🏘 What’s the current state of residential real estate investing in 2024? 🏘
About 41% of residential real estate investors say they’re making more now than a year ago, compared to just 14% making less. Still, around 9 in 10 say they’ve lost money on an investment (90%) or have regrets about investing in real estate (87%).
Who Are Real Estate Investors? | Increasing Profit for Most Investors | Investor Regrets| House Flipping Profits and Challenges | Real Estate Investment Strategies | Future Investor Concerns
The post-Great Recession days of lucrative, easy-to-find residential real estate deals are long over, as is the lengthy period of rock-bottom interest rates that helped make mortgages more affordable than ever.
But even amid overall economic uncertainty and housing market pressures, such as low supply and increasing insurance costs, residential real estate investors seem to be thriving.
Three-quarters of those surveyed by Clever Real Estate (75%) say they’re making at least as much as they made last year in real estate investments, with 41% making more than in 2023. An even higher percentage (46%) say they’re making more than they expected from real estate investing.
More than half of rental investors (56%) say they’re able to regularly raise rents by 10% or more every renewal, while 68% of long-term landlords say their typical tenants stay three years or more, helping keep vacancy low.
But it’s not easy money, no matter what social media gurus or late-night infomercials say. Nine in 10 respondents (90%) say real estate investing comes with challenges, including the weekly or even daily hassles of maintenance, repairs, chasing down tenants for rent checks, fielding complaints from neighbors, and more.
These problems likely influence the 40% who wish they never started investing in real estate in the first place and the 42% who report losing more money than they’ve made in their real estate investing careers.
To find out more, Clever Real Estate surveyed 764 American residential real estate investors to paint a broader picture of the residential real estate investing landscape as it stands in 2024 — from the most popular investment styles and property types to the unexpected pitfalls for new investors.
🔑 Residential Real Estate Investing Statistics
- 41% of residential real estate investors report that they make more income from real estate investing now than a year ago, while another third (34%) say they’re making about the same.
- Only 14% report making less in real estate investments than a year ago.
- The median amount long-term rental owners raise rent on their tenants each year or each renewal is 10%.
- Nearly all real estate investors (90%) say they’ve lost money on an investment at some point.
- 40% of respondents say they wish they had never started investing in residential real estate.
- Almost half of investors (45%) admit a bad investment has almost ruined them financially.
- About 61% of landlords say they have to track down missed rent payments every month.
- Roughly 4 in 10 real estate investors deal with maintenance issues (41%) or repairs (40%) at least once a week.
- Roughly 80% of residential real estate investors invest in more than one type of residential real estate investment, with the top options being traditional long-term rentals (51%), land for future development (45%), house flipping (42%), and short-term or vacation rentals (40%).
- About two-thirds of investors would consider properties with squatters (67%), foundation issues (65%), or a high risk of natural disasters, such as a flood, wildfire, or hurricane (62%).
- Nearly two-thirds of rental owners (63%) deal with complaints from neighbors about tenants at least once a month.
- More than half of respondents (56%) have had to evict a tenant at some point.
- The most common future concerns for real estate investors are high interest rates (44%), high home prices (41%), and inflation (40%).
- 44% of investors wouldn’t be able to live comfortably without their real estate income.
Who Are Real Estate Investors?
There are a wide variety of real estate investors out there, from mom-and-pop buyers looking to earn some extra cash to professional buy-and-hold investors and flippers.
The median rental investor in our survey currently owns 49 units and initially invested approximately $270,000. Just over half of respondents (55%) say residential real estate investing is their main source of income.
Revenue from investments varies significantly between landlords renting properties and house flippers. The former group brings in a median of roughly $123,000 annually or approximately $2,500 per unit per year. House flippers make significantly more, with a median income of nearly $174,000.
Most investors got their start looking to build wealth and financial security (41%), because they enjoy real estate (40%), or to generate passive income (39%).
However, more than a quarter (27%) say they did it because it’s less risky than investing in the stock market, while about a fifth of investors (21%) say it was the only way they could afford a home.
Real Estate Investors Are Nearly 3x More Likely to See Growing Profits This Year Than Shrinking Ones
The tumultuous real estate market that has defined the 2020s showed little sign of settling down over the past year. Nevertheless, 41% of residential real estate investors say they’re making more than they did a year ago, while another third (34%) say they’re making the same. Just 14% say their earnings have gone down.
Real estate has generally been a pleasant surprise for many investors. More than half of those who had an expectation of their earnings say they’re making more than they thought they would (52%), almost 2x the number making about what they expected (28%), and 3x the number who say they’re making less than expected (18%).
