Kiavi Real Estate Investor Survey Reveals Inflation Pains, Renovation Gains and Need for Technology
Respondents said inflation is top of mind, while kitchen renovations net the highest ROI.
SAN FRANCISCO — April 14, 2022 —Kiavi, a leading provider of financing to real estate investors (REIs) today announced the results of its Q1 2022 Real Estate Investor Survey  focusing on renovation trends and top concerns for these investors. According to the survey, 66% of REIs said inflation had the biggest impact on their investment projects in 2021, followed by 61% who said supply chain, with rising interest rates (60%), access to capital (57%), and low inventory (57%) impacted their investment projects. When asked what were the top concerns for real estate investors in 2022, 65% are still most concerned about inflation followed by 63% indicating rising interest rates were top of mind with them and 58% said that access to capital is critical. More than one-third of the respondents reported using technology to assist in locating and financing properties. REIs also said they were most likely to renovate the kitchen, and that kitchen renovation nets the highest ROI. A total of 503 REIs from age 18 to over 75, who are not Kiavi customers, responded to the survey.
“It is no surprise that inflation is top of mind with real estate investors as I think that’s the case for most Americans today. Even still, we’re seeing our customers continue to identify smart investments and make good decisions. With over two thirds of U.S. homes 30 years old or more, REIs will continue to play an important role as they revitalize aged homes and make them move-in ready for millions of families across the country,” said Michael Bourque, CEO of Kiavi. “I am also not surprised to see some of the pain points that REIs face today. The real estate industry is ripe for digital disruption. Oftentimes the processes are opaque and paper heavy. And with our technology and data, Kiavi is truly bringing real estate investors into the digital age. As we continue to grow and bring products to market that meet the needs of our customers, we hope to make the process even more efficient.”
REIs reveal pain points in searching for investment properties, where technology can help
In addition to concerns about inflation, supply chain, rising interest rates, access to capital, and low inventory, REIs cited their biggest pain points when searching for investment properties. These include too many hoops to jump through to purchase a property (45%); too many different parties to coordinate with during the purchase process (44%); not having enough data about a property to determine ROI (38%); and not enough information about the process and not knowing how to begin (31%).
Financing is a brighter spot in the survey than the above issues, but some respondents indicated long waits to receive financing. Sixty-three percent of REIs consider their lender a partner in their investments. Almost half (43%) of REIs said it takes one to two weeks to receive financing for a project. Twenty-seven percent think it takes longer, between two to four weeks. For 10%, it can even take one to two months, and three to six months for 6% of REIs.
Profits are not guaranteed
Over half of the REI respondents said they lost money on a project (53%). This is because the property had hidden issues they weren’t aware of, according to the largest percentage of REIs at 44.9%. Location is also a key factor as 39.7% said the area in which they chose to renovate was not profitable. The real estate market also played a role, with 33.7% of REIs saying it wasn’t in their favor. Money invested in the wrong renovations caused 31.8% to lose money on a project, and 15.7% said they didn’t have proper financing. REIs reported that purchase price, location and potential resale price are the three most important factors to determine whether an investment property is a good investment.
The money pits
According to 23.3% of real estate investors, plumbing is most often the biggest money pit when dealing with older properties, followed by structural integrity (19.3%), the roof (19.1%), and unsafe lining materials such as asbestos (14.1%).
The kitchen rules renovation ROI
The Kiavi Q1 2022 Real Estate Investor Survey also focused on renovations, a common practice for REIs to add value and appeal to properties for resale. Investors agree that kitchen renovation nets by far the highest ROI (29%), followed by flooring (16%), the master bathroom (15%), another bathroom (14%), and a total home gut rehab (10%). Landscaping nets the least ROI according to 19% of REIs, followed by the master bedroom (17%), the kitchen (15%), the exterior (14%) and a bathroom (14%).
With the highest ROI, the kitchen is also the number-one area REIs are most likely to renovate (27%), followed by the master bedroom (23%), a bathroom (21%), and flooring (11%). On average, REIs spend between 12% and 14% of their total renovation budgets on kitchen renovations.
Age and gender also influence decisions on which areas to renovate. Ages 45 and above said they would renovate the kitchen, while those under 45 would renovate the master bedroom or bathrooms. Males were most likely to renovate the master bedroom at 27.9%, while the highest percentage of females at 32% would renovate the kitchen.
Coastal preferences on kitchen renovation
According to data sourced from projects that were financed by Kiavi, from Jan 2022 to Feb 2022 there are coastal preferences regarding material for kitchen countertops; granite is popular on the East Coast while quartz is preferred on the West Coast. Granite topped the list of kitchen countertop renovation materials on the East Coast at 76% in Connecticut, 50% in Florida and 50% percent in Georgia, while quartz led the West Coast with 50% in California, 34% in Nevada and 30% in Arizona.
An interior paint job also brightens a renovated investment property, and prices vary considerably across the United States according to Kiavi’s data. The price of an interior paint job is highest on average in Washington, D.C. at $5.05 per square foot and lowest in Arizona at $1.86 per square foot. States with high real estate prices such as California and Connecticut vary considerably; an interior paint job in California averages $2.89 while Connecticut averages $4.11 per square foot.
Kiavi’s bridge, or fix-and-flip loans offer flexible short-term financing for the purchase and rehab of investment properties. For more information read here.
Kiavi uses the power of data and technology to bring lending for real estate investors into the digital age. Through Kiavi’s digital platform, real estate investors are empowered to make smarter decisions, gain access to funding faster, and scale their business. Founded in 2013 Kiavi, formerly known as LendingHome, has grown to become one of the largest lenders to real estate investors in the United States. The company is committed to helping customers revitalize approximately $25 trillion worth of aged U.S. housing stock and provide move-in ready homes and rental housing for millions of Americans  across the country. For more information, visit www.kiavi.com, and follow us on Twitter. NMLS ID #1125207
-  Statistical survey with +/- 4 margin of error was completed in Q1, 2022 via Propeller, a market research firm that surveyed approximately 503 real estate investors over two weeks to gain insights directly related to Real Estate Investing and technology used throughout the real estate investment process. Note this survey was for informational purposes only and not intended to provide investment, legal, or tax advice; propeller is unaffiliated with Kiavi.
-  Based on original construction date U.S. Census Bureau, American Housing Survey; see the section titled “Industry, Market and Other Data.”
- strong> According to data sourced from projects that were financed by Kiavi, from Jan 2022 to Feb 2022
- strong>We define aged housing stock as homes over 30 years old from the original construction date. U.S. Census Bureau, American Housing Survey, 2019.