Vulture investing moves from quick money to long-term gains

Vulture investors are feasting on the depressed America’s housing market. Flocks of vulture investors are snapping up distressed properties ripe for the plucking due to depressed prices, record-low interest rates and a strong rental market driven by people who have lost their houses. But in this anemic economy, vulture investing has changed.When times were good, vulture investors bought and sold homes quickly. In these troubled times, they are landlords raking in hefty, steady incomes.

Vulture investors pick at remains of housing market

Vulture investors get their name because they swoop down and purchase distressed properties on the cheap. CNN reports that places wracked with foreclosures and short sales like Las Vegas, Phoenix and Miami are popular because home prices there have dropped as much as 70 percent. Their frequent flipping often drove home prices artificially high. Now they consider potential rental profits, a far more stable, long-term investment these days. Today, vulture investing may serve as more of a stabilizing force for neighborhoods.

Vulture investors wearing a different hat

Several factors presently occurring in the United States of America housing market have changed vulture investing strategy from buyer and seller, to buyer and landlord. Mortgage resource HSH.com said ever-rising home prices, the meal ticket for house flippers, are a distant memory. There is no cash in buying low and selling low. Plus, millions of foreclosed borrowers have to wait years before they can buy again have no choice but to rent, often from vulture investors who bought the properties for pennies on the dollar.

Vulture investors enjoy a large money flow advantage

Vulture investors that pay in cash can start making cash from the first month they start renting the homes. The CNN article uses Las Vegas as an example, where prices have fallen about 70 percent and rents have only declined about 20 percent. Glenn Plantone, a vulture investor in Las Vegas, told CNN his net return on investment via cash flow is 12-to-14 percent . The beauty of cash flow is that if real estate values continue to fall, the return for the vulture investor holds steady.

Additional reading

money.cnn.com

blog.hsh.com