Individual investors versus institutions

Investors show surprising strength during pandemic

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Large institutional investors like Invitation Homes, American Homes 4 Rent and Amherst are poised to pounce on distressed property purchase opportunities in the aftermath of the coronavirus-induced economic downturn, according to a recent Wall Street Journal article. 

But those mammoth institutional investors may be outflanked by an army of individual real estate investors willing to buy earlier in the cycle at prices closer to full market value.  

“We have had twice the number of new members in March and April than we had in prior months. Our sales have not slowed down. Prices have not come down,” said Kathy Fettke, Co-CEO at Real Wealth Network, a company that connects passive individual investors — most holding full time day jobs — with turnkey rental properties. “Our teams do not have enough inventory to meet demand.”

In the decade since the last downturn, Real Wealth Network and other companies like it have armed individual real estate investors with direct access to nationwide inventory along with services such as tenant placement, property management and maintenance. 

“I see no reason to stop investing, and I think most investors out there, the majority of those people still feel bullish,” said Marco Santarelli, founder of Norada Real Estate Investments, another provider of turnkey investment properties to passive individual investors. 

Santarelli noted that his buyers aren’t holding out for deep discounts. 

“Nobody is asking us, waiting for or expecting big discounts because of what is going on,” he said. “That expectation is not there. Nobody is talking about housing prices crashing. All our product is turnkey and newly renovated and new construction. We’re not after distressed properties.”

Santarelli noted that the property providers he relies on for turnkey investment inventory are often purchasing distressed properties at foreclosure auction and then rehabbing those properties into rent-ready condition. He believes the strong demand from individual turnkey buyers will ripple out to those distressed property buyers as well.

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