Homebuyers looking nationwide to invest

updated 7:46 p.m. ET Oct. 14, 2005

LOS ANGELES - While many would-be homebuyers have been scared off by dire housing market predictions, Debbie Harris has taken out mortgages on five homes in the past 18 months. She’s among a growing number of fledgling real estate investors around the country using equity earned in overheated housing markets to stake their claims to rental property in more affordable areas.

The investors say there’s no reason to fear the housing market will collapse — although each purchase increases their risks of losing money if prices do take a dive.

“My husband believes there is,” said Harris, who runs two cell phone stores. “He’s thinking five houses is enough. I’m thinking, no, it’s not.”

Indeed, investors like Harris believe their investments are secure because people will always need places to rent — especially as homes become less affordable. But some observers say their zeal to scoop up property in emerging areas is helping drive prices there even higher.

Mike House, who hosts meetings for a real estate investor group in Las Vegas, thinks a number of markets have already soared out of reach for those looking to spend less than $200,000.

“Los Angeles, Phoenix, Las Vegas ... are all unaffordable now, theoretically,” he said.

Many of the new investors got into the market after watching their stock portfolios stall as their home equity soared. These days, they’re turning to friends, seminars and real estate clubs for advice on buying property for long-term rental income.

More gutsy investors are “flipping” homes for profit through quick sales.

A survey by the National Association of Realtors determined that 23 percent of all homes purchased last year were acquired as investment properties.

On the East Coast, investors in New York and Boston are grabbing real estate in growing areas of Florida and the Carolinas, said Lawrence Yun, senior economist for the association.

Californians, meanwhile, are buying in Nevada, Arizona, Utah and Colorado, among other markets.

“California is filling up with equity and now it’s spilling over into these other areas,” said James Joseph, owner of Century 21 Grisham-Joseph in La Mirada, a Los Angeles suburb.

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