If you’ve ever considered selling your home to an investor, chances are you’ve wondered what happens after you close.
Will they fix it up and sell it right away?
Will it become a rental?
Is it going it get torn down?
More often than not, the reality isn’t quite as glamorous as the people who watch house flippers on television would have you believe. While there are as many outcomes as there are properties, most tend to fall into a few categories based on the home’s condition, neighborhood and the investor’s long-term plans.
Here’s the inside scoop on where houses tend to go after selling to an investor and how the process can actually benefit neighborhoods.
Investors Rarely Sell Your House Only Once
Before we get too far, let’s dispel one of the biggest myths about selling your house to an investor.
Contrary to popular belief, many houses do not get flipped immediately after you sell. Some houses may not even be sold again for many years.
It all depends on what kind of investor purchases your home and what their game plan is for properties like yours.
Some investors buy homes to rehab and quickly resell. Others are strictly in the rental business. You’ll even find some investors who flip back and forth between these strategies over time.
The tricky part is that these three paths can often look the same from your doorstep. Let’s take a closer look at how each one plays out.
Investors That Flip Homes For Sale
This is the famous “flip” you’ve heard about on TV.
Your house is likely sold as-is because it needs repairs, upgrades or cosmetic work. When they close on your home, the investor will likely begin making the home livable again. Broken systems are repaired, old carpet or finishes are replaced, and other improvements are made to bring the home up to market standards.
Once their work is complete, your home may be sold to another buyer on the retail market. Many of these homes become the move-in ready listings you often see in neighborhoods. By “flipping” the home, they’ve acted as a bridge between distressed and move-in ready.
The next buyer may never know your home was sold to an investor years ago.
Investors That Turn Homes Into Rentals
Not every home can—or should—be completely renovated.
Some are fairly livable but may need a few minor repairs or updates. These homes might also benefit from a fresh coat of paint and some dedicated maintenance. An investor will often take these homes, make minimally needed repairs, and list them for rent.
Rent-ready houses often look no different than other homes on your block. They’ll be renovated as needed, occupied by tenants, and maintained just like any owner-occupied home.
Turning houses into rentals can actually help stabilize neighborhoods, giving homes time to find their next owner without becoming vacant or falling into disrepair.
Investors That Buy and Hold Properties
On the flip side (pun intended), you’ll also find investors that aren’t flipping or renting at all.
Buy and hold investors purchase properties with a long-term mindset and don’t necessarily plan to sell (or rent) right away. They purchase homes that are good investments in growing neighborhoods and let those investments pay off over time.
Buy and hold investors may rent these homes out in the short term and make improvements along the way. Since they’re not relying on flipping the home for profit, they’re able to hold on until market conditions make sense.
These owners might not make any drastic improvements to the property, or they may upgrade as funds become available. Over time, they may sell to a retail buyer who wishes to occupy the home.
Investors Usually Don’t Buy-to-Sell Your House Immediately For A Few Reasons
Many homeowners wonder why their home can’t simply be sold to a retail buyer immediately.
More often than not, it comes down to a few simple reasons:
Condition
Some houses require extensive work before they can be attractive to the retail market. Others may have outdated floorplans or years of deferred maintenance.
You’d be surprised how many titles have issues or how much clutter some homeowners leave behind.
Timing
Investors provide a service by taking homes off the hands of sellers who need to move quickly. By the time you list with an investor, you’ve likely accepted the fact that your home isn’t going to appraise or sell in a timely manner. You don’t want to wait around, so you just want to get it over with.
Market
Because investors have the ability to purchase homes “as-is,” they can provide a home buyer who isn’t ready to tackle major repairs with a new solution.
Instead of passing on your home entirely, they’ll often step in and handle things on their end.
Selling your home to an investor doesn’t have to be a dark, scary mystery. By providing a home buyer who needs to move quickly with more solutions, investors have become a helpful solution to many transactions.
Investors Can Be Good For The Neighborhood
I know what you’re thinking…
Yes, investors can stabilize neighborhoods by turning homes into rentals. But isn’t the whole purpose of buying a house from an investor to turn around and sell it for a huge profit? Not always.
Investors often rehab, repair, and paint houses that would otherwise remain vacant or undesirable. Sure, some do take houses, maximize their profits, and leave the neighborhood worse off. Many more use renovation as an opportunity to give older housing stock a new life.
How does flipping houses help neighborhoods?
In growing markets across the country, investors help keep older homes more affordable and competitive with new construction. Without refurbishments and rehabilitation, these older homes would fall into disrepair and take decades off of the surrounding neighborhood.
Why Does Your Home’s Future Vary So Much?
When you’re looking to sell your home fast, it can be frustrating to hear about every possible outcome. You might not be sure which investor you’ll end up working with or how they’ll approach your street.
Just like any real estate decision, it comes down to finding the right buyer for your home.
We know every home has a unique story. That’s why we strive to learn about each home we purchase and treat the families behind them with respect. Learn more about our buy house fast process here.
The Bottom Line:
Is your house going to be demolished tomorrow? Probably not.
Selling your home to an investor won’t instantly cause every house on your block to turn into rentals. It’s also unlikely that your home will be lived in by a bunch of investors for decades to come.
At the end of the day, just about every house will be sold to a family at some point. Whether that’s weeks, months or years after you sell is up to market conditions, housing demand and the investor’s plans.
Understanding what comes after you sell can help you make the best decision for your situation today.