Scotsman Guide > Residential > January 2018 > Department

 Enter your e-mail address and password below.

  •  
  •  

Forgot your password? New User? Register Now.

Residential Department: Q&A: Doug DeShields, National Real Estate Investors Association: January 2018

 

Q&A: Doug DeShields, National Real Estate Investors Association

Real estate investors provide a vital service

The real estate investment industry is relying on financing more and more in the U.S., particularly in fix-and-flip transactions — where residential properties are purchased, renovated, and resold in quick order by investors looking to make a reasonable profit. The estimated total dollar volume of financing used for house-flipping hit a nine-year high in second-quarter 2017, according to Attom Data Solutions. Some $4.4 billion dollars of financed homes were flipped during second-quarter 2017, representing more than 35 percent of all homes flipped in the quarter — also an almost nine-year high.

At the same time, profits on flipped homes slipped to the lowest level since third-quarter 2015. Much of the trend toward lower profits can be explained by rising home prices, but real estate investors face other issues. We spoke with Doug DeShields, president of the National Real Estate Investors Association, about these issues and how investors actually help communities with the problem of housing affordability born out of low inventories and rising prices.

What is the biggest issue facing real estate investors today?

One of the biggest problems is finding houses to buy to fix up either as rehab and then resell or to hold onto long-term for rentals. In Charlotte, North Carolina, we’ve got about a one-and-a-half-month inventory of homes, which is well below what the norm is. So, the first problem is finding houses. That is actually a bigger problem than finding the money.

What are some of the other issues?

One of the things that has put a damper on those of us that rehab houses is the availability of contractors. Some of that has been a part of the guest-worker deal. President Trump has put some limits on that and more of them have had to go back and come back later. So, at times, what we have is the subcontractors who work for contractors don’t have the full crews that they had back in 2007 and 2008. On a good note, it’s not really a problem, but an opportunity. The opportunity for the real estate investor is that in some markets your homebuilders have just not jumped in and built for the lower end of the market — for the rental end of the market.

Anything else?

The only other problems I see are the legislative problems we have [such as] the Dodd-Frank bill from a couple years ago. One of the things that it did was it limited the seller financing to three per year, which harms us people who have significant inventories of rental homes who are now wanting to get rid of them — to seller-finance them. It’s made it a little more difficult to do that.

What are the hot areas for investors right now?

Charlotte, Austin and Dallas, Texas, and some in Phoenix, Arizona. A lot along the Southwest corridor. Nashville, Tennessee, is another. I think a lot of that has to do with the fact that there has been a migration going on for some period of time from the North to the South. The South is now the largest region in the country. There are about 110 million people. Charlotte is now the 17th largest city in the country, with the seventh busiest airport in the world. Most of the country thinks of Charlotte as a sleepy little town. When I was born many years ago, Detroit was the fourth largest city in the country. It is now the 49th largest city in the country.

Is flipping still the driving force in investment?

I think we’re seeing more and more hold in [investment], even though you don’t see very much television where I’m fixing up a house and then renting it, because it doesn’t make for good television. It’s not good water-cooler talk. but it’s a way to build wealth, certainly.

Why is rehab and hold so strong?

What I’m seeing in our markets, and I think in some of the other larger southern markets, is it’s gotten to the point where [homebuilders] can’t afford to build unless they build large tracts of homes. They can’t afford to build at the lower end of the market. … So that’s where the real estate investor comes in. He’s providing affordable rental housing. Buying it, fixing it up, making it a comfortable place for somebody to live. Or buying it, fixing it up, rehabbing it, bringing it up to something you and I would live in. These are avenues where the real estate investor provides a huge service to the community.

Doug DeShields is president and CEO of Capstone Financial Services Inc., which is focused on providing consulting and accounting services primarily to real estate investors and trade associations across the United States. A licensed insurance agent, DeShields hold a bachelor’s degree in economics and a Master of Business Administration with a concentration in investments. Presently DeShields serves as treasurer of the Metrolina Real Estate Investors Association and as president of the National Real Estate Investors Association.


 

Will McDermott is managing editor for Ask a Lender. Reach him at willm@scotsmanguide.com or (800) 297-6061.

Fins A Lender Post a Loan
Residential Find a Lender Commercial Find a Lender
Scotsman Guide Digital Magazine
 
 
 
 

 
 

© 2019 Scotsman Guide Media. All Rights Reserved.  Terms of Use  |  Privacy Policy