It’s a huge industry, and one that represents an opportunity for agents. But it’s also a field with quirks, culture, sub-categories and methodologies.

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Jason Cassity works as a Compass agent in the San Diego area, and last week got a call from a Southern California architect. The architect wanted to start flipping houses in Cassity’s area and was looking for an agent to help him find the right property at the right price.

Jason Cassity

“He wanted something that he could then live in and then flip and sell for a profit,” Cassity recently told Inman.

What ensued was a relatively typical real estate conversation in which Cassity helped the would-be investor understand the market and what options he might have. If you are or have been an agent, you know the drill.

What was notable was how often Cassity ends up having one version of it or another.

“I get that call or text once a week,” Cassity said.

Cassity’s experience speaks to a larger trend: There are a growing number of people looking to invest in property that they won’t ultimately use as their primary residence.

It’s a huge industry, and one that represents a massive opportunity for real estate agents. But it’s also a field with its quirks, culture, sub-categories and methodologies. In other words, it’s a big topic and one that can take years to master, but here are some of the basics for understanding what’s happening and how to better get in on the trend.

The state and outlook of the investment property market

Numerous real estate professionals who spoke with Inman described what seems to be escalating interest in investment property in their markets.

Josh Higgins

For example, Josh Higgins — also a Compass agent in San Diego who specializes in multifamily deals — told Inman he had seen business “kind of blowing up and expanding.”

Joe Davis is busy as well. A Sotheby’s agent in Park City, he told Inman that 2018 was the best year ever for sales at Promontory Utah, a vacation-oriented community in the mountains above Salt Lake City where Davis sells real estate.

Owners in the community often use their property as a second home or vacation destination, and Davis said real estate picked up so much that there is virtually no longer a shoulder season.

“The pace I’ve seen now is different from what I’ve seen in the past,” he said, adding that business is so good the community’s developer has now decided to begin selling additional, high-end vacant lots.

Data from Zillow and provided to Inman shows that the investment sector is significant, with nearly a fifth, or 19 percent, of all homeowners having some kind of secondary property.

Moreover, Zillow’s data shows that 10 percent of homeowners have a vacation home, 6 percent have an investment property and 3 percent have some other kind of property beyond their primary residence.

Recent data from the National Association of Realtors (NAR) offers a longer view of the market and shows that during recent months there has been a slight uptick in investment property purchases. In April, for example, non-primary residence transactions made up 18 percent of all real estate deals. That’s slightly higher than at any point during 2018.

Data from the National Association of Realtors shows a fluctuating real estate investment market. This graph’s X axis shows years, followed by the months represented with a number. | Credit: NAR and Jim Dalrymple II

Prior months during 2019 also showed growth compared to the end of 2018.

Looking back to late 2015 — the first year covered by the data NAR provided — reveals a fluctuating market with the current moment tied with April 2017 for having the highest percentage of non-primary residence transactions.

To be clear, this nationwide data doesn’t show overall explosive growth. And Lawrence Yun, NAR’s chief economist, described the trend as mostly “holding steady,” with investors sticking around even if they’re not quickly pushing the market higher.

But the data does still show modest recent growth in the number of non-primary residence transactions. In a market with peaks and valleys, we appear to currently be on a peak.

So why are investors still plunking down cash on real estate? Here are a few reasons:

The economy

A confluence of trends is fueling the ongoing interest in investment property, but the most basic factor is probably the economy.

Greg Williams

“It’s a safe place to put your money,” Greg Williams, a broker and owner of HomeFront Realty in Massachusetts and New Hampshire, told Inman. “And of course there are some great tax benefits to it as well.”

Higgins agreed. He noted that some investors might currently be looking at volatility in the stock market and in Washington, D.C., while also noting that their friends and acquaintances are doing very well by comparison with real estate.

“I think the idea of getting into multifamily is that you can hedge some of that volatility,” he suggested. “For the people who do see it and have heard about it, it’s very titillating. Who doesn’t want cash flow?”

