High financing costs, limited inventory continue to be biggest challenges, but insurance costs and coverage are growing concerns
Fix & flip investors more optimistic than rental property owners as noted in the Winter 2023 Investor Sentiment Survey
Overall, after jumping from 30% to 39% in the Fall Survey, investor optimism was basically flat with 40% of the respondents saying the environment for investing was better than a year ago. Slightly fewer felt that things were worse: 33%, down from 38% in the Fall and 37% in the Spring.
“Rising home prices are helping improve profits for fix-and-flip investors, while asking rents have flattened out and even declined in some markets compared to last year.” said RCN Capital CEO
The Winter 2023 Investor Sentiment Survey is the third quarterly report from RCN Capital, taking the pulse of real estate investors across the country, identifying market challenges and opportunities, and getting feedback on current trends and events.
Investors sited the same factors as major challenges to their success as in previous surveys. The high cost of financing was mentioned by 74% of respondents; 43% noted the lack of inventory of properties for sale; and 35% said that competition from institutional investors was a problem and will continue to be later in the year. Investors may believe that finance costs are beginning to improve, as only 67% of respondents believed that high loan costs will still be a major challenge in six months. Conversely, the percentage of investors who believe that limited inventory will still be a problem in the future was slightly higher, at 46%. Perhaps due to that expectation, over 82% of investors expect to buy the same number of properties or less in the next year. Fix-and-flip and rental property investors outlooks are similar in that regard: 49% of flippers and 47% of rental property investors plan to buy the same number of properties in the next year; 37% and 33% respectively expect to buy fewer.
“One new finding in the Winter survey is that insurance is becoming more of a factor for investors today, and a major concern going forward,” noted
Investors continued to see the impact of higher mortgage rates in their local markets. Over 92% have seen a either a decline in demand for owner-occupied homes, an increase in demand for rental properties, or both in the markets where they invest.
Recession Still Seems Likely, Home Prices Expected to Rise
Investors were slightly less pessimistic about the
Most Investors Opting for Rental Properties, Buy Close to Home
For the second time in the last three surveys, more investors claimed to focus on buying rental properties than fixing-and-flipping homes. Forty six percent of the respondents buy and rent properties, while 32% fix-and-flip properties to home buyers. Wholesaling – securing the rights to sell a property without taking title – may be a growing trend, as 22% of respondents listed that practice as their primary type of investment activity.
As in the previous survey, the majority of investors purchase their investment properties close to home – 39% purchase within their hometown, and 84% within their home state.
About RCN Capital
RCN Capital is a
About CJ Patrick Company
Founded in 2019, CJ Patrick Company is a Market Intelligence and Business Advisory firm working with companies in the real estate and mortgage industries. Visit www.cjpatrick.com for more information.
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SOURCE RCN Capital