2017 Investor Survey
2017 Investor Survey
2017 Investor Survey
Investor Survey
Survey methodology & objectives
Methodology
293 online surveys conducted July-August 2017
Respondents: REALTORS who have worked with
investors buyers in the past 12 months
Sample error: 3% at a 95% confidence interval
Objective
Detail whos investing (investor profile)
What theyre buying and why
How theyre paying and what the objectives are
What the negotiation/process was like
Strategic/relationship considerations for REALTORS
The Investor Business
Business is brisk generally for investors too
18
16.4 Number of
16 15.2 14.8 Type Transactions
14 13.1
12
Median 3.0
10
8
6.4 Mean 4.6
6 4.9 4.6
4.0 80th
4 2.7
Percentile 6.0
2
0
2013 2014 2015 2016 2017 Max 50.0
Average Investor Transactions Average Total Transactions
Q: How many investor transactions did you close in the past 12 months?
In some ways, its the only game in town
Returns by Investment Type
13.4% 13.0%
12.0%
9.5%
7.2%
6.0%
5.5%
-0.1%
-2.2%
2
FRM
ARM
1
35% 32%
31%
30%
26%
25%
21%
20%
15%
10%
5%
0%
2013 2014 2015 2016 2017
Q: How many investor transactions did you close in the past 12 months?
Q: How many total transactions did you close in the past 12 months?
Who Is Investing?
Client Demographics
More businesses getting into the mix
80%
72.0%
69.0%67.9%
70%
60%
50%
40%
30%
22.0%22.0%23.5%
20%
10% 5.3%
0.8% 1.9% 0.4%
3.1% 2.7% 2.9% 2.3% 4.3%
0%
LLP Other Corp LLC Individual
2015 2016 2017
Taiwan 0.6%
Other 1.2%
Mexico 0.6%
Japan 0.6%
China 3.0%
Canada 0.6%
USA 93.3%
0% 50% 100%
Foreign investors made up slightly more
100% 5% 6% 7%
90%
80%
70%
60%
50% 95% 94% 93%
40%
30%
20%
10%
0%
2015 2016 2017
U.S. resident Foreigner
$100,000
$50,000
$0
2013 2014 2015 2016 2017
30%
19.6%
20% 16.0%
14.0%
9.8%
10% 5.6%
2.5% 3.8%
0%
Asian Black Hispanic Other White
% of Investors % of Population
Not only not getting better, getting worse
100%
90%
80%
49% 53% 52%
70% 60% 55%
60%
50%
40% 20%
29% 19% 24%
30% 17%
10%
20% 13%
14% 11% 13%
10% 9.5% 16.0%
7.9% 9.7% 7.8%
0% 0.7% 2.2% 3.6% 2.4% 2.5%
2013 2014 2015 2016 2017
African American/Black Other Hispanic/Latino Asian Caucasian/White
$350,000
$300,000
$264,841
$247,080
$250,000
$200,000
$150,000 $138,571
$103,500
$100,000 $81,667
$50,000
$0
Asian White Other Hispanic Black Total
The Tech IPO still a unicorn, but lucrative!
Client Financial Background Client Net Worth
Inheritance
3% Foreign
Investor Total 6.2
Other 4%
Tech IPO 25.5
11%
Tech IPO
2% Other 2.3
0 20
$Millions
Mean Median
How Sophisticated
Are Investors?
Client Real Estate Background
Generally, investors are pretty savvy
140
120
100
80
65
60
40
21
20
5
0
This Photo by Unknown Author is licensed under CC BY-SA
Expert Knowledgeable Limited Needs
Knowledge Handholding
And getting savvy-er
50.0%
Extremely knowledgeable/experienced 60.0%
62.6%
37.0%
Knowledgeable, but fairly inexperienced 33.0%
26.7%
10.2%
Limited knowledge, first time investor 5.5%
8.6%
50.0%
41.4%
40.0% 33.3% 33.3%
28.6%28.6% 27.8%
30.0%
20.7%
20.0%
10.0% 6.1%
0.0%
Entrepreneur Foreign Investor Mom/Pop Other Tech IPO
% w/Expertise % w/Limited Knowledge
Buying less other properties, but some BIG ones
7.0 74% 80%
6.5
6.0 64% 70%
60%
5.0
47% 50%
4.0
40%
3.0
30%
2.0 1.8
2.3 20%
1.0 10%
0.0 0%
2015 2016 2017
% who purchased other properties Average # of properties
Q: How many other properties did your last investor client purchase within the past 12 months?
2017 Investors: Not my first rodeo
% who own other properties Average # of other properties
9.0 8.3 100%
90% 91%
8.0 83% 83% 85% 90%
10.0
# of Units
8.0
6.6
6.0
3.8 4.0
4.0 3.5
2.0 1 1 1 1 1
0.0
2013 2014 2015 2016 20017
Average Median
Q: How many units did the property have in your last investor transaction?
