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From about the mid-1990s up until the housing bubble burst, Arizona's economy was driven primarily by the real estate industry. During those years, high population growth and lax credit standards resulted in a booming housing market. This boom created a need for more real estate-related jobs (real estate agents, construction companies, title/escrow agents, etc). This also became an attractive market for property investment companies. These investors flooded the market buying up property left and right. This ultimately led to inflated home prices, which played a big role in the bust that started in late 2006.
Fast forward to today... It is late 2010 and over the past 4 years the effects of the housing collapse are evident. The market has definitely changed, but those real estate investors (who are not shell shocked) are seeing great opportunity. It is time to shift the mind set of the investor. Investing no longer can be based solely on speculation. An investment opportunity needs to produce cash flow, which provides a monthly passive income for the investor. There are other advantages; however this article will focus on the impact property investment companies have on the cash flow investor.
The first step is to understand the different types of property investment companies. There are 3 main categories; property wholesalers, rehab specialists, and private equity funds. It is important to understand the services these companies provide and how they impact a cash flow investor's profitability.pharma portfolio management
Property Investment Companies: Property Wholesalers
With the increasing supply of distressed real estate, there have been a number of property wholesale companies entering the Arizona market. These property investment companies purchase property at a discount, then wholesale (or flip) the properties to an investor at a higher price. Typically, wholesale companies are purchasing short sales, bank-owned (REO) properties, or properties at trustee sales. Anywhere they can buy at the lowest possible price and resell for the highest possible profit. Generally, the properties being sold by wholesale companies are 'as is'. This means that they will not be doing any improvements to the property, which could be a disadvantage for the buyer.
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