Other observers pointed to larger economic trends that have come to dominate cities. Alex Pettee, president of real estate investment firm Hoya Capital, noted that there appears to be a macroeconomic trend that involves people renting longer than they have historically. And that, in turn leads to greater demand for rentals — a fact that isn’t lost on would-be investors.

Data suggests the conditions Pettee described are widespread, with real estate analytics firm ATTOM Data Solutions reporting in January that renting a home was more affordable than buying in 59 percent of U.S. markets.


While the economy has been strong before, one thing unique to this moment in time is the pervasiveness of electronic, property-oriented technology. And many of the real estate professionals who spoke to Inman said the rise of real estate tech is serving as a gateway to new property investors.

Shaun Greer

“Technology is making it easier to find, locate and rent a property now,” Shaun Greer, the senior director of real estate at vacation rental company Vacasa, told Inman. “It’s making it easier for investors to analyze properties and also get tenants.”

Greer pointed to a company like Zillow, which put previously inaccessible data into the hands of everyday investors, as a game changer.

Some of this new technology is focused on one particular slice of the real estate investment market. Greer’s company, for example, offers a tech-enabled vacation rental platform, among other services.

A number of other platforms have emerged to provide a kind of shallow-end version of real estate investing for consumers. Among them, Fundrise functions as a real estate-oriented crowdfunding platform and has raised tens of millions of dollars.

RealtyShares was also a crowdfunding platform before effectively going bust and selling to iintoo, yet another similar platform. The business models of these various platforms vary, but in many cases they let investors with small amounts of money chip in together to jointly own property.

Alex Pettee

Pettee, whose firm runs a real estate investment trust (REIT), said these kinds of platforms were primarily enabled by a new law, the JOBS Act, which was first passed in 2012 and then modified in 2015. The so-called “crowdfunding” law lets companies begin targeting small-time investors for the first time.

“The changes in 2015 allowed these companies to target essentially everybody,” Pettee explained.

For the most part, this kind of investment is self-directed; investors don’t need agents to help them invest on crowdfunding platforms or buy shares in REITs. Still, these technologies are an important part of the investment equation right now. And it’s easy to imagine smaller investors who began on apps and saw strong returns eventually wanting to take off the training wheels and pursue properties outright.

In any case, it does appear there is some cross pollination going on between technologies that fuel real estate investment and various subsections of the market. Higgins, for example, works with both mom-and-pop and institutional investors who focus on longer-term rentals. But when asked what factors were driving growth in real estate investment, he also pointed to various tech platforms, saying they are raising the awareness.

“I think as people are starting to hear more and more about the rental markets, Airbnb and vacation rentals, it’s starting to come more to the forefront,” he added.

Cultural shifts

Michael Nourmand

Several agents who spoke with Inman have also observed a shift in attitudes about families that they said has resulted in more deals. Among them, Michael Nourmand, president of the Los Angeles-area brokerage Nourmand and Associates, explained that ever-increasing home prices appear to be driving an increase in family-oriented investment.

“I think you have a lot of families that worry their kids aren’t going to be able to afford it,” he said of homeownership. “So they buy to hold onto it for kids later on.”

Credit: Getty Images

Davis, the agent in Utah, also described seeing more family-based investing.

Joe Davis

“I’d say it reminds me a lot of what I’ve seen in Martha’s Vineyard and Nantucket,” he said. “It feels like what I’m seeing is families are taking legacy money, a lifetime in some cases, and putting that into something that’s going to last generations.”

Changes in attitudes about family and real estate are difficult to quantify, but Davis’ and Nourmand’s observations track with years of data showing that parents are indeed increasingly helping their adult children purchase housing, and that the U.S. is currently seeing a significant increase in the number of multigenerational households.

What types of properties are investors looking for?

The types of properties and investment opportunities out there are incredibly varied, but it’s useful to break them down into a few broad categories.