In general, family homes or smaller MFRs
Avg. Sq. Ft. Avg. Units
8,365 8,532
7,896 38.7
12.0 13.0
1,922
1.4
3.4
2.9 2.7
2.1 2.1 2.2
3.3 3.4
2.8 2.7
2.2 2.2
46% 46%
47% Other
Rural
Suburban
Urban
40% 41%
35%
6.1
4.2
80%
70%
60% Don't know
79.4%
50% 70.4% Up
Flat
40%
Down
30%
20%
10% 14.8% 7.8%
0% 0.4% 5.8%
In 1 year In 5 years
20%
15%
10%
5%
0%
2015 2016 2017
60%
50.7%
50%
40.0%
40%
30% 24.5%
20%
10%
0%
Single-Family Attached Multi-Family Land
Bargain price Annual rental income Short-run gain Future price appreciation
Tax purposes Other Safety and/or hedge
Biz wants deals; individuals mostly rents
Primary Motivations by Type of Client
45%
40% 38.5%
35.6%
35%
30%
25% 21.8%
20% 17.9% 18.4% 17.8%
14.1%
15% 11.0% 11.0%
10%
5.1% 3.7% 2.5%
5% 1.3% 1.3%
0%
Business Individual
Annual rental income Future price appreciation Bargain price
Tax purposes Short-run gain Safety and/or hedge
Other
Less focus on location and returns
Location 38.0%
34.2%
Size 6.6%
2.9%
Other 1.8%
7.0%
Q: What was the single most important reason that your last
investor buyer chose to purchase that particular property?
Blip for flips? Rental share is down.
100%
7% 10% 12% 13%
90% 14%
80% 20%
26% 26%
70% 28% 30%
60%
50%
40%
73%
30% 65% 62%
58% 57%
20%
10%
0%
2013 2014 2015 2016 2017
Rental Flip Other
60%
50% 33%
39%
51% 39% 40%
40%
30%
20% 36%
30%
10% 18% 22% 23%
0%
2013 2014 2015 2016 2017
None Minor cosmetic Major cosmetic Major remodeling
$20,000
$20,000
$15,000
$15,000 $13,500
$10,000 $10,000
$10,000
$5,000
$0
2013 2014 2015 2016 2017
$1,500
$1,000
$500
$0
2015 2016 2017
Q: How much will your last investor client charge for monthly rent on the property?
Maybe a leading indicator rents topping?
Median
$120
$100
$100
$80
$60
$50 $50
$40
$20
$0
2015 2016 2017
Q: How much will your last investor client increase the monthly rent for the next tenant?
How are Investors
Paying for Properties?
Still cash buyers, but with rates this low
100%
90%
80% 33% 33% 34%
45% 43%
70%
60%
50%
40%
30% 67% 67% 66%
55% 57%
20%
10%
0%
2013 2014 2015 2016 2017
Cash Financing
Q: What was the source of the cash funds in your last investor transaction?
The Negotiation Process
and Dealmaking
Sellers still getting top dollar in 2017
Sales-to-List Price Ratio
101%
100.1% 100.1%
100%
99.2%
99% 98.3%
98%
97%
96%
95.0%
95%
94%
93%
92%
2013 2014 2015 2016 2017
Businesses throw weight around
Sales-to-List Price Ratio
106%
103.9%
104%
102%
100% 99.7%
97.9% 98.3%
98%
96%
94%
Business Individual
Mean Median
Businesses much more cheeky w/offers
Initial Offer-to-List Price
100.0%
99.5% 99.4%
99.0%
98.6%
98.5%
98.0%
97.5% 97.4%
97.0%
96.5%
96.0%
Business Individual Total
Foreign investors willing to pay premium
Sales-to-List Price by Residency
110%
108.3%
108%
106%
104%
102%
100% 99.5%
98.8% 98.3%
98%
96%
94%
92%
Foreign Domestic
Mean Median
Lots of others competing for investment units
Average
4.5 4.2
4.0
3.5
3.5 3.3 3.3
3.0
# of Offers
2.5
2.0
1.5
1.0
0.5
0.0
2014 2015 2016 2017
3.0
2.7
2.5
2.0
1.6
1.5 1.4
1.0
0.5
0.0
SFR Detached Attached Other Raw land Multi-Family Total
Others start to give Bay Area run for its $
Multiple Offers by Region
4.5
4.1
4.0
3.5
3.5 3.3
3.2
3.0
3.0
2.5 2.3
2.0 2.0
2.0
1.5
1.0
0.5
0.0
Southern Bay Area Central Sacramento Central Far North Another Total
California Valley Metro Coast State
Those are the areas to watch heat up
California Job Growth
Multiple Offers by Region
Shasta 5.2%
4.5 4.1 Madera 4.3%
Napa 4.2%
4.0 3.5 Ventura 3.5%
25 23
20
15 15 14
15
10
0
2013 2014 2015 2016 2017
80
60
60
45
40
20 11 14
0
Attached SFR Detached Raw land Multi-Family Other
Driving up competition for those units!
