MOST DISTRESSED PROPERTY BUYERS ARE LOCAL INVESTORS REHABBING AND RESELLING TO OWNER-OCCUPANTS
- 87 percent purchased five or fewer investment homes in 2020
- 78 percent purchase most investment properties within driving distance
- 62 percent rent occupied properties back to current occupants
Auction.com, the nation’s leading distressed real estate marketplace, released its 2021 Buyer Insights Report, which shows that more than three out of every four distressed property buyers are local investors and nearly nine in 10 buyers purchased five or fewer investment properties in 2020.
Based on a Q1 2021 survey of Auction.com buyers, the report also found that rehabbing and reselling to owner-occupants was the primary investing strategy for the majority of buyers (57 percent) while 38 percent of buyers said their primary investing strategy involved acquiring investment property as rentals. Among those rental investors, 62 percent said that they have rented back to current occupants of occupied homes.
“A transparent and democratized distressed property marketplace attracts a diverse set of mostly local real estate investors who are committed to doing good in the communities where they invest,” said Jason Allnutt, Auction.com CEO. “Not surprisingly, these local buyers are the best option for responsibly returning distressed properties to retail buyers and renters. Sixty-two percent of our buyers report they have successfully avoided an eviction by keeping the occupants in the homes as renters.”
More than two-thirds of buyers (66 percent) said they budget at least 20 percent of a property’s purchase price for rehab and holding costs, while more than one-third (34 percent) budget at least 30 percent of a property’s purchase price for rehab and holding costs. Based on the average sales price of homes sold on Auction.com in 2020, that would be a budget of between $27,000 and $40,000 per property.
Click HERE to read the full report.
The report contains several case studies of distressed properties purchased by Auction.com buyers.
Other high-level findings from the report:
- Building long-term wealth and creating new income sources were the top investing motivations for most buyers, but a combined 13 percent of buyers ranked improving homes and neighborhoods or investing back into the community as their top motivation for investing.
- 74 percent of buyers believe home prices in their local market will rise at least 3 percent in 2021, but 40 percent described their local market as overvalued with a correction possible.
- 93 percent of buyers expect their 2021 acquisitions to increase or remain the same compared to their 2020 acquisitions.
About Auction.com
Auction.com is the world’s leading distressed real estate marketplace that engages buyers with a real-time bidding process, providing more transparency than a traditional real estate transaction. With more than 700 employees in offices across the United States, Auction.com uses world-class technology and data science to bring buyers and sellers closer together, bridging the gap between both sides and unleashing the power of the marketplace with its unrivaled transaction platform. For more information, visit: https://www.auction.com
