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Tech

Buyers on U.S. coasts target cheaper markets

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Opening sequence

Tech

Buyers on U.S. coasts target cheaper markets

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COMING UP:Buyers on U.S. coasts target cheaper markets

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Transcript

00:00:01
>> With the Bay area one of the priciest places in the US 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 are using companies like HomeUnion to outsource the hassles of finding the house and managing it.
00:00:20
Reuters Correspondent, David Randall, gives us this industry's pitch.>> If you're living at San Francisco, it's very hard to buy a house in Alabama. You don't know anybody, you don't know anything about it. So what they do is essentially say, here's the list, here's the homes, here's people who can renovate it and we're going to rent it out for you.
00:00:37
So it's nothing you have to do except for click a couple times and now you can make yields of 10 or 12%.>> HomeUnion is one of a handful of companies, like Investability and Roofstock that have launched since the housing crisis, offering ways to buy, renovate, and manage properties in less glamorous cities.
00:00:55
But not everyone is happy about it.>> So you are seeing this infusion of coastal wealth going in places like Cleveland and realtors are saying, I've never seen as many out of state buyers especially all cash buyers from California. And you're seeing these out-of-state buyers being able to essentially out price someone in Cleveland who is trying to save up for rental home or for a single family home.
00:01:16
And it's 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.
00:01:36
Or that pesky market down turn, that could make a sure thing look a lot less appealing.