Cash is king for a reason, even if a seller would prefer to hand over their home to a young family rather than a private equity fund. Offers made using FHA, VA and USDA loans, which are more popular with first-time buyers, tend to fall to the bottom of the pile. The key advantage investors, especially the larger ones, have over consumers is that they can raise capital and pay cash to purchase a home. More would-be owners are priced out and forced to rent, which creates a stronger financial incentive for investors to convert more homes into rentals. In markets like Denver where not enough homes are being built to keep up with demand, prices escalate. As a result, prices go up,” said Shaival Shah, CEO and co-founder of New York-based Ribbon, the latest “power buyer” to enter the Denver market. “When investors buy homes it decreases owner-occupied homes in the market. Just over four in 10 of those homes were flipped or resold after making improvements, but a similar share of investor-purchased homes went forward as rentals. Institutional buyers, who range from giant private equity funds to mom-and-pop landlords using an LLC, snapped up about one in seven of the homes sold in Colorado last year, according to the National Association of Realtors. It can be especially frustrating when they lose out to cash buyers, whether investors looking to acquire rental properties or transplants who are shifting money from more costly housing markets. Homebuyers in metro Denver have faced a tough market for years, with listings in short supply and multiple failed bids common on the path to the closing table. Digital Replica Edition Home Page Close Menu
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