U.S. Investors Favor Renting Over Flipping According To Auction.com Real Estate Investor Activity Report™

Investment Strategies Vary by Region, Vehicle and Investor Profile According to November Survey Results

IRVINE, Calif., Dec. 18, 2014 /PRNewswire/ -- Auction.com, LLC, the nation's leading online real estate marketplace, today announced the findings from its November Real Estate Investor Activity Report™, a nationwide survey of real estate investors bidding on properties offered for auction during the month. 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 buying property to hold and rent is currently favored over flipping nationwide, although investor intent varies considerably by vehicle (online or live event) and investor profile.

Respondents who indicated that they were making a one-time purchase preferred a hold-to-rent strategy, as did – to a lesser extent – respondents identifying themselves as full-time "real estate investors." Meanwhile, flipping was favored by the majority of respondents indicating that they were working on behalf of another investor.

National Findings: Investor Intent

Investor Profile

Flip

Rent

Undecided

One-time purchase

24.4%

72.2%

3.3%

Real Estate Investor

46.7%

50.4%

2.9%

Working on Behalf of Another Investor

60.4%

36.8%

2.8%

TOTAL

46.6%

50.5%

2.9%

Auction.com's findings based on responses given at online auctions show that investors bidding online generally tend to hold properties to rent rather than flipping them. This data also suggests that purchasing property to rent is more prevalent in the Midwest and South, whereas there appears to be a higher propensity for flipping among real estate investors in the Northeast. The flip vs. rent split is nearly even in the West, with a very slight preference toward renting.

November Online Investor Data: Intent of All Investors Surveyed

Region

Flip

Rent

Undecided

West

49.5%

50.5%

0%

Midwest

43.5%

51.8%

4.7%

South

40.5%

57.1%

2.4%

Northeast

54.1%

41.9%

4.1%

Nationwide

43.3%

54.0%

2.7%

Conversely, investors bidding at live events appear to be more likely to flip the properties they purchase, but there were very strong regional variances. November survey data collected at live events in states where Auction.com is active revealed that flipping was favored overall, with only Georgia, Tennessee and Texas bucking the trend. Meanwhile, respondents at live events in the Western states such as California, Arizona and Nevada showed an overwhelming preference toward flipping.

November Live Event Investor Data: Intent of All Investors Surveyed

State

Flip

Rent

Undecided

Arizona

66.7%

19.0%

14.3%

California

65.6%

32.2%

2.2%

Georgia

41.9%

54.3%

3.9%

Idaho

69.2%

30.8%

0%

Nevada

88.9%

11.1%

0%

Tennessee

39.4%

60.6%

0%

Texas

38.7%

60.0%

1.3%

Washington

62.5%

37.5%

0%

Nationwide

49.3%

47.6%

3.1%

"Real estate investors appear more likely to flip a property in those regions where home values are higher," said Auction.com Executive Vice President Rick Sharga. "Higher prices can translate to a faster and potentially more significant short-term return on investment. The hold and rent strategy seems most popular in markets where home prices are lower, allowing investors to charge a more competitive monthly rental rate and still produce reasonable returns over an extended period of time."

Flipping was also the more popular strategy among investors purchasing multiple properties per year – particularly institutional investors (those indicating that they purchase 50 or more properties per year). This was true for both online auctions and live events.

November Online Auction Investor Data: Intent By Purchase Profile

Purchase Profile

Flip

Rent

Undecided

0-1 Property/Year

30.0%

65.6%

4.4%

2-49 Properties/Year

52.8%

45.5%

1.7%

50+ Properties/Year

60.0%

40.0%

0%

November Live Event Investor Data: Intent By Purchase Profile

Purchase Profile

Flip

Rent

Undecided

0-1 Property/Year

41.3%

56.3%

2.5%

2-49 Properties/Year

49.8%

48.0%

2.2%

50+ Properties/Year

55.4%

38.6%

6.0%

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

For further information: The Hoyt Organization, Kent Barrett, kbarrett@hoytorg.com or Katherine Lambert, klambert@hoytