Flipping Edges Out Renting As The Preferred Investment Strategy In The Fourth Quarter Of 2014 According To Auction.com Real Estate Investor Activity Report™
Low inventory of new and existing homes, and price appreciation may be behind shift
Jan 21, 2015, 09:00 ET
IRVINE, Calif., Jan. 21, 2015 /PRNewswire/ -- Auction.com, LLC, the nation's leading online real estate marketplace, today announced the findings from its Fourth Quarter 2014 Real Estate Investor Activity Report™, a nationwide survey of real estate investors bidding on properties offered for auction during these respective periods. This research provides insight into real estate investment trends on both a national and regional level. Survey data collected from investors bidding on property online and at live events across the country reveals that flipping is still going strong.
Auction.com's findings for the fourth quarter reveal a slight propensity toward flipping among investors overall, although investor intent varies considerably by the type of auction (live event versus online auction) and the investor profile. Survey respondents who indicated that they were making a one-time purchase 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.
"It's probably not a coincidence that some of the highest priced markets, such as California and the Northeast, are seeing more flipping activity, since higher priced homes are more difficult to rent out profitably," said Auction.com Executive Vice President Rick Sharga. "But it's also very possible that part of the reason we're seeing an increase in flipping is that in many of these markets there's simply not enough new or existing home inventory to meet buyer demand. That spells opportunity for real estate investors who can buy, fix and flip a property quickly and efficiently."
Q4 2014 National Findings: Investor Intent
| Investor Profile |
Flip |
Rent |
Undecided |
| One-time purchase |
27.5% |
68.9% |
3.6% |
| Real Estate Investor |
51.3% |
46.1% |
2.6% |
| Working on Behalf of Another Investor |
59.4% |
38.1% |
2.4% |
| TOTAL |
50% |
47.3% |
2.7% |
Investors bidding at live events appear to be more likely to flip the properties they purchase based on survey responses collected in the fourth quarter of 2014, 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 West and Midwest.
Q4 2014 Live Event Investor Data: Intent of All Investors Surveyed
| State |
Flip |
Rent |
Undecided |
| Arizona |
65.2% |
21.2% |
13.6% |
| California |
70.3% |
27.2% |
2.5% |
| Georgia |
48.8% |
46.8% |
4.4% |
| Idaho |
63.2% |
34.2% |
2.6% |
| Missouri |
66.7% |
33.3% |
0% |
| North Carolina |
55.6% |
44.4% |
0% |
| Nevada |
71% |
29% |
0% |
| Tennessee |
53.8% |
45% |
1.3% |
| Texas |
50.7% |
48% |
1.3% |
| Washington |
72.1% |
25.6% |
2.3% |
| Nationwide |
56% |
41.1% |
2.8% |
Conversely, responses given at online auctions in the fourth quarter of 2014 show that investors bidding online generally intend to hold the properties they purchase. This was true in three of four regions, with the exception being the Northeast.
Q4 2014 Online Investor Data: Intent of All Investors Surveyed
| Region |
Flip |
Rent |
Undecided |
| West |
45.5% |
52.2% |
2.2% |
| Midwest |
44.9% |
53.5% |
1.7% |
| South |
39.8% |
58.2% |
2% |
| Northeast |
50% |
46.5% |
3.5% |
| Nationwide |
42.3% |
55.1% |
2.5% |
Less active investors (those indicating that they purchase one or fewer properties per year) demonstrated a preference for renting properties, while flipping was prevalent among investors who purchase multiple properties per year.
Q4 2014 Investor Data: Intent By Purchase Profile
| Purchase Profile |
Flip |
Rent |
Undecided |
| 0-1 Property/Year |
36.3% |
61.1% |
2.6% |
| 2-49 Properties/Year |
54.9% |
42.7% |
2.4% |
| 50+ Properties/Year |
56.3% |
39.6% |
4% |
About Auction.com:
Auction.com, LLC, is the nation's leading online real estate marketplace. Founded in 2007, the company has sold over $26 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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