing's
Golden Investment
or Fairy Tale?
