Flipping Edges Out Renting As The Preferred Investment Strategy For The Fourth Consecutive Quarter According To Auction.com Real Estate Investor Activity Report™
Price appreciation and inventory constraints continue to dictate investor strategy in the second half of 2015
IRVINE and SILICON VALLEY, Calif., Oct. 29, 2015 /PRNewswire/ -- Auction.com, LLC, the nation's leading online real estate marketplace, today announced the findings from its Third Quarter 2015 Real Estate Investor Activity Report™, a nationwide survey of real estate investors bidding on properties offered for auction during the respective period. Survey data collected from investors bidding on property online and at live events across the country reveals that flipping is still the preferred investment strategy among investors, edging out the hold-to-rent strategy for the fourth consecutive quarter – and since Auction.com began tracking the split in investor intent.
"Rising prices and extremely limited inventory make a nearly ideal environment for real estate investors who want to buy, fix and flip properties, and that is precisely where we are in today's market," said Auction.com Executive Vice President Rick Sharga. "But record occupancy rates in the rental market also present opportunities for investors who find moderately priced homes they can rent out at a reasonable rate of return, so it's not surprising that we're continuing to see buy-and-hold investing activity in the Midwest and Southeastern states."
Although Auction.com's findings for the third 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 strongly favored flipping.
Q3 2015 National Findings: Investor Intent
| Investor Profile |
Flip |
Rent |
Undecided |
| One-time purchase |
27.8% |
68.7% |
3.5% |
| Real Estate Investor |
55.1% |
43.3% |
1.1% |
| Working on Behalf of Another Investor |
67.6% |
31.9% |
0.5% |
| TOTAL |
53.7% |
45.1% |
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 third quarter of 2015, with respondents indicating a preference toward flipping over holding to rent in every state where Auction.com conducted live events.
Q3 2015 Live Event Investor Data: Intent of All Investors Surveyed
| State |
Flip |
Rent |
Undecided |
| Arizona |
59.8% |
40.2% |
0% |
| California |
67.5% |
32.5% |
0% |
| Georgia |
53.2% |
46.8% |
0% |
| Idaho |
71.6% |
28.4% |
0% |
| North Carolina |
54.9% |
45.1% |
0% |
| Nevada |
87.4% |
12.6% |
0% |
| Tennessee |
69.5% |
30.5% |
0% |
| Texas |
56% |
44% |
0% |
| Washington |
73.8% |
26.2% |
0% |
| Nationwide |
62.4% |
37.6% |
0% |
Conversely, responses given at online auctions in the third 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, which experienced a swing toward flipping in the second quarter due to the region's inventory constraints and higher purchase prices negatively impacting rental property returns.
Q3 2015 Online Investor Data: Intent of All Investors Surveyed
| Region |
Flip |
Rent |
Undecided |
| West |
45.8% |
51.8% |
2.4% |
| Midwest |
41.3% |
56.6% |
2.1% |
| South |
38.6% |
58.1% |
3.3% |
| Northeast |
52.7% |
45.5% |
1.8% |
| Nationwide |
43.3% |
54% |
2.7% |
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 68 percent of respondents in this group favored flipping in the third quarter – up from 62 percent in Q2 and 54 percent in Q1.
Q3 2015 Investor Data: Intent By Purchase Profile
| Purchase Profile |
Flip |
Rent |
Undecided |
| 0-1 Property/Year |
37.3% |
60.1% |
2.6% |
| 2-49 Properties/Year |
58.8% |
40.4% |
0.8% |
| 50+ Properties/Year |
66.7% |
33.3% |
0% |
About Auction.com:
Auction.com, LLC, is the nation's leading online real estate marketplace. Founded in 2007, the company has sold more than $32 billion in residential and commercial real estate assets. Auction.com has over 900 employees and headquarters in Irvine and Silicon Valley, Calif., as well as offices in key markets nationwide. Visit www.auction.com for more information.
SOURCE Auction.com, LLC
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