2016 Investor Survey-Final (Public)

8/18/2019 2016 Investor Survey-Final (Public)

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2016CALIFORNIA INVESTORSURVEY

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Survey Methodology

364 online surveys conducted in February-March 2016

Respondents: REALTORS® who have worked with investors in

past 12 months (February/March 2015 – February/March 2016)

Sample error: 3% at a 95% confidence interval

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REALTORS®’ GENERAL

INVESTOR BUSINESSInvestor Market Overview

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Number ofTransactions Declining

Q: How many investor transactions did you close in the past 12 months?

Average Investor TransactionsAverage Total Transactions

0

5

10

15

20

2013 2014 2015 2016

6.44.9

4.02.7

1615

13

# of

Transactions

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Investor Business Declining

39%

32%

26%

21%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2013 2014 2015 2016

Q: How many investor transactions did you close in the past 12 months?Q: How many total transactions did you close in the past 12 months?

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LAST INVESTOR BUYER

TRANSACTION

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Buyers Dominate InvestmentTransactions

0%

10%20%

30%

40%

50%

60%

70%

80%

90%

100%

2014 2015 2016

56% 54%48%

24% 35%

35%

21%11% 17%

Both

Sellers

Buyers

Q: Who did you represent?

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MoreTransactionsConducted in SouthernCA

Q: Where was the property located in your last investor transaction?

23%15%

24% 23%

27% 45% 30% 25%

50%40% 46%

50%

1% 0.4% 1.6%

0%

10%

20%

30%

40%

50%60%

70%

80%

90%

100%

2013 2014 2015 2016

Another StateSouthern CA

Other CA

Northern CA

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Single Family Purchases Decreasing

78%

14%

1.1%

7.2%

73%

19%

0.9%

6.7%

72%

21%

0.9%

7.0%

70%

19%

0%

10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Single family home Multifamily Bulk sale Other

2013

2014

2015

2016

Q: What type of property did your investor client purchase?

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MajorityTransactions Not Distressed

Q: Was the property a(n)?

0%

10%20%

30%

40%

50%

60%

70%

80%

90%

100%

2014 2015 2016

70%80%

87%

12%

13% 6.1%18%

7% 6.6%

Short sale

Foreclosure

Equity

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Investors Purchase MoreUnits Per Property

0.0

2.0

4.0

6.0

8.0

2013 2014 2015 2016

3.8 3.5 4.0

6.6

# o f U n i t s

Average

Q: How many units did the property have in your last investor transaction?

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Initial Listing Price Growing

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

2013 2014 2015 2016

$307,500

$322,500

$381,500$409,500

Median List Price

Q: What was the initial listing price?

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Final Sale Price Growing

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

2013 2014 2015 2016

$292,000$320,000

$375,000$410,000

MedianSale Price

Q: What was the final sale price?

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Listing & Sale Prices Nearly Equal

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

Listing Sale

$409,500 $410,000

Median

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Days on Market Declined

Q: How many days was the property on the market?

0

5

10

15

20

25

30

2013 2014 2015 2016

15 15

30

23

Median

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Nearly ½ Properties inSuburban Location

Q: How would you describe the location of the property purchased?

16

40%35%

46%

47%

13%13%

1.5% 5.0%

0%

10%

20%

30%

40%

50%60%

70%

80%

90%

100%

2015 2016

OtherRural

Suburban

Urban


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Majority of Investors Rented Properties

73%

58% 65% 62%

20%

28%26% 26%

7%14% 9.7% 12%

2013 2014 2015 2016

0%

10%

20%

30%

40%

50%60%

70%

80%

90%

100%

Other

Flip

Rental

Q: What was the intended use of the property?

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Transaction Cost Down

Q: How much did it cost to purchase the property?

$0

$2,000

$4,000

$6,000

$8,000

$10,000$12,000

$14,000

$16,000

2013 2014 2015 2016

$9,000

$12,000

$15,000

$12,900

MedianCost

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More than ¾ Investors Remodeled Properties

0%

20%

40%

60%

80%

100%

20132014

20152016

18% 22% 30%

23%

51%39%

39%

40%

22%

22% 18%

19%

9%17% 12%

17%

None Minor cosmetic Major cosmetic Major remodeling

Q: What type of rehabilitation/remodeling was done to the property?

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RemodelingCost Increased

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

2013 2014 2015 2016

$10,000

$15,000

$10,000

$13,500

Median

Q: How much did your client invest in rehabilitating/remodeling the property?

