Real estate investors count single-family homes among their most profitable assets. According to the Greater Ohio Policy Center, 21% of all home sales in Ohio were purchased by institutional investors in 2021. Institutional investors accounted for roughly 25% of all home sales nationally.
An institutional investor invests significant money in securities or assets on behalf of its clients. Institutional investors include Real Estate Investment Trusts (REITS) hedge funds, and other investment pools that can manage billions of dollars. Your pension fund, 401k or investment portfolio might include a REIT or similar product.
Institutional investors may compete against smaller investors and individual buyers for single-family homes. Once a home is bought by an investor, it might be updated and flipped for a profit, but the majority are converted to rental properties. When multiple homes are purchased in a given area by an institutional investor, it can leave scant inventory for owner-occupant buyers.
It isn’t clear how much residential real estate is currently owned by investors. However, MetLife Investment Management estimates that institutional investors will hold more than 40% of all single-family rentals by 2030.
Some Ohio lawmakers are concerned about the impacts of such investment activity, and have drafted Senate Bill 36 and Senate Bill 76. Senate Bill 36 would grant tenants of rental properties, as well as certain non-profits, the right to purchase properties being foreclosed. Senate Bill 76 creates investor transparency requirements regarding ownership, and assigns impact fees to high-volume landlords. These bills remain in discussion at the Ohio Statehouse.
Meanwhile, Ohio home buyers are not completely shut out. Institutional investors only offer about 60% of a home’s asking price, per industry estimates. Not all sellers are willing to take that kind of haircut, even for an all-cash deal! A home buyer who has a mortgage pre-approval and representation by an Exclusive Buyer’s Broker can compete quite well. Learn more with our free e-book, “How to Buy a Home like a Pro!”
As Exclusive Buyer’s Brokers, we serve your best interests at all times! Unlike real estate agents and brokerages who represent sellers, as an Exclusive Buyer’s Broker, we only represent you, the buyer, getting you the best price and terms with no conflict of interest at all times.
Understanding this distinction could literally save you thousands of dollars not only on the purchase price and terms, but also on seller concessions and home inspection issues, whether you are a first-time homebuyer or an experienced homeowner!
Contact us with your home buying questions! Remember, we are with you every step of the way…all the way home!
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Buyer’s Resource Realty Services www.BuyersHome.com
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7100 North High Street, Suite 204, Worthington, Ohio 43085
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