Long-term rentals

Long-term rentals have been the bread and butter of the real estate industry for a long time, and the remain popular today. These types of properties can range from large apartment complexes to single homes owned by mom-and-pop investors.

In some markets, such as Nourmand’s in Los Angeles, multifamily properties rented out to tenants have long been the go-to investment choice. However, Nourmand said that more recently, preferences appear to be shifting thanks in part to new regulations.

“It used to be that people were much more geared to multifamily,” he explained. “With some of the rent control rules that have passed people have become a little more open to buying single family.”

Some major institutional investors (more on them below), such as Invitation Homes, have also focused almost exclusively on long-term, single family rentals.

Andrew Rybczynski

However, Andrew Rybczynski, a senior consultant at commercial real estate data firm CoStar, told Inman that the overall popularity of single-family rentals has in fact waned somewhat.

“We have seen single-family rentals decline in raw numbers over the last few years,” Rybczynski said, “and that makes sense given pricing on these properties.”

His point is that investors have veered away from single-family homes as prices of these types of homes have gone up, making the prospect of cashing out their equity the most attractive option, and making new investors more hesitant to buy them when seeking a fast return.

Multifamily, however, does remain popular among many investors.

Jeanette Rice

Jeanette Rice, a researcher at real estate analysis firm CBRE, told Inman that investment in multifamily buildings was up 6 percent in April of 2019 year-over-year. In fact, Rice said, growth of multifamily has outpaced other sectors of the real estate market.

“It’s still very popular,” she added.

A report from CBRE further explains that since 2015 multifamily “has held top market share among all property types.” The firm also found that during the first quarter of 2019, the multifamily sector had a vacancy rate of only 4.6 percent and that rents had grown 3 percent year-over-year.

Additionally, “multifamily acquisitions totaled $36.4 billion in Q1, up 1.3 percent year-over-year,” CBRE reported.

A New York multifamily building | Credit: Daniel Viñé Garcia and Getty Images

Agents working in the field have firsthand experience with the ongoing growth of multifamily. Higgins, for example, said he stays busy working with clients who have anywhere from a handful of multifamily units to portfolios worth tens of millions of dollars.

Across the country in New England, Williams also said that he favors multifamily units for his portfolio because you “get a much better rate of return.”

But much of the buzziest action in the longer term rental world right now has less to do with consumer behavior and more to do with tech platforms that are trying to streamline various aspects of the management and leasing process.

Palo Alto-based Keyo, for example, was founded in 2017 and uses freelancers to show apartments much the same way that Uber relies on independent contractors to drive cars.

Other tech startups that operate in the long-term rental space include Aptly, ZenplaceLivlyPayLease and its recent acquisition Zego, among many others.

The opportunity for either investors themselves or their real estate agents to actually interact with these startups varies, but the point here is merely that there is a considerable amount of interest and investment currently directed at the longer-term rental sector.

Vacation homes and short-term rentals

The rise of vacation rentals has been a game-changer for the real estate investment world, and much like the multifamily sector has seen waves of investment. Airbnb pioneered the niche, but a host of other companies operate in the space as well. Those companies include Vacasa, VRBO and its parent HomeAway (which is part of Expedia), Guesty, BluegroundiTrip Vacations and others.

Even well-established businesses such as Google and Marriott have jumped more aggressively into the sector this year.

The industry has also seen explosive growth in bookings, which of course serves as the primary draw for investors.

HomeAway, for example, told Inman that nights stayed in its properties grew 29 percent in 2018 year-over-year. Additionally, the company had nearly $11.5 billion in gross bookings.

Greer, from Vacasa, also described booming demand for the vacation-oriented properties that his company operates. And he added that there is significant potential for the vacation rental market to grow.

“There are still many many people who own second homes who don’t rent them out,” he explained.

Matt Landau — founder of, a marketing and educational site that focuses on vacation rentals — said that the sector has taken off in part because travelers are simply more aware of vacation rentals thanks to companies like Airbnb. But he also said basic economics are playing a big role: “The return on the investment is significantly greater.”

