Recent survey data collected from investors bidding on properties online and at live events across the country reveals that flipping is still going strong. According to findings from Auction.com’s Second Quarter 2015 Real Estate Investor Activity Report, flipping is edging out the hold-to-rent strategy for the third consecutive quarter.
Auction.com Executive Vice President Rick Sharga said, “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.”
According to Sharga, they are 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.
Also, investors are increasingly focusing on flipping properties in regions where prices have rebounded from the 2008 crash but the inventory of homes for sale remains scarce – an almost perfect scenario for investors looking for a short-term profit.
Investor intent varies considerably by the type of auction (live event versus online auction) and investor profile. Investors making a one-time purchase preferred a hold-to-rent strategy, while full-time “real estate investors” 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 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.
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.