Duplex Investments Surge In 2011

According to the National Association of Realtors (NAR), sales of investment properties jumped in 2011 to the highest levels since 2005.

Last week, NAR released their annual report, 2012 Investment and Vacation Home Buyers Survey, which covers existing and new-home transactions for 2011.

The study shows investment property homes and duplex sales jumped 64.5 percent to 1.23 million. This is nearly doubly the 749,000 that sold in 2010.

In fact, investment property sales were responsible for 27 percent of all real estate transactions last year.

Perhaps this is because 41 percent of all investment buyers purchased more than one property.

Of these investors, 49 percent paid cash in 2011. Half of all investment properties they bought in 2011 were distressed; meaning they were either bank owned or a bank was involved in the negotiations.

For those duplex investors who financed their acquisitions, the median down payment was 27 percent.

How much were investors spending? The median investment property purchase price was $100,000 in 2011. This is up 6.4 percent from the $94,000 seen in 2010.

On average, the typical investment property buyer last year had a median age of 50, earned $86,100 and bought a duplex or other investment property that was, on average, 25 miles from where they lived.

Thirty percent of all single family, duplex, triplex and apartment building investors lived more than 100 miles from the property.

The share of property investors who were in the market to rehab and sell for a profit stood at 5 percent. While this is an increase from the 2 percent market share in 2010, most investment buyers intend to own the property for a median of 5 years. This is down from the 10 year expected ownership period seen among 2010 investors.

Of all the real estate investors, 34 percent did so with the intention of diversifying their investment portfolio or saw it as a good opportunity. Half did so with the intention of generating rental income.

Fourteen percent of real estate property investors bought so they could provide housing for a family member, friend or relative.

Nearly half of all real estate investors said they will buy another property in the next two years.

As there are nearly 42.1 million people in the country ages 50-59, another 43.5 million between 40 and 49, and another 40.2 million in the 30-39 age range, it looks like the investment property market is positioned to stay strong for years to come.