“Everyone and their sister is aware of this alternative kind of lodging now,” Landau continued. “It has created this incredibly attractive alternative to long-term rentals.”

Greer made almost the same point: “What we do see is higher return rates relative to annual rentals.”

Short-term rentals managed by Vacasa Credit: Vacasa

And like Greer, Landau sees room for significant growth in the vacation rental arena.

“I think we’ve only seen the tip of the iceberg of it,” he said.

The vacation rental world is changing quickly, but for additional information on the sector check out Inman’s Essential Guide to Second Homes and Vacation Homes.


Home flipping is a tried-and-true investment strategy, and new data shows that investors are continuing to turn to it in droves.

According to an ATTOM Data report, flips accounted for 7.2 percent of all home sales during the first quarter of 2019. That’s higher than any other quarter since the first three months of 2010.

The top regions for home flipping in the first months of 2019 were Memphis, Tennessee, followed by Huntsville, Alabama, and Phoenix, Arizona.

Even though investors are still pouring money into flips, that doesn’t mean that we’re currently in a golden age of remodeling and selling.

The ATTOM report shows that while the number of flips was high at the beginning of 2019, actual “gross profits are stumbling.”

“Homes flipped in Q1 2019 sold at an average gross profit of $60,000, down from an average gross flipping profit of $62,000 in the previous quarter and down from $68,000 in Q1 2018 to the lowest average gross flipping profit since Q1 2016,” the report explains.

Moreover, ATTOM’s data from 2018 shows that home flipping fell in 2018 by 4 percent year-over-year. There were still plenty of flips — 207,957 single family homes and condos flipped by 146,020 individuals and institutions to be exact — but the situation nevertheless prompted ATTOM Chief Product Officer Todd Teta to observe that 2018 saw “a bit of a flipping rate slowdown.”

Despite that slowdown, however, the total lending volume for 2018 was up 8 percent, and Teta added that home flipping isn’t going away.

“The market is still ripe with investors flipping and bargains still await, especially in the lowest-priced areas of the country, where levels of financial distress remain highest,” he explained in the report.

Cassity, the Compass agent in San Diego who recently got the call from a would-be flipper-architect, has first-hand experience with the ebbing industry. He said that he still receives plenty of inquiries from potential investors who want to flip homes. However, given the high prices in his area and the lack of distressed properties, the actual number of deals that close with flippers has dwindled.

“Those deals are few and far between now in 2019,” he added.

None of this is to say that flipping isn’t a thing. Obviously, it is. But it clearly has become less of a buzzy, growth industry than it once was.

What's up with institutional investors?

Institutional real estate investors have been around for a long time, but the last decade or so has seen a number of firms snatch up tens of thousands of homes following the Great Recession. Probably the best-known of these companies is Invitation Homes, which is owned by private equity firm Blackstone, but there are others as well, many of which operate long-term rentals.

NAR Chief Economist Lawrence Yun told Inman that institutional investors have clustered in markets such as Memphis and Phoenix, where they can pull in high returns on their properties. (Institutional investors have also become a fruitful market for homes that iBuyers such as Opendoor are trying to flip.)

An Arizona neighborhood | Credit: Art Wager and Getty Images

However, while companies such as Invitation Homes are an important part of the conversation surrounding investment properties, Yun said that across the U.S. small-time mom-and-pop investors remain “the dominant players.”

Lawrence Yun

“In terms of the overall market impact, it’s the summation of all these small investors,” he added.

Beyond companies like Invitation Homes, Greer told Inman he has seen private equity investors increasingly turn to short-term rentals as well. Much like an “Average Joe” buying a second home, these investors are attracted to the potentially higher profits of vacation rentals, and recognize that the supply of prime property along places like coastlines is limited.

The opportunity for most agents to interact with massive investment firms like Invitation Homes is somewhat limited, but they do represent an essential part of the real estate landscape and are worth trying to understand if you either might end up selling to or competing with them. For more information on some of these investors check out our last essential guide, on Wall Street capital.

