Arizona’s economy was powered largely by the real estate sector from around the mid-1990s until the housing bubble exploded. Fast population growth and weak lending requirements contributed to a booming housing market during those years. This boom generated a need for more positions relevant to real estate (real estate brokers, construction companies, title / escrow brokers, etc). LAS Companies has some nice tips on this. It has grew into an enticing sector for land investment companies. Such buyers poured left and right with the economy buying up land. In the end, this contributed to rising house values, which played a significant role in the bust that started in late 2006.
Fast forward to now… It’s late 2010 and the consequences of the deterioration of homes are visible over the last four years. Definitely the landscape has shifted, but some real estate buyers (who are not shell-shocked) are seeing fantastic opportunities. It’s time to change investor’s mind set. It is no longer feasible to focus expenditure purely on speculation. An investing incentive has to produce cash flow, which provides the investor a passive monthly profit. There are other advantages; but this essay should concentrate on the effect on the cash flow holder of property owning firms.
The first move is to consider the numerous forms of real estate investment firms. There are three major categories; real estate wholesalers, investment companies and private equity firms. It is important to understand the services provided by these companies, and how they impact the profitability of a cash flow investor.
Land Investment Companies: Home wholesalers A variety of land wholesales joined the Arizona sector with the growing availability of troubled real estate. These property investment firms buy property at a discount, and then wholesale (or flip) the properties at a higher price to an investor. Wholesale companies usually purchase short sales, bank-owned (REO) assets, or trustee selling property. We will purchase at the lowest price available anywhere, then resell at the greatest benefit available. The assets owned by wholesale firms are usually’ as is.’ That implies they would not make any changes to the land, which may be a downside for the purchaser.