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October 4, 2016

Eighty Nine Percent of Investors Want to Invest in Real Estate

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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 willmake another real estate investment
      • 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 commercial (49%).

Family Motivations behind Real Estate Investment

Eighty Nine Percent of Investors Want to Invest in Real Estate 1

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.

Eighty Nine Percent of Investors Want to Invest in Real Estate 2

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 percent), followed by it requires too much time (41 percent), demands too much starting capital (35 percent) and that it is “risky” (28 percent). 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 percent) and down payment advice (47 percent).

“To see consumer confidence of this magnitude is very promising,” says Sherry Chris, President and CEO, Better Homes and Gardens Real Estate. “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.

Eighty Nine Percent of Investors Want to Invest in Real Estate 2

“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.”

For more information, visit www.bhgre.com.

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