Investors bidding on properties online and at live events nationwide appear to prefer flipping these purchased properties more than renting them. Auction.com, LLC, recently revealed the findings from its second quarter 2015 Real Estate Investor Activity Report, a nationwide survey of real estate investors. The data collected determined that flipping is still going strong, edging out the hold-to-rent strategy for the third consecutive quarter, a trend that has been consistent since Auction.com began tracking investor intent.
“Rounding out the first half of 2015, most of the country and most investor segments performed in a manner very consistent with what we’ve been seeing for about a year,” said Rick Sharga, Auction.com EVP. “We’re seeing two major trends that are driving these numbers. First, we’re seeing a return of the ‘mom and pop’ investor in the single family rental space–smaller investors with an intimate knowledge of their local markets, who are willing to buy properties that deliver long-term returns based on monthly cashflow. Second, investors focusing more and more on flipping properties in regions where prices have rebounded from the 2008 crash and inventory of homes for sale remains scarce–an almost perfect scenario for investors looking for a short-term profit.”
The Auction.com investor research provides insight into real estate investment trends on a national and regional level. Factors such as price appreciation and inventory constraints continue to dictate investor strategy.
"Although Auction.com’s findings for the second quarter reveal a propensity toward flipping among investors overall, investor intent varies considerably by the type of auction (live event versus online auction) and investor profile," the report said. "Survey respondents who indicated that they were making a one-time purchase clearly preferred a hold-to-rent strategy, while respondents identifying themselves as full-time 'real estate investors' and those indicating that they were working on behalf of another investor favored flipping."
According to the report, investors bidding at live events are more likely to flip the properties they purchase based on survey responses collected in the second quarter of 2015. Respondents noted a preference toward flipping over holding to rent in every state where Auction.com conducted live events. The Southwest and Midwest had the widest margins of all states represented in the survey.
On the other hand, Auction.com found that survey participants in online auctions generally intend to hold the properties they purchase. This was true in every region except the Northeast, where investor are more attracted to flipping. This is likely due to the region’s inventory constraints and higher purchase prices negatively impacting rental property returns.
Less active investors or those indicating that they purchase one or fewer properties per year demonstrated a strong preference for renting properties, the report said. Meanwhile, flipping was prevalent among investors who purchase multiple properties per year, a preference appears to be growing among investors purchasing more than 50 properties per year. Almost 62 percent of respondents in this group favored flipping in the second quarter, an increase from 56.3 percent in Q4 2014 and 53.6 percent in Q1 2015.
Click here to view Auction.com's second quarter 2015 Real Estate Investor Activity Report.