Real Estate Investors Are Shifting Tactics

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Real Estate Marketing Insider comments on the new strategies being employed by real estate investors.

Tobias Nergarden issued some observations about the shift in tactics being reported among real estate investors today, and his opinion is that this may help home sellers or an online estate agency because the fact that investors are changing tactics is due to rising home sales, and is another sign of housing recovery.

U.S. News and World Report reports that real estate investors, who have been investing in real estate investment trusts (REIT) since the collapse of the housing market, are now investing in homebuilding companies. This is considered significant because REITs have been taking advantage of there being fewer home buyers after the crisis by investing in apartment complexes or other rentals like beachfront home rentals. Now, however, with a recovering housing market and lower prices, purchasing a home is in some cases less expensive than an apartment. A Goldman Sachs report also indicates that while members of the Millennial Generation are generally buying homes now, that this may change within the next five years as they save money and find more stable employment. With more demand for housing, REITs are looking less attractive for investors. Homebuilding companies like Toll Brothers, on the other hand, are. The reason for this is that Homebuilding companies have spent the last few years regrouping and are now exploring the fastest growing real estate markets, which means that a return on a stock investment is looking more lucrative.

A Real Estate Investment Trust, or REIT is an investment group designed to avoid corporate taxes. They do this by distributing 90 percent of their profits to investors. These groups can either be public or private, and in the United States, can operate, as well as own investment properties. These properties are therefore usually apartments or homes that are rented, the rental income being divided among the investors. Since the 2008 economic crisis, REITs have been performing well above average in terms of return on investment because they can adjust rents to cover costs and are considered flexible.

Toll Brothers is one of the largest homebuilding companies in the United States. Their business practices are not just limited to construction, however, as they are involved in land purchasing, architecture, and all other aspects of home development. They target markets that are seeing a rise in home sales and have a large amount of cash on hand in order to create developments quickly.

Goldman Sachs is a global financial firm headquartered in New York City. Although Goldman Sachs has been around since 1869, they have been under fire recently for alleged improper practices, mostly to do with their profiting during the current financial crisis. Many former government officials such as former Treasury Secretary Rick Rubin, worked for Goldman Sachs before their government positions.

The Millennial Generation is known for being tech-savvy and for enjoying social networking. They are also more likely to want to live with a more connected lifestyle, in closer physical proximity to other people and are less concerned with privacy. This generation is more loosely defined than other generations, but currently, experts are considering anyone born between the late 1970’s and the late 1990’s to be part of this generation.

Real Estate Marketing Insider today commented on departure of real estate investors from REITs to homebuilding firms.

About Real Estate Marketing Insider:
Real Estate Marketing Insider provides online tips to real estate professionals regarding hot news, trend analysis, and marketing strategies. This publication is based out of La Jolla, CA.

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