What does it mean when someone says they buy or invest in real estate? Or even when they simply say that they want to buy a house? It’s not always Ken and Barbie looking for a 3-bed single family home in Honolulu with a white picket fence and room for Fido in the back. Today’s real estate scene is savvier and more sophisticated than ever. Non-real estate professionals know more about the real estate industry than at any time in history thanks to the internet, smartphones and general openness of information.
But even with the more refined real estate and financial knowledge of today, some things don’t really change. Just as before, there are 3 main types of real estate buyers today.
The Buy, Fix and Sell Buyer
Real estate investors in this group generally buy houses “as is” for cash, saving owners in distress valuable time and money. Preforeclosure, divorce, probate, inheritance, bankruptcy, mortgage difficulty, tax problems, relocation and other issues fall into this category. A homeowner in one (or more) of these situations generally needs a buyer with the cash and experience to help them move on. Almost exclusively, these buyers will use a mix of hard or private money to finance their purchases; this is what allows them to buy houses in 14 days or less. This is the type of buyer WE are here in Hawaii.
The Landlord Buyer
These buyers enjoy having properties that they rent to tenants for monthly income. They may do some remodeling but generally don’t want to go through big renovations, instead deciding to hold properties for long-term investment purposes. The more sophisticated in this group will utilize the services of a quality property manager since they generally don’t want to get the “2:00 am clogged toilet” call. Many will buy their investment properties with cash.
Hawaii can be a difficult “cash flow” market because of our overall high prices. However, the right discount upfront and keeping a lid on any association or maintenance fees can still produce positive gains.
The Retail Buyer
Not much need for explanation here as most buyers fall into this category. These are buyers who, more often than not, will be getting a mortgage to purchase their home. However, there are still plenty of cash buyers out there and they often get a discount for being able to navigate the red tape much more quickly. Much of this will depend on the prevailing interest rates.
So the next time someone says they’re in the market for a house, you can ask what type of buyer they are and sound like a pro! 🙂