Family motivations and optimism around long-term financial stability drives interest to incorporate real estate into investment strategies
10-04-2016 — Could real estate be the hottest trend in investing? While the concept itself isn’t new, confidence and intrigue in this investment strategy are high according to recent findings from a national survey of U.S. investors by Better Homes and Gardens® Real Estate, which found 89 percent of U.S. investors surveyed are interested in incorporating real estate into their investment strategies. The results also revealed that 80 percent of U.S. investors surveyed believe a real estate portfolio is one of the best financial legacies they could leave for their family, so what could this mean for the real estate industry?
Real Estate Investors of Today and Tomorrow
Nearly all (96%) of U.S. investors surveyed who have invested in real estate believe their decision has helped them achieve some form of financial success:
- 52% greater overall financial stability
- 51% greater long-term net worth
- 45% greater monthly cash flow
94% percent of those who have invested in real estate are interested in making a future investment of this kind
- 84% who have invested in real estate indicated that they will make another real
- 2 in 5 planning to do so in less than a year
80% of investors surveyed who have never previously invested in real estate expressed an interest in making this financial commitment:
- 96% of Millennial investors are interested in making a real estate investment,
showing greater interest than their Boomer counterparts (83%).
- Millennials are more drawn to personal real estate investments (79%) than
Family Motivations Behind Real Estate Investment
Despite capturing the public’s fascination through reality TV, only a small portion of respondents (29%) view property flipping as a beneficial real estate investment. Rather, research revealed that family is a driving motivation behind real estate investments.
79% of investor respondents feel it is important to invest in a property that they could use for themselves or a family member at some point.
83% of parents who invest would consider buying a property for or with their child or grandchild to:
- Co-manage and profit from together (40%)
- Manage and profit from it themselves (39%)
- Have their children or grandchildren live in the home during college (35%)
- Fund college tuition in the future (35%)
Investing More than Money
Unlike many other investments that can be made with the click of a button, real estate investments are often complex and require careful consideration. In fact, 89 percent of investors who have made a real estate investment in the last five years feel it is important for a real estate investment property to be geographically close, so that they could either manage or use it themselves.
For non-investors, this commitment can be a deterrent. Eighty-nine percent of non-real estate investors surveyed who cited concerns about jumping in on an investment property, the top reason was that they don’t know enough about investing in real estate (42%), followed by it requires too much time (41%), demands too much starting capital (35%) and that it is “risky” (28%). There is a clear need for real estate professionals and their insights – 30 percent would be more likely to invest if they had access to a real estate investment professional for advice, or resources to explain how to get started.
This need translates into a set of expectations. Approximately 53 percent of respondents expect a real estate agent to advise on managing the investment, as well as provide guidance on terms (49%) and down payment advice (47%).
“To see consumer confidence of this magnitude is very promising. Through this research, we’ve discovered that a majority of investors, including Millennials, Gen Xers and Baby Boomers, believe real estate is the best way to diversify an investment portfolio. What’s fascinating is that even when it comes to real estate investments, for many, there are still emotional drivers that accompany this type of transaction. Consumers are starting to look forward and see real estate as a viable investment strategy, and as an industry, we need to help educate and guide these individuals on the right path to achieve this goal.”
“The aspiration to invest in real estate is there, yet it is up to real estate professionals to explain the fundamentals and help to serve as strategic sources throughout the process. Our hope is that this research empowers our industry to provide the resources and develop the necessary information to accelerate this opportunity for both current and future real estate investors.”
– Sherry Chris, President and CEO, Better Homes and Gardens Real Estate
About the Survey
The Better Homes and Gardens Real Estate Investors Survey was conducted by Wakefield Research, among 1,000 U.S. investors, between June 30 and July 12, 2016, using an email invitation and an online survey.
Results of any sample are subject to sampling variation. The magnitude of the variation is measurable and is affected by the number of interview and the level of the percentages expressing the results. For the interviews conducted in this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 3.1 percentage points from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample.
About Better Homes and Gardens Real Estate LLC
Better Homes and Gardens Real Estate LLC is a dynamic real estate brand that offers a full range of services to brokers, sales associates and home buyers and sellers. Using innovative technology, sophisticated business systems and the broad appeal of a lifestyle brand, Better Homes and Gardens Real Estate LLC embodies the future of the real estate industry while remaining grounded in the tradition of home. Better Homes and Gardens Real Estate LLC is a subsidiary of Realogy Holdings Corp. (NYSE: RLGY), a global leader in real estate franchising and provider of real estate brokerage, relocation and settlement services.
The growing Better Homes and Gardens® Real Estate network includes more than 10,000 affiliated sales associates and approximately 300 offices serving home buyers and sellers across the United States, Canada and the Bahamas.
Better Homes and Gardens® is a registered trademark of Meredith Corporation licensed to Better Homes and Gardens Real Estate LLC and used with permission. An Equal Opportunity Company. Equal Housing Opportunity. Each Better Homes and Gardens® Real Estate Franchise is independently owned and operated.
For more information, visit www.BHGRealEstate.com.