This optimistic view is likely fueled by one of tenants’ least favorite things: rent hikes. Long-term rental owners we surveyed raise rents a median of 10% each time they renew a lease or find new tenants.
There may not be much science or market analysis behind the chosen increases; the most common rent increase amount was 5% (indicated by 14% of respondents), followed by 10% (12% of respondents), and 15% (10% of respondents). This suggests most landlords are just falling back on round numbers, meaning they could be leaving potential profit on the table or risking extended vacancies by overpricing their units.
Meanwhile, short-term rental investors are enjoying strong demand, with 57% saying their properties are typically vacant less than two weeks between stays, while more than 1 in 3 respondents (39%) say their usual vacancies are less than a week.
9 in 10 Real Estate Investors Have Lost Money, Have Regrets About Investments
Some talk about real estate investing as “passive income.” But for many, it’s far from passive, and sometimes, it's not even income. In fact, 40% say they wish they’d never started investing in real estate.
Among the nearly 9 in 10 residential real estate investors (87%) who have regrets about their investment decisions, tenant issues are the most common, with more than half saying they’ve dealt with bad tenants (51%) or had tenants significantly damage a property (52%). A third (33%) regret overpaying for their investment property.
About a quarter of investors got a rude awakening regarding the time and effort required to be successful. Roughly 23% wrongly believed real estate investing would allow them to quit their full-time job, while 24% regret being on-call for tenants and others 24/7, without any true time off.
About a third of house flippers (30%) say they regret going into business with the wrong partner, while roughly a quarter (23%) of traditional long-term rental and vacation rental owners say the same.
A look at their books might also explain some of the negativity from investors. A whopping 9 in 10 (90%) say they’ve lost money on an investment at some point.
More than half of respondents (52%) have lost $100,000 or more on a residential real estate investment, and 42% have lost $200,000 or more on a single investment, highlighting the substantial stakes of buying property.
With six-figure sums at stake, it’s clear investors need to use caution and properly analyze potential deals. Despite their best efforts, almost half of investors still face potentially life-changing downsides.
About half (48%) have had to sell a property due to financial difficulties at some point in their investing career, and another 42% say they’ve lost more money than they’ve made from their investments. The results have been particularly grim for 45% of investors, who admit a bad investment has almost ruined them financially.
Missing Rent, Maintenance, and More Regular Hassles
Even those who manage to successfully rent, flip, or otherwise get started in real estate investing don’t have an easy road day to day.
The 90% of residential real estate investors who say they face challenges pointed to diverse issues — from paying for repairs (33%) to dealing with market changes (30%). About a third also struggled with finding reliable tenants (31%) or dealing with difficult current ones (30%).
Roughly 4 in 10 real estate investors deal with maintenance issues (41%) or repairs (40%) at least once a week, while about a quarter are stuck handling maintenance (24%) or repairs (26%) multiple times per week. These include the dreaded late-night and off-hours calls from tenants, which 40% of landlords say they get at least weekly.
For all their efforts, 61% of landlords say they still have to track down missed rent payments every month.
More Money (and More Work Than Expected) for House Flippers
Like rental owners, investors specializing in renovating and flipping houses are also doing well.
Sixty percent of house flippers make $50,000 or more in profit on an average flip, with nearly a quarter (22%) bringing in $100,000 or more on average, showcasing the significant returns of flipping. Just 13% profit less than $20,000 per flip.
That’s notable from a return-on-investment perspective, too. The majority of house flippers in our survey (56%) target homes with a sale price below $500,000 for their flips. Some specialize in the extremes instead. About 1 in 8 flippers (13%) focus on homes worth $1 million or more, while a similar percentage (11%) flip budget properties under $200,000.
Still, big profits come with big regrets for 88% of house flippers. House flipping is often one of the most hands-on, time-intensive ways to make money in real estate — no matter what home improvement shows might suggest. That’s news to the 58% of respondents who say HGTV made them think flipping homes would be easy.
This makes sense, considering the most commonly mentioned regret among flippers is underestimating the time and effort required (36%). Other top regrets include choosing a home in a poor location (33%) and uncovering a big, unexpected problem during the flip, such as mold or termites (33%).
More than a quarter (27%) admit they’ve experienced one of the biggest dangers of a flip: running out of cash before they could complete it.
Issues like this are why it's critical for investors to get their deals at an appropriate price. More than three-quarters of flippers (77%) say the maximum they can offer is 80% of the after-repair value (ARV), while a majority (56%) say their max offer is 70% of ARV.
Versatility Is Key for 8 in 10 Real Estate Investors
In the past, some real estate investors may have been able to get by focusing on a single strategy or type of property. However, modern ones looking for success need to diversify.
Roughly 80% of residential real estate investors invest in more than one type of residential real estate investment, meaning they’re very likely to try multiple investment strategies at once.
The most frequently cited strategies include traditional long-term rentals (51%), buying land for future development (45%), house flipping (42%), and short-term or vacation rentals (40%). More than half (56%) say they’ve bought a foreclosed property as part of their investment strategy.
Around a third of respondents also practice more specialized strategies, including student housing (35%), wholesaling (34%), and house hacking or room rentals (33%).
About the same amount (35%) do their real estate investing in a truly passive way, putting their money into real estate investment trusts, commonly known as REITs. These funds allow investors to benefit from specific types or regions of real estate without having to purchase a property themselves or deal with the hassles of management.
There’s also broad diversity in the types of property real investors target. Single-family homes are the most popular (58%), followed by apartment buildings (48%), duplex/triplex/quadplexes (45%), and townhomes (43%).
Along similar lines, investors don’t seem to agree on the best types of properties to target. Regardless of what they personally invest in, investors believe the most profitable type of residential property is single-family homes (25%), duplexes/triplexes/quadplexes (25%), and apartment buildings (23%). The remaining investors are split almost equally between townhomes and condos (15%) and unique properties, such as tree houses or tiny homes (14%).
What Won’t Investors Buy? Not Much
Success in real estate investing can be as much about avoiding bad properties as finding good ones. Overall, 86% of residential real estate investors say there’s at least one type of property they won’t buy. However, a closer look at the numbers reveals plenty are willing to take chances on riskier options or ones facing significant challenges.
The most frequently avoided properties are those with an issue that buyers can’t fix, no matter how hard they try: a poor location, which 39% of investors won’t touch.
On the flip side, it’s easy to see how the tight real estate market of the past few years has forced many residential real estate investors to drop their standards a bit.
About two-thirds would consider properties with squatters (67%), foundation issues (65%), or a high risk of natural disasters, such as floods, wildfires, or hurricanes (62%). More than three-quarters (76%) would buy a famous or notorious property, perhaps hoping to cash in on some free marketing.
Meanwhile, roughly three-quarters are willing to navigate the more complex transactions of bank-owned foreclosures (73%), short sales (79%), or probate sales (79%).
It’s worth noting that over a quarter of real estate investors (26%) say they won’t touch properties that are part of a homeowners association, an increasingly common feature covering approximately a third of U.S. homes.
However, many HOAs impose restrictions on rentals or require lengthy tenant approval processes in addition to the sometimes strict rules on home design and upkeep.
The Seven Habits of Highly Effective Real Estate Investors
- Real estate markets are constantly changing, requiring investors to stay on top of shifting prices and demand. About half of residential real estate investors (46%) who invest in rentals report looking at property listings and auctions at least once a week. Nearly three-quarters (72%) check listings at least monthly.
- Perhaps the most critical decision is where to buy rental properties. Two-thirds of respondents (65%) primarily invest in their local market, leveraging their knowledge of their area with the ease of being able to check on the property or handle minor maintenance issues themselves. The remaining 35% search for opportunities elsewhere, whether they’re targeting a certain type of property — such as a vacation rental — see better returns in different markets, or simply can’t afford homes near them.
- Another big choice for investors is whether to self-manage or hire a property manager to handle leasing and tenant issues. Roughly a third (35%) manage their properties themselves, while another 29% use a combination of self-management and professional help. Just 18% solely use professional property managers.
- Where properties are listed can matter quite a bit when it comes to the ease of renting them. Rental investors looking at long-term options found the most success with Realtor.com (55%), Rent.com (54%), and Facebook Marketplace (52%), along with word of mouth (53%.) Meanwhile, Booking.com (62%) and Airbnb (61%) were notably ahead of their short-term focused competitors, Expedia (53%), HomeAway (50%), and Vrbo (49%).
- Successful landlords also make sure to budget for maintenance, cleaning, and upkeep. The median investor in our survey spends $26,100 per year on these services — or about 19% of their rental income.
- Among the many hats landlords need to wear are those of a PR specialist and crisis manager. Nearly two-thirds of short- or long-term rental owners (63%) say they have to deal with complaints from neighbors about tenants at least once a month, while 39% handle them weekly.
- Although it’s unpleasant for everyone involved, real estate investors need to be prepared for evictions. More than half of respondents (56%) have had to evict a tenant at some point, an often-fraught experience with legal, financial, and logistical hurdles.
