A quarterly survey of investor sentiment by RCN Capital found that there's a big difference in the outlook of real estate investors. After seeing optimism jump from the spring and fall survey, the company's winter survey found about 40% of investors believe the environment is better today than it was a year ago.
That's down from 43% in the fall, but up from 30% in the spring. The survey also found 18% expect things to get worse, which is the lowest percentage to date.
Fifty percent of flippers felt things were better today than last year, and 51% expect things to improve over the next six months. Only 20% of rental property owners felt conditions were better today, and only 22% expect things to improve over the next six months.
Forty-eight percent of rental property owners felt conditions were worse compared to 26% of flippers. Rental owners are also less optimistic about future conditions, with 23% expecting things to worsen, while only 14% of flippers share that sentiment.
“Rising home prices are helping improve profits for fix-and-flip investors while asking rents have flattened out and even declined in some markets compared to last year,” RCN Capital CEO Jeffrey Tesch said. “These factors probably play a large role in the opposite trends we’re seeing among real estate investors today.”
High financing costs remained a significant concern, with 74% of survey respondents mentioning it. Additionally, 43% noted the lack of available properties for sale, while 35% expressed concerns about competition from institutional investors, a challenge that is expected to persist throughout the year.
Even though financing remains a concern, only 67% of respondents said it will be a significant challenge in the next six months. On the other hand, limited inventory concerns appear to be growing, with 46% saying it will continue to be an issue. Consequently, over 82% of investors expect to either maintain or decrease their property acquisitions in the next year.
The survey highlights that a growing number of investors focus on purchasing rental properties rather than fixing-and-flipping homes, with 46% favoring rental properties and 32% engaging in fix-and-flip activities. Wholesaling, the practice of securing property sale rights without taking title, emerges as a potential trend, with 22% of respondents citing it as their primary investment activity.
Investors continue to favor investments close to home, with 39% making purchases within their hometown and 84% within their home state. Notably, California, Florida, Texas, and New York are the states most frequently mentioned as investment destinations.