Which markets are seeing the most investment property activity?

In a word, investors want property in places that are cheap.

Yun said that in general, investors have focused on more affordable markets, such as California’s Inland Empire, which starts an hour or two east of Los Angeles (depending on traffic) and extends deep into the Golden State’s deserts. The South also remains popular.

“Generally, the Southern cities have shown more investor activity because that’s where prices are still relatively affordable,” Yun added.

Homes in California’s Inland Empire | Credit: Credit: Tim Gray iStock, Getty Images Plus

Recent data from ATTOM further shows that Baltimore, Maryland, had the highest potential annual gross rental yields for single family homes in 2019, followed by Bibb County, Georgia, and Cumberland, New Jersey.

ATTOM expects the worst metros for single-family rental returns in 2019 to be parts of California’s Bay Area, where home prices are notoriously high.

Additionally, ATTOM found that the hottest city for home flipping in 2018 was Memphis, where 29.5 percent of all home sales were flips. Other areas that saw high flipping rates included Donna, Texas, Miami, Florida, and Washington, D.C.

Tips for agents working with property investor clients

Inman asked a number of agents how they marketed themselves to investors and grew that side of their business. Uniformly, they said there wasn’t some trick or shortcut. Instead, they stressed experience.

Here are some of their tips:

Dive into data

Cassity, whose business in San Diego involves working with both flippers and developers, suggested agents start finding investors on their own multiple listing services (MLSs). Those systems should allow agents to filter property searches by the year a home was built, which Cassity said can be useful for finding newly constructed homes.

When those homes are located in existing neighborhoods, it probably means a someone came in and extensively renovated or rebuilt the property. And that someone is an investor.

“A lot of times you can find out who the developer is and from there you just reach out to them,” he said.

Before making contact, Cassity also recommended having a potential investment project in mind.

For agents who want even more detailed data, a number of firms — such as ATTOM, cited above — also allow real estate agents to scan for properties such as foreclosures that may not be immediately visible on any given MLS.

Though these data-based services typically cost money and represent a more advanced strategy than simply combing through available listings, some agents do subscribe and ultimately close deals they find on them. Higgins, for one said that he pays for a data subscription.

Partner up with experienced pros

Williams, whose New England brokerage includes about 35 agents, said one problem he often sees is that newer agents either lack the confidence or the knowledge to work effectively with property investors.

The issue, he told Inman, is investors typically understand the industry better than the average homebuyer. And that, in turn, means they have more advanced concerns and end up asking their agents more “senior questions” about things like tenants and property management.

An agent can’t fake his or her way through those types of technical conversations, so Williams said the solution is to lean on more advanced colleagues.

“If I was going to give advice to new agents,” he said, “it would be to spend some time talking to seasoned agents about how to deal with tenants. Or maybe talk to a senior agent who can give you some tidbits about local markets.”

Become an investor yourself

Yun, of NAR, said about 40 percent of real estate agents “actually own a second property for rental income.” He described rental property ownership as a natural outgrowth of agents’ day-to-day business, especially for those who are able to bring in some spare money.

“Some Realtors make easily a six figure income,” he said, “and part of their savings goes into second and third income properties.”

Higgins is one of those agents, and pointed out that real estate professionals don’t have pensions or, in some cases, large retirement savings.

As a result, rental property can form an essential part of an agent’s long-term financial plan. And the collateral benefit is that agents become more knowledgeable and able to serve clients along the way.

“Agents shouldn’t be looking at multifamily just for their clients, they should be looking for themselves,” Higgins said. “Learn and buy as much multifamily in the right markets as possible.”

Williams offered similar advice, saying that his rentals have served him well both as investments on their own and as a way to boost his skill set — which is what agents who want to work with investors need.

“I’ve always encouraged my agents to buy multifamilies,” he concluded.

Email Jim Dalrymple II

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