Module 2 Lesson: Types of real estate investors

 

There are several niche markets available to real estate investors. Here are two of the most common:

 

A. House Flippers

 

This term describes the person that purchases properties and then quickly re-sells it for a profit. It is estimated that over 200,000 houses or condos are flipped in the U.S. each year. The goal is to buy property at a lower price and sell it for a higher price. 

 

Most house flippers are looking for one or both of these common situations: 

 

1) A property that needs improvement. Some houses may need extensive repairs and renovations and many homeowners may be unwilling or unable to make the improvements themselves. A house flipper will perform the necessary renovations and repairs earning a profit on the property.

 

2) A seller that needs to sell quickly. A home seller’s situation may require them to quickly sell their property. Circumstances that include divorce, relocation or a pending foreclosure are examples of reasons. 

 

Either of those two circumstances can work to a house flippers advantage. It creates an environment where the initial seller may be willing to sell at a greatly reduced price. 

 

B. Landlords

 

The concept of land lording can be traced deep into history. Landlords purchase property and then use it to provide housing to those who cannot or do not wish to own their own property. Landlords use their property to rent (usually short term) or lease (usually a longer term). The person who rents or leases a property from a landlord is known as a tenant. 

 

While house flippers are motivated by earning immediate profits, Landlord focus on the long term benefits of their real estate investments. These benefits include regular, incremental revenue of rents, the appreciation of property value over time and possible tax benefits. 

 

C. Other Types of Investors 

 

Because of the complexities involved, there are a few categories of real estate investors that are beyond the scope of this class. This group of investors include Developers and those interested in Commercial Real Estate. In addition to the skillset described in Module 3, agents interested in providing services to these investors should also become knowledgeable in Land Use, Zoning, Building Regulations, Environmental, ADA Compliance, Brownfield issues and Subdivision Regulations.