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Investment Cost is 6.4% of Sale Price

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$292,000 $320,000 $375,000 $410,000

$9,000 (3%) $12,000 (4%) $15,000 (4%) $12,900 (3.1%)

$10,000 (3%) $15,000 (5%) $10,000 (3%) $13,500 (3.3%)

0%

10%

20%

30%

40%

50%60%

70%

80%

90%

100%

2013 2014 2015 2016

Rehab Cost

Transaction Cost

Purchase Price


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Expected Rate of Return Increased Slightly

Q: What is the expected rate of return on the property investment?

0%

2%4%

6%

8%

10%

12%

14%

16%

18%

20%

2013 2014 2015 2016

19%

17%

13%14%

Average

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Most Investors Own Other Properties

90%83% 83%

91%

6.5

8.3

6.4

5.6

0%

10%

20%

30%

40%

50%

60%70%

80%

90%

100%

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

2013 2014 2015 2016

% W

h o O w n O t h e r P r o p e r t i e s

# o f P r o

p e r t i e s

% who own other properties Average # of other properties

Q: How many other investment properties does your client own?

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17%Other Investments LocatedOutsideCA

29%50%

42%20%

44%

41%33%

42%

21% 20%

21%

20%

0.5%

2.4%

5% 3% 4%15%

0%

10%20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2014 2015 2016

Other CA Southern CA Northern CA Another country Another state

Q: Where are those properties located?

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Majority of Investors PurchasedOther Properties

Within the PastYear

47%

74%

1.8

2.3

0%

10%20%

30%

40%

50%

60%

70%

80%

0.0

0.5

1.0

1.5

2.0

2.5

2015 2016

% W

h o O w n O t h e r P r o p e r t i e s

# o f P r o p e r t i e s

% who purchased other properties Average # of properties

26

Q: How many other properties did your last investor client purchase within the past 12 months?


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Fewer Properties Found on MLS

Client found property

Another agent's private listing

Other

Directly from seller

My listing

MLS

0% 10% 20% 30% 40% 50% 60% 70%

4.8%

5.2%

7.3%

8.0%

18%

57%

5.2%

2.6%

5.2%

5.8%

15%

65%

2015 2016

Q: How did you find the property for your client?

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More Properties Found Directly from Seller

Q: How did you find the property for your client?

67%62%

65%

57%

18% 21%

15% 18%

3.7% 4.0% 5.8% 8.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2013 2014 2015 2016

MLS My listing Directly from seller

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InvestorsTake LessTime to Find Property

Q: How many weeks did you spend looking for a property with your client?

9.9

6.8 7.0

5.9

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2013 2014 2015 2016

# o f W e e k s

Average

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InvestorsViewedSlightly More Properties

11.1

6.9

8.7 8.9

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2013 2014 2015 2016

# o f P r o p e r t i e s

Average

Q: How many properties did you view with your client prior to the client making a purchase?

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More Investors are MakingOffers onOther Properties

79%

63%54% 57%

4.2

2.7

2.02.3

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2013 2014 2015 2016

% M u l t i p l e O f f e r s

# o f O f f e r s

% Multiple Offers Average # of Offers

Q: How many offers did your client make on other properties?

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Sellers Received 4.2 Offers onAverage

Q: How many offers did the property purchased by your last investor client receive, including that of yourbuyer?

3.3 3.3

4.2

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2014 2015 2016

# o f O f f e r s

Average

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Future Price Predictions are Positive

2.5% 4.6%

17% 10%

76%71%

4.2%15%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

In 1 year In 5 years

Don't know

Up

Flat

Down

Q: Do you think real estate prices in the neighborhood where the property is located will go up, down or stayflat?

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Intended Length ofOwnership Rose

7.9 8.0

6.1

8.1

0

1

2

3

4

5

6

7

8

9

2013 2014 2015 2016

#

of

Y

e

a

r

s

AverageYears

Q: How many years does your client intend to keep the property?

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2/3 Properties Managed byOwner

67% 69% 66% 65%

27% 22% 24% 27%

8.0% 11% 10% 8.2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2014 2015 2016

Other

Property manager

Owner

Q: Who will manage the property?

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Investors Plan toCharge 19% Higher Rent

$0

$500

$1,000

$1,500

$2,000

$2,500

2015 2016

$1,850

$2,200

Median

36

Q: How much will your last investor client charge for monthly rent on the property?


