Survey data collected from investors bidding on property online and at live events across the country in January by Auction.com reveals the continuation of a trend seen in the fourth quarter of 2014 – a preference for flipping over a hold-to-rent strategy, even as demand for rental housing continues to grow in most markets.
“Considering recent reports that have suggested a shortage of rental units in some metropolitan areas, we’d expect to see more investors starting to move toward a buy-and-hold strategy to address this market opportunity,” said Auction.com Executive Vice President Rick Sharga. “We know anecdotally that some flippers purchase homes specifically to sell them to other investors who repurpose the properties as rental units. But, it will be interesting to see if more investors move away from flipping and towards rental strategies over the next few months if demand for rental housing continues to rise.”
Although Auction.com’s findings for January show a slight propensity toward flipping overall, 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.
Investors bidding at live events appear to be more likely to flip the properties they purchase based on survey responses collected in January, with respondents indicating a preference toward flipping over holding to rent in all but two of the states where Auction.com conducted live events. The two states where renting prevailed: Georgia and Missouri. Conversely, responses given at online auctions in January show that investors bidding online are more likely to hold the properties they purchase.
Less active investors (those indicating that they purchase one or fewer properties per year) demonstrated a clear preference for renting properties, while flipping was prevalent among investors who purchase multiple properties per year.
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