Interest Rates, Home Prices, Inflation Are Top Investor Concerns for the Future
Despite cashing in big time over the past few years, 90% of residential real estate investors say they see threats to their investments in the future.
High interest rates, cited by 44%, loom the largest, with new indications from the Federal Reserve suggesting just one cut by the end of the year. Along similar affordability lines, 40% worry about continued inflation, while 41% are concerned about high home prices.
This last point is notable because nearly two-thirds of respondents (62%) believe real estate investors have contributed to high property prices. This admission may be especially impactful for low-income or first-time buyers because 62% of investors say they primarily target starter homes.
Real
The tense political and social climate is on the minds of a quarter of investors (25%), who worry that domestic unrest could be a big threat to real estate investing in the future. Just staying within the bounds of the law is tough for more than half of real estate investors (51%), who say they find it challenging to keep up with local rental regulations.
Despite the hype, residential real estate investors don’t seem worried about AI. Only 26% perceive it as a major future threat to their investing.
Regardless of their exact worry or the likelihood of it, the data underscores how important investment properties often become for owners. Nearly half of investors (44%) wouldn’t be able to live comfortably without their real estate income, another sign of how vital keeping up with the market has become.
Despite all the hurdles, you won’t find many investors ready to give it up: 70% say they plan to continue investing in residential real estate for years to come.
Best Investment Markets
| State | Best Market |
| Alabama | Chickasaw |
| Alaska | Anchorage |
| Arizona | Maricopa |
| Arkansas | Walnut Ridge |
| California | Thousand Palms |
| Colorado | Pueblo |
| Connecticut | East Hartford |
| Delaware | Lincoln |
| Florida | Jay |
| Georgia | Aragon |
| Hawaii | Keaau |
| Idaho | Wendell |
| Illinois | Pinckneyville |
| Indiana | South Bend |
| Iowa | Albia |
| Kansas | Baxter Springs |
| Kentucky | West Liberty |
| Louisiana | Albany |
| Maine | Skowhegan |
| Maryland | Lusby |
| Massachusetts | Rutland |
| Michigan | Lansing |
| Minnesota | Eveleth |
| Mississippi | Crystal Springs |
| Missouri | Higginsville |
| Montana | Cut Bank |
| Nebraska | Schuyler |
| Nevada | Winnemucca |
| New Hampshire | Swanzey |
| New Jersey | Wenonah |
| New Mexico | Tucumcari |
| New York | Walworth |
| North Carolina | Maysville |
| North Dakota | Grafton |
| Ohio | Mansfield |
| Oklahoma | Sulphur |
| Oregon | Boardman |
| Pennsylvania | Frackville |
| Rhode Island | Pawtucket |
| South Carolina | Starr |
| South Dakota | Madison |
| Tennessee | Medina |
| Texas | Tyler |
| Utah | Hyrum |
| Vermont | Lyndon |
| Virginia | Buena Vista |
| Washington | Newman Lake |
| West Virginia | Charleston |
| Wisconsin | Oconto |
| Wyoming | Torrington |
Methodology
Clever Real Estate conducted a survey of 764 Americans who invest in residential real estate to learn more about their preferences and opinions regarding residential real estate investing. The survey was conducted between May 18 and June 9, 2024.
About Clever
Since 2017, Clever Real Estate has been on a mission to make selling or buying a home easier and more affordable for everyone. Twelve million annual readers rely on Clever's library of educational content and data-driven research to make smarter real estate decisions—and to date, Clever has helped consumers save more than $160 million on realtor fees. Clever's research has been featured in The New York Times, Business Insider, Inman, Housing Wire, and many more.
More Research From Clever
Articles You May Like
FAQs
How much do residential real estate investors make?
Rental owners make a median of roughly $123,000 annually or approximately $2,500 per unit per year, based on the study median of 49 units. House flippers make significantly more, with a median annual income of nearly $174,000. Learn more.
What’s the most common type of residential real estate investing?
The most common types of residential real estate investing include traditional long-term rentals (51%), buying land for future development (45%), and house flipping (42%). Single-family homes are the most popular type of property (58%), with apartment buildings (48%) in second place. Learn more.
What are the most significant challenges in residential real estate investing?
More than half of investors (51%) say they’ve dealt with bad tenants, while 39% regret the money they’ve lost. A third (33%) regret overpaying for their investment property. Learn more.
What are the biggest future worries for residential real estate investors?
Just under half of investors (44%) believe high interest rates are the biggest challenge. Along similar affordability lines, 40% worry about continued inflation, while 41% are concerned about high home prices. Learn more.