2013 CALIFORNIA INVESTOR SURVEY

Survey Methodology

719 online surveys conducted in April 2013

Respondents: REALTORS® who have worked with investors in 12 months prior to April 2013

Sample error: 3.5% at 95% confidence interval

REALTORS®’ GENERAL INVESTOR BUSINESSInvestor Market Overview

39%

investor portion of business

Median: 5 Investor Clients

1 3 5 7 9 12 15 20 22 25 28 32 45 55 100

104

0.0%2.0%4.0%6.0%8.0%

10.0%12.0%14.0%16.0%18.0%20.0%

Number of Investor Clients

Q: How many investor clients do you have?

Median: 3 Investor Transactions in 2012

1 3 5 7 9 11 13 15 18 23 28 35 38 50 75 900.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Number of Investor Transactions

Q: How many investor transactions did you conduct in 2012?

LAST INVESTOR TRANSACTION

Buyers Dominate Investment Transactions

77%

23%

BuyerSeller

Q: What type of transaction was it?

Nearly Half of Transactions Were Conducted in Southern CA

Another State

Northern CA

Central Valley/Other CA

Southern CA

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

0.5%

23.9%

26.0%

49.6%

Q: Where was the property located?

Single Family Homes Dominate Investor Market

Single family home

Multifamily Other Bulk sale0.0%

10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%

78.0%

13.7%7.2%

1.1%

Q: What type of property did your investor client purchase/sell?

67% of Sales Were Single Units, the Remainder were…(Median: 1 Unit)

2 4 6 8 10 13 15 20 45 57 450

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Number of Units

Q: How many units were purchased/sold?

Nearly Half of Transactions Listed Below $250k

$250 or less $251-500 $501-$1,000 $1,000+0%5%

10%15%20%25%30%35%40%45%50%

46%

33%

14%7%

Listing Price (In Thousands)

Q: What was the initial listing price?

Nearly Half of Transactions Sold Below $250k

$250 or less $251-500 $501-$1,000 $1,000+0%5%

10%15%20%25%30%35%40%45%50% 46%

35%

13%

6%

Sale Price (In Thousands)

Q: What was the final sale price?

Median Listing Price 1% > Sale Price

Listing Sale$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000$275,000 $272,500

Cost of Doing Business is $10k or Less for Nearly Half of Investors

$0-1 $1-10 $10-50 $50-100 $100-1,000

$1,000+0.0%5.0%

10.0%15.0%20.0%25.0%30.0%35.0%40.0%

6.7%

37.5% 36.1%

6.7%11.9%

1.1%

Transaction Cost (In Thousands)

Q: How much did it cost to purchase/sell the property?

Median Transaction Cost Relative to Sale Price is Highest in $251-500k Price Range

$250 or less

$251-500 $500+$0

$100,000$200,000$300,000$400,000$500,000$600,000$700,000$800,000

4.3%5.3% 5.1%

Median Sale PriceMedian Transaction Cost

Sale Price (In Thousands)

Cost of Doing Business is $10k or Less for 2/3 of Buyers

$0-1 $1-10 $10-50 $50-100 $100-1,000

$1,000+0%5%

10%15%20%25%30%35%40%

30%

37%

21%

4%8%

1%

Transaction Cost (In Thousands)

Q: How much did it cost to purchase/sell the property?

Cost of Doing Business is $50k or Less for Majority of Sellers

$0-1 $1-10 $10-50 $50-100 $100-1,000

$1,000+0%5%

10%15%20%25%30%35%40%45%50%

29%

14%

44%

3%9%

1%

Transaction Cost (In Thousands)

Q: How much did it cost to purchase/sell the property?

Median Days on Market: 15

0-30

31-60

61-90

91-180

180-365

365+

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%

65.5%

17.2%

4.7%

8.1%

4.1%

0.3%

Day

s on

Mar

ket

Q: How many days was the property on the market?

Buyer Median Days on Market: 15Seller Median Days on Market: 25

0-30

31-60

61-90

91-180

180-365

365+

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%

Sellers Buyers

Day

s on

Mar

ket

Q: How many days was the property on the market?

