Share of Homes Bought by Investors Keeps Growing as Single-Family Rents Soar
Real estate investors were responsible for 18.2% of the homes purchased in the U.S. during the third quarter of this year — a record-high share, according to Redfin. Investment Property Mortgage Home Loans are available to both new and experienced investors.
This new all-time high was up from a revised share of 16.1% in second-quarter 2021 and 11.2% in third-quarter 2020. The year-over-year jump as of Q3 2021 was the second-largest annualized increase ever recorded by Redfin. And the total number of homes bought by investors in Q3 —90,215 — also is a new record, as is the $63.6 billion dollar volume spent by investors to buy these homes, up from a revised total of $58.8 billion in Q2 2021 and up from $35.7 billion in Q3 2020.
With U.S. home prices continuing to soar, the typical purchase price for a home bought by an investor in Q3 2021 was $438,770, up 5.3% year over year.
You could buy a top-of-the-line laptop and a new cell phone to match, or you could pay one month’s rent for a single-family home in Los Angeles. It’s not much better for prospective single-family renters across California, a new study found. In Ventura or Carlsbad, median single-family rents are $4,250, and in Santa Clara and Berkeley, median single-family rents reached $4,225 and $4,200, respectively.
That’s nearly as much as it costs to deliver a newborn, on average, even with employer-provided health insurance.
A median single-family rent in Cape Coral-Fort Myers, Florida stood at $1,800 in March 2020, but by October this year, had doubled to $3,600. Florida, overall, experienced the largest rent hikes during the pandemic.
As eviction moratoriums expire, studies predict single-family rents will just continue to increase. Enforcement of the now-expired Centers for Disease Control eviction moratorium was inconsistent to begin with, and in some areas there have been few checks on tenant turnover and rent increases even during the pandemic.
“Increasing home prices fueled by an intense housing shortage have created opportunities for investors to reap big profits,” said Sheharyar Bokhari, senior economist at Redfin. “Those same factors have pushed more Americans to rent, which also creates opportunities for investors because investors typically turn the homes they purchase into rentals and can now charge higher rents.” Slightly more than three in four (76.8%) of homes bought by investors were paid in cash in the third quarter, highlighting another challenge the investor-rich marketplace has raised for regular buyers.
If you are looking to take advantage of the high rent marketplace, Griffin Funding has just the loan program for you. A DSCR loan is an option to put as little as 20% down, without providing any of your personal income or tax returns.
The Debt Service Coverage Ratio is a ratio of a property’s annual net operating income and its annual mortgage debt, including principal, interest and all associated fees. Lenders use DSCR to analyze how much of a loan can be supported by the income coming from the property as well as determining how much income coverage there will be at a specific loan amount.
A DSCR loan is available to new and seasoned investors alike. There is no limit to the amount of investment properties you can acquire to grow your real estate portfolio, including long or short term rentals. Begin or continue building your real estate investment portfolio without the need for a private hard money loan. Our DSCR loans are an excellent mortgage option to help you build residual income without mortgage challenges standing in your way.
Apply for a DSCR loan online today. Want to learn more about our non-QM loans before applying? Contact us online or call us at (855) 394-8288 to speak to one of our experienced loan specialists.