Coastal investors are buying and renting out homes in cheap faraway markets using property management companies. Havovi Cooper reports.
With the Bay Area one of the priciest places in the U.S. to own a home, many in Silicon Valley armed with cash are now buying houses in cheaper parts of the country and renting them out as a source of investment. They're using companies like HomeUnion to outsource the hassles of finding the house and managing it. Reuters Correspondent David Randall gives us this industry's pitch. SOUNDBITE: DAVID RANDALL, CORRESPONDENT, REUTERS, (ENGLISH) SAYING: "If u're living in San Fran, it's very hard to buy a house in Alabama. You don't know anybody, don't know anything about it. So here's what you say. Here's a list of homes. Here's people who can renovate it, and we're going to rent it out for you. So it's nothing you have to do except click a couple of times and now you can make yields of 10 or 12 percent." HomeUnion is one of a handful of companies including Investability and Roofstock that have launched since the housing crisis offering ways to buy, renovate and manage properties in less glamorous cities. But not everyone is happy about it. SOUNDBITE: DAVID RANDALL, CORRESPONDENT, REUTERS, (ENGLISH) SAYING: "You're seeing these out-of-state buyers price out someone in Cleveland who's trying to save up for a rental home or for a single family home and is making this market much more tiered towards investors rather than the locals." But using services like HomeUnion can be a risky play- it means placing a lot of faith in young companies with short track records. And plenty could go wrong - from a lack of renters, to broken appliances, to flooded basements, or that pesky market downturn that could make a "sure thing" look a lot less appealing.