From small towns to major metropolitan areas, real estate investors drive the market for everything from condominiums to single family homes to multi-family homes like duplexes, triplexes, and quads. You may have a negative image of real estate investors or you may not know much about them. Find out whether a sale to an investor might be a wise choice for you—and what to look for when considering an investor’s offer.
Types of Real Estate Investors
There are a variety of ways to invest in real estate. Some real estate investors favor one particular strategy, while others have a diversified portfolio with different types of investment properties. Here are the main types of residential real estate investors you’ll meet.
Wholesalers shop for investment options which they then offer to other, more moneyed investors. They’ll conduct an initial negotiation, then put the property under contract with the option to assign it to another investor with whom the transaction will be completed.
Short-term or Flipper
Short-term investors are focused on purchasing a home as inexpensively as possible, then adding value with improvements, repairs, and enhanced marketing. They’ll then sell the newly rehabbed or renovated property to another buyer for profit—often within weeks or months.
Long-term or Buy and Hold
Long-term investors are focused on buying a home that is affordable and marketable at or near its current condition. As the name suggests, they plan to hold the investment for many years, renting it out while the home builds equity and appreciation.
Advantages of Selling to an Investor
Many sellers think of an investor as someone who is only focused on price, thus they are resistant to the idea of working with an investor buyer. However, depending on the situation, there are a variety of reasons to consider selling to an investor.
Shorter escrow timeline
By the time an investor enters into a serious negotiation for your property, he or she has made their decision and is generally ready to move forward. The longer it takes them to close on the property, the more they will pay in carrying costs. That means that if you are in a hurry to close, an investor will be motivated to work on a faster timeline that may just suit your needs.
As-Is properties welcome
If your home suffers from deferred maintenance or needs one or more major repairs, you may be dreading a traditional home inspection and appraisal process. With a real estate investor, you’ll be able to sell your home As-Is without worrying about a laundry list of repair requests or a second round of negotiations.
More reliable funding
While not all investors are cash-only purchasers, many are. That may mean that you not only save time but also experience an easier and faster closing process—without having to wait for your buyer to complete appraisal and underwriting. In addition, you won’t have to worry about financing falling through and undermining your ability to complete the sale.
Potential for rent-back
Because they have added flexibility, if you are selling your home due to financial setbacks, an investor may be the right choice for you. A buy and hold investor may be willing to buy your property, then allow you to continue living there while paying rent that is less than your current mortgage payment.
Easier sales process
By selling to an investor, you’ll experience a faster, more straightforward sales process. That may be an advantage under any of the following circumstances:
- Sale of an inherited property
- Sale of a property out-of-town or out-of-state
- Sale of a property due to retirement
- Sale of a property due to divorce
- Sale of a property due to financial reversals
In addition, you won’t have to worry about decluttering, deep cleaning, open houses, and other aspects of the home sale process. A real estate investor won’t be focused on anything but the overall structural integrity of the home and the bottom-line calculations of the deal.
There are times that the speed and ease of a transaction is more important than maximum profitability. In that case, you may prefer to work with an investor rather than spending time and energy on a traditional sale.