Are Professionals Squeezing the “Amateurs” Out of Flipping?
According to the La Times, professional investors are flocking to California in record numbers to buy large quantities of foreclosed homes at distressed prices. In the article, the reporter speculates that this movement could be due in large part to the fact that there are “sparse investment opportunities elsewhere”[1].
While this analysis may or may not be particularly astute, it is a documented fact that professional buying (that is, investors who are buying using large amounts of money and investing in large quantities of property at once, also known as bulk REO investing) has surged in the past few years, while investors tapping a 401K or a line of equity in their own homes have declined in numbers. While this type of professional investor involvement is “spark[ing] a nascent housing recovery in Southern California because investors have cut significantly into the glut of foreclosed properties,” is it true that they are forcing the “smaller fry” out?
It certainly could be, but if so, this is due to lack of information rather than being outplayed on an investing field. Many investors do not realize that you do not need your own millions or billions to invest in large volumes of property and therefore could be “bowing out” in the face of larger real estate investing ventures. It is important not to demonize the big players, but it is also vital to your investing success that you not allow yourself to fade out in the face of new investing strategies, but rather turn those strategies to your advantage.
Do you think it is accurate to say that professional real estate investors are squeezing out the amateurs?
Thank you for reading! Your comments and questions are welcomed below.
[1] http://www.latimes.com/business/la-fi-homes-investors-20100820,0,7168785.story?track=rss