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Why We Need Real Estate Investors

July 7, 2008

Posted by Roshawn Watson under Uncategorized

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By: Roshawn Watson

Real estate investors are snapping up more and more properties because of the current housing crunch. From small-time broker-investors to small real estate firms, many people are buying distressed homes at significant discounts.

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For example, one real estate broker purchased a property for $65,000 that listed for $195,000. She may rent out the 3 apartments for $1500 and make a profit for a couple of years until the market recovers.

Some “moderate” investors are buying bulk properties from banks (between 5-500 properties at a time) site unseen at significant discounts. However, the big investors seem to be waiting. “They’re after even deeper discounts, and prices are indeed projected to keep falling in the next year – by double digits in parts of California and Florida.” Apparently, that is when the biggest deals will occur.

I began to wonder if the real estate investors “are getting a bad rep” Although the article suggests that they are vultures, they seem to be providing a valuable and necessary resource.

Motivated sellers generally need liquidity, which the real estate investors supply, so why are they considered the villain?
Banks generally are not in the real estate business and would rather get capital for investments more suited to their expertise.
Neighborhoods also benefit. Distressed homes left abandoned often become havens for “squatters, looters, and drug dealers.” Real estate investors get new residents into these homes thereby decreasing the likelihood of the neighborhood becoming degenerate.
Real estate investors who rehabilitate properties also add significant value to the new owners and the communities at large.

While it is true that good real estate investors do make a profit, I question if most are truly the vultures that they are often painted out to be. Could they just be a hero-capitalist?

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