Auction.com: Flipping Edges Renting for Third Consecutive Quarter

IRVINE , CA—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. 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.

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.