Flipping Edges Out Renting As The Preferred Investment Strategy For The Third Consecutive Quarter According To Auction.com Real Estate Investor Activity Report™
Price appreciation and inventory constraints continue to dictate investor strategy
IRVINE and SILICON VALLEY, Calif., July 14, 2015 /PRNewswire/ -- Auction.com, LLC, the nation's leading online real estate marketplace, today announced the findings from its Second Quarter 2015 Real Estate Investor Activity Report™, a nationwide survey of real estate investors. Survey data collected from investors bidding on properties online and at live events across the country reveals that flipping is still going strong, edging out the hold-to-rent strategy for the third consecutive quarter – a consistent trend since Auction.com began tracking investor intent. This research provides insight into real estate investment trends on both a national and regional level.
"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 Auction.com Executive Vice President Rick Sharga. "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."
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. 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.
Q2 2015 National Findings: Investor Intent
| Investor Profile |
Flip |
Rent |
Undecided |
| One-time purchase |
26.5% |
72.2% |
1.2% |
| Real Estate Investor |
55.6% |
43.3% |
1.1% |
| Working on Behalf of Another Investor |
63.7% |
34.6% |
1.6% |
| TOTAL |
53% |
45.8% |
1.2% |
Investors bidding at live events appear to be far more likely to flip the properties they purchase based on survey responses collected in the second quarter of 2015, with respondents indicating a preference toward flipping over holding to rent in every state where Auction.com conducted live events. Of the states represented in the survey, the widest margins occurred in the Southwest and Midwest.
Q2 2015 Live Event Investor Data: Intent of All Investors Surveyed
| State |
Flip |
Rent |
Undecided |
| Arizona |
71.3% |
28.7% |
0% |
| California |
71.9% |
28.1% |
0% |
| Georgia |
56.6% |
43.4% |
0% |
| Idaho |
77.5% |
22.5% |
0% |
| North Carolina |
66.7% |
33.3% |
0% |
| Nevada |
70.4% |
29.6% |
0% |
| Tennessee |
54.8% |
45.2% |
0% |
| Texas |
54.4% |
45.6% |
0% |
| Washington |
65.5% |
34.5% |
0% |
| Nationwide |
61.3% |
38.7% |
0% |
Conversely, responses given at online auctions in the second quarter of 2015 show that investors bidding online generally intend to hold the properties they purchase. This was true in every region except the Northeast, where the pendulum has swung toward flipping. As was noted regarding a similar (though temporary) shift in the West earlier in the quarter, this is likely due to the region's inventory constraints and higher purchase prices negatively impacting rental property returns.
Q2 2015 Online Investor Data: Intent of All Investors Surveyed
| Region |
Flip |
Rent |
Undecided |
| West |
42.9% |
55.3% |
1.8% |
| Midwest |
43.9% |
53.2% |
2.9% |
| South |
43.8% |
54.3% |
1.9% |
| Northeast |
51% |
47.2% |
1.7% |
| Nationwide |
44.6% |
53% |
2.4% |
Less active investors (those indicating that they purchase one or fewer properties per year) demonstrated a strong preference for renting properties, while flipping was prevalent among investors who purchase multiple properties per year. This preference appears to be growing among investors purchasing more than 50 properties per year: nearly 62 percent of respondents in this group favored flipping in the second quarter – up from 56.3 percent in Q4 2014 and 53.6 percent in Q1 2015.
Q2 2015 Investor Data: Intent By Purchase Profile
| Purchase Profile |
Flip |
Rent |
Undecided |
| 0-1 Property/Year |
38.2% |
60.2% |
1.6% |
| 2-49 Properties/Year |
59.8% |
39.2% |
1% |
| 50+ Properties/Year |
61.9% |
38.1% |
0% |
About Auction.com:
Auction.com, LLC, is the nation's leading online real estate marketplace. Founded in 2007, the company has sold over $30 billion in residential and commercial real estate assets. Auction.com has over 900 employees and headquarters in Irvine and Silicon Valley, California as well as offices in Austin and Plano, Texas, Atlanta, Denver, New York and Miami. Visit www.auction.com for more information.
SOURCE Auction.com, LLC
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