The Rise of Mom-and-Pop REO Investors

Over half of investors at foreclosure auctions plan to purchase fewer than five properties in 2019, according to the 2019 Buyer Insights Survey Report from Auction.com. The report found that 51% of auction buyers are these “mom and pop” investors, while 22% of buyers plan to purchase more than 10 properties for the year. Only 2% of buyers said they plan to purchase more than 100 properties in 2019.
“Foreclosure auctions are no longer dominated by larger investors able to navigate what was an opaque process of purchasing a property at the courthouse steps or from a hard-to-find REO asset manager,” said Jason Allnutt, CEO at Auction.com. ”The majority of foreclosure and REO auction buyers are now smaller, mom-and-pop investors who are taking advantage of a much more accessible buying experience.”
Auction.com’s Survey Report is based on a survey sent to more than 4,700 buyers who had purchased at least three properties on the Auction.com platform. The survey was conducted between June 6 and June 20, 2019, with 197 buyers responding.
According to respondents, the South is one of the most popular locations for foreclosure buyers, with 73% purchasing properties in the South region of the country, the highest share of any region. A good chunk are purchasing outside of their location, as 24% of survey respondents said their local housing market is overvalued with a correction possible.
Earlier this year, Auction.com took a look at what investment strategy is the best for whatever your endgame would be. Advantages to real estate investment compared to other investment strategies include appreciating property values, easy access to credit with a property as collateral, equity buildup, and deferred profits. There are two main strategies to real estate investment, Auction.com notes: buy and hold, and fix and flip.
“Opting for a long-term or short-term strategy in building your investment portfolio is a personal decision,” Auction.com notes. “You should consider your investment goals, capital availability, your risk tolerance level and flexibility as it applies to your exit strategy.”
DSNews