Sales-to-List Price by Property Type
106%
104.3%
104%
102%
100% 99.5%
98%
96.5%
96% 95.1%
94% 93.6%
92%
90%
88%
SFR Detached Attached Multi-Family Raw land Other
Transaction costs rise more than prices
Median Cost
$25,000
$20,700
$20,000
$15,000
$15,000 $12,000 $12,900
$9,000
$10,000
$5,000
$0
2013 2014 2015 2016 2017
6.8
5.9
6.0
4.0
2.0
0.0
2013 2014 2015 2016 2017
Q: How many weeks did you spend looking for a property with your client?
Many had to go to several properties to close
4.5 4.2 90%
4.0 80%
3.5 70%
% Multiple Offers
3.0 2.7 2.8 60%
# of Offers
10.0
8.7 8.9
8.4
# of Properties
8.0
6.9
6.0
4.0
2.0
0.0
2013 2014 2015 2016 2017
Q: How many properties did you view with your client prior to the client making a purchase?
Still a traditional business
36.0%
Previous client 29.0%
28.0%
17.0%
Referral 22.0%
22.2%
11.0%
Friend 12.0%
16.5%
11.0%
Client found me online 8.5%
4.9%
50%
40%
30%
21%
18% 18%
20% 15% 14%
5.8% 8.0%
10% 3.7% 4.0% 5.3%
0%
2013 2014 2015 2016 2017
MLS My listing Directly from seller
Q: What kind of marketing do you do to attract investor clients? Please select all that apply.
Biz: online adds; Individuals: print media
Advertising/Marketing by Medium
100%
11.1% 13.7%
90% 19.5%
80% 14.2% 12.3%
8.0%
70%
60% 31.6% 33.2%
36.8%
50%
40%
30%
20% 43.2% 40.8%
35.6%
10%
0%
Business Individual Total
None Online Print Other
ROI is still an essential piece of information
Essential Information for Purchase Decision
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Attached Land Multi-Family Single-Family Total
Location ROI Price Comps Rents Condition Restrictions Other
Business wants to see those COMPS too!
Essential Information by Type of Client
35%
29.5%
30% 27.2%
26.1%
24.4% 24.8% 24.7%
25%
20%
15% 14.1%
9.5%
10% 7.3%
5%
0%
Business Individual Total
Location ROI Price Rents Comps Condition Other Restrictions
Well need to step up the analysis game
Especially if you want some big MF deals
% Performing Analysis Prior to % Performing Analysis by Property
Purchase Type
70% 120%
60% 100%
60% 100%
80% 71%
50% 47%
60% 49% 50%
40% 45%
40%
30%
20%
20% 0%
10%
0%
Business Individual
Opportunities for Property
Management Income
Property management declines w/flipping
100%
8.0% 11% 10% 8.2%
90% 15%
80% 27% 22% 24% 27% 24%
70% ( by Buyers Agent)
60%
50%
40%
67% 69% 66% 65%
30% 61%
20%
10%
0%
2013 2014 2015 2016 2017
Owner Property manager Other
0%
Owner Other Buyers Agent Another Manager
Single-Family Attached Multi-Family Land
The management chicken/egg dilemma
Did You Get Management Deal Did You Get the Sale Because You
Because You Were Buyers Agent? Have Property Management
100% Expertise/Experience?
90% 19.0% 100%
80% 90%
70% 80%
60% 70%
60%
50%
50% 100%
40%
40%
30% 30%
20% 20% 43%
33%
10% 10%
0% 0%
Attached Land Multi-Family SFR Attached Multi-Family SFR Detached
Yes No Yes No
Lease percentages less popular
Forms of Payment for Property Management
100%
90%
80%
70% 60.0% 55.6% 56.6% 56.6%
67.3%
60%
50%
0.0%
40%
16.4% 16.4%
30% 20.0%
13.5%
20% 44.4%
10% 20.0% 27.0% 27.0%
19.2%
0%
Attached Multi-Family Other SFR Detached SFR Detached
Monthly Fee % of Lease Other
But good money either way!
Annual Property Management Percentage of Annual Income Owing
Income to Property Management Income
$18,000 $16,800
$16,000 Total 6.8
$14,000
$12,000 $11,133 Attached 3.8
$10,000 $8,812
$8,000 $6,853 Other 4.9
$6,000
$3,837
$4,000 Raw Land 7.5
$2,000
$2
$0 SFR Detached 7.9
Multi-Family 13.0
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