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Investors Plan to Increase Rent byTwice as Much as

LastYear for the NextTenant

$0

$20

$40

$60

$80

$100

2015 2016

$50

$100

Median

37

Q: How much will your last investor client increase the monthly rent for the next tenant?


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Investors Expect Properties toAppreciate Less

0%

5%

10%

15%

20%

25%

30%

2015 2016

27%25%

Average

38

Q: How much does your last investor client expect the property to appreciate by the time he/she sells?


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Most Investors Bought Properties Not Under

RentControl

39

Q: Is the property subject to rent control?

Yes 6.4%

No 94%


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FINANCING

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Fewer Investors PayingCash

67% 67% 66%55%

33% 33% 34%45%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%100%

2013 2014 2015 2016

Financing

Cash

Q: How did your client pay for the property?

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MostCash Funds from Personal Savings

Q: What was the source of the cash funds in your last investor transaction?

Other

Foreign bank

1031 exchange

Private investors

Proceeds from previous investment

Personal savings

0% 10% 20% 30% 40% 50%

10%

5.6%

8.9%

19%

19%

46%

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Majority Financing from Bank

Q: What was the source of the financing in your last investor transaction?

0% 10% 20% 30% 40% 50% 60% 70% 80%

Other

1031 exchange

Private investors

Bank loan

6.0%

13.0%

19%

74%

4.2%

6.3%

23%

75%

2015 2016

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CLIENT – AGENT

RELATIONSHIP

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Many REALTORS®Getting Repeat Business

0% 5% 10% 15% 20% 25% 30% 35% 40%

Client found me online

Other

Friend

Referral

Previous client

8.5%

11%

12%

22%

29%

11%

7.5%

11%

17%

36%

2015 2016

Q: How did you establish a relationship with your last investor client?

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59% of REALTORS® Market toAttract Investors

Q: What kind of marketing do you do to attract investor clients? Please select all that apply.

46

0%

10%

20%

30%

40%

50%

60%70%

80%

90%

100%

2015 2016

34% 46%

2%

17%18%

19%

46%41%

NoneOther

Print

Online


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Most Investors are Knowledgeable

Q: How would you describe your last investor client’s real estate market knowledge?

0% 10% 20% 30% 40% 50% 60%

Not at all knowledgeable, required a lotof oversight/consulting

Limited knowledge, first time investor

Knowledgeable, but fairly inexperienced

Extremely knowledgeable/experienced

1.5%

5.5%

33%

60%

2.9%

10%

37%

50%

2015 2016

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57% of Investors Didn’tAnalyze Return Potential

Q: How did you and your client analyze the investment return potential of the property the client purchased?

0% 10% 20% 30% 40% 50%

CMA

Cap rate

Comps

Other

13%

11%

28%

49%

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Most Essential Info to Investors

Q: What information was essential to your client in his/her decision to purchase that particular property?

4.4%

9.2%

10%

10%

19%

22%

25%

0% 5% 10% 15% 20% 25% 30%

Other

Property condition

Comps

Market rent

Price

ROI

Location

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INVESTOR DEMOGRAPHICS

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Most Investors are Individuals

2016

20150.0%

20.0%

40.0%

60.0%

80.0%

LLPOther

Corp LLCIndividual

1.9%2.7% 4.3%

22%

69%

0.8% 3.1%2.3%

22%

72%

Q: Was your client a(n)?

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Nearly Half of Investors are IndividualsWho

Purchased Single Family Homes

0%

10%

20%

30%

40%

50%

60%

70%

OtherCorp

Individual

2.3% 19%

49%2.7%

10%

0.4%

6.6%

9.3%

Single family Multifamily Other

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More Minority Investors in 2016

0.7% 2.2% 3.6% 2.4%7.9%

9.7% 9.5% 7.8%

14% 11%

13%

13%

29%

17%19% 24%

49%

60% 55% 53%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2014 2015 2016

Caucasian/White

Asian

Hispanic/Latino

Other

African American/Black

Q: How would you describe your client’s ethnic background?

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Annual Income/Revenue 67% Higher

$0

$50,000

$100,000

$150,000

$200,000

$250,000

20132014

20152016

$160,000

$200,000

$150,000

$250,000

Median

Q: What is your client’s annual income/revenue?

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5.8% of Investors are Foreigners

Q: What is your client’s country of permanent residence?

55

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015 2016

95% 94%

5% 5.8%

Foreigner

U.S. resident

Documents

2016 Investor Survey-Final (Public)