Understanding buyer intent
One of the fundamental differences between an investor and a typical home buyer is what they plan to do with your property after they buy it. A homebuyer aims to live there and make it their primary home. An investor on the other hand sees your home as a business opportunity, whether they intend to rent it out or flip it.
Get familiar with the different types of home investors
Home investing is a broad term that encompasses several distinct business models, including home flipping, buy-and-hold long term rentals, and iBuying.
Investors have varying goals in mind when they make an offer on your property, which will impact whether they’re interested in your home, how much they’re able and willing to pay, and the experience they offer to home sellers. Here’s a quick breakdown on the different type of investors along with a few key variables that separate one home investor from the next.
Buy-and-hold investors
A buy-and-hold investor intends to purchase and own a property for an extended period of time without living there. These investors count on rental income, as well as property appreciation, to make money on the purchase long term. A buy-and-hold investor can be a real estate beginner who’d like to try their hat at becoming a landlord or a large Wall Street-backed institution such as Invitation Homes.
A buy and hold investor targets single-family homes or condos in a growing neighborhood, ideally in turn-key condition for maximum rent potential. Depending on the condition of your property, buy-and-hold investors offer close to (but still slightly under) market value. Since they’re playing the long game, there’s less of a pressure to flip the property for immediate profit.
House flipping
House flippers take a buy low, sell high approach. They purchase properties in poor condition at a steeper discount, make the necessary repairs and upgrades to attract a buyer who’ll pay a greater price, and sell it usually within no later than a 12-month time frame.
iBuying
The latest innovation in the home investing realm, iBuyers aim to offer a simplified online home-selling experience in exchange for a convenience or service fee. Rather than purchase a home or two per year, iBuyers turn a higher volume of homes that are in good condition on lower per-flip profit margins.