Nearly Half of Sellers Owned Property Less than 1 Year(Average: 7 Years)

Less than

11-2 2-3 3-4 4-5 5-6 6-7 7-10 10-

2020-30

30+

0.0%5.0%

10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%50.0%

47.1%

10.0%4.3%2.9%5.7%4.3%

1.4%

11.4%5.7%

1.4% 5.7%

Years

Q: How many months did the seller own the property?

2/3 of Investors Rented their Properties

26%

66%

8%

FlipRentalOther

Q: What was the intended/actual use of the property?

Sellers More Likely to Flip Properties

AllBuyers

Sellers

0%10%20%30%40%50%60%70%80%90%

100%

26%20%

44%

66%73% 44%

8% 7%12%

OtherRentalFlip

Q: What was the intended/actual use of the property?

Most Investors Made Minor or No Repairs

17%

49%

25%

10%

NoneMinor cosmeticMajor cosmeticMajor remodeling

Q: What type of rehabilitation/remodeling was done to the property?

Median Remodeling Cost: $10,000

$0

$1-1,

000

$1,00

0-5,00

0

$5,00

0-10,0

00

$10,0

00-20

,000

$20,0

00-30

,000

$30,0

00-40

,000

$40,0

00-50

,000

$50,0

00-75

,000

$75,0

00-10

0,000

$100

,000-5

00,00

0

$500

,000+

0.0%4.0%8.0%

12.0%16.0%20.0%

Remodeling Cost

Q: How much did your client invest in rehabilitating/remodeling the property?

Median Rehab Cost Ratio is Lowest in Higher Sale Price Range

$250 or less

$251-500 $500+$0

$100,000$200,000$300,000$400,000$500,000$600,000$700,000$800,000

4.2%

3.6%

3.4%

Median Sale PriceMedian Rehab Cost

Sale Price (In Thousands)

Top 5 Reasons for Buying/Selling Now

location

personal

low interest rates

good price

profit potential

0.0% 10.0% 20.0% 30.0% 40.0%

3.9%

5.5%

9.8%

25.9%

33.7%

Q: What motivated your client to buy/sell now?

75%of Investors Own 1-10 Other Properties

None1

2-56-10

11-2021-50

50-100100+

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

12.8%14.5% 46.4%

14.2%

6.6%3.1%

1.7%0.7%#

of Other Properties

Q: How many other investment properties does your client own?

Other Investments Primarily Located in SoCal

Another Country

Another State

Northern CA

Other CA

Southern CA

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

0.3%

4.7%

21.2%

29.3%

44.4%

Q: Where are those properties located?

Most Properties Were Found on MLS

59%22%

6%4%

4%

2%

1%

1%

MLSMy listingOtherAnother agent's private listingDirectly from sellerClient found propertyBankFannie Mae

Q: How did you find the property for your client?

How Buyers & Sellers Found Properties

67%

18%

4%4% 4%

0%1%1%

MLSMy listingOtherAnother agent's private listingDirectly from sellerClient found propertyBankFannie Mae

31%

36%

10%

4%6%

9% 3%

Buyers Sellers

Q: How did you find the property for your client?

Most Buyers Intend to Keep Property Less than 6 Years(Median: 5 Years)

Less than 1 1-5 6-10 11-20 21-300.0%5.0%

10.0%15.0%20.0%25.0%30.0%35.0%40.0% 36.5% 38.0%

15.3%

6.6%3.6%

Years

Q: How long does your client intend to keep the property?

2/3 of Properties are Not Professionally Managed

67%

27%

8%

OwnerProperty managerOther

Q: Who will manage the property?

FINANCING(Buyers Only)

More than 2/3 of Buyers Paid Cash

67%

17%

7%

4%

3%3% 2%1%

CashPersonal SavingsBank loanUnsureProceeds from Previous InvestmentPrivate InvestorsOther1031 Exchange

Q: What was the source of the financing?Q: How did your client pay for the property?

Buyers Overwhelmingly Opted for Fixed Rate Loans

Unsure

Adjustable

Fixed

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

4%

9%

87%

Q: What type of loan did your client acquire?

More than ¾ of Buyers Acquired 30-year Loans 2% 2%

4%4%

11%

76%

3 years5 yearsOtherUnsure15 years30 years

Q: What is the duration of the loan?

30%

•average down payment

19%

•average rate of return on investment

CLIENT – AGENT RELATIONSHIP

Most REALTORS® Found Clients by Referral

Client responded to my ad

He/she is a relative

For sale sign

Other

He/she is a friend

Prior dealings with my brokerage

Client found me online

Referral

0% 5% 10%15%20%25%30%35%

2%

5%

5%

9%

13%

15%

17%

33%

Q: How did you find your client?

Most Buyers Found Property in Fewer than 8 Weeks(Median: 4 Weeks)

1-2 3-4 5-8 9-12 12+

0%5%

10%15%20%25%30%

28%

23% 23%

9%

17%

Weeks

Q: How many weeks did you spend looking for a property with your client?

Most Buyers Viewed Fewer than 10 Properties(Median: 6 Properties)

1-5 6-10 11-15 16-20 21-50 51-100

0.0%5.0%

10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%50.0%

46.9%

25.4%

11.5%6.2%

7.2%2.9%

Number of Properties

Q: How many properties did you view with your client prior to the client making a purchase?

8/10 Buyers Made Offers on Other Properties(Median: 3 Offers)

None 1 2 3 4 5 6 7 8+0%

5%

10%

15%

20%

25%21%

14%14%

15%

6%8%

5%

2%

15%

Number of Offers

Q: How many offers did your client make on other properties?

Sellers Received 4.4 Offers on Average

1 2 3 4 5 6+

0%

5%

10%

15%

20%

25%

17% 17%

23%

8%13%

22%

Number of Offers

Q: How many offers did your client receive?

INVESTOR DEMOGRAPHICS

Most Investors are Individuals

70%

21%

3%

3%3%

IndividualLLCLLPCorpOther

Q: Was your client a(n)?

Mix of Buyer/Seller Investor Types

77%

16%

2%

2% 2%Buyers

Individual LLC LLP Corp

Q: Was your client a(n)?

48%

34%

3%8%

6%

Sellers

Majority of Individual Investors are Male

Male Female0%

10%20%30%40%50%60%70%80%90% 81%

19%

Q: What was the client’s gender?

Average Individual Investor is 49 Years Old

25 or under 26-35 36-45 46-55 56-65 65+

0.0%5.0%

10.0%15.0%20.0%25.0%30.0%35.0%

0.5%

11.8%

27.3%

34.2%

21.9%

4.3%

Age

Q: What was the client’s age at the time the transaction closed?

¾ of Individual Investors are Married

75%

20%5%

MarriedSingleOther

Q: What was the client’s marital status at the time the transaction closed?

Most Individual Investors have Higher Education

Grade s

chool

or les

s

Some h

igh sc

hool

High sc

hool

Some c

ollege

Vocatio

nal/te

chnica

l scho

ol

4-yea

r colle

ge

Gradua

te sch

ool

0%5%

10%15%20%25%30%35%

2% 2%

14% 17%

5%

35%

25%

Q: What was the highest level of education your client had completed at the time the transaction closed?

Nearly Half of Individual Investors are White 1%

6%10%

13%

25%

47%

BlackOtherUnsureHispanicAsianWhite

Q: How would you describe your client’s ethnic background?

Nearly Half of Individual Investors are White

All Buyers Sellers0%

10%20%30%40%50%60%70%80%90%

100%

6% 7%10% 10%

10%

13% 13%13%

25% 26%

16%

47% 44%61% White

AsianHispanicUnsureOtherBlack

Q: How would you describe your client’s ethnic background?

Median Annual Income/Revenue: $175k

< $100 $100-200 $200-300 $300-500 $500-1,000 >$1,000

0%5%

10%15%20%25%30%35%40%45%50%

14%

47%

19%

10%7%

3%

Annual Income/Revenue (In Thousands)

Q: What is your client’s annual income/revenue?

More than ¼ of Investors are Foreigners

68%

6%

3%

3%

15%

5%

USAChinaIndiaMexicoOtherUnsure

Q: What is your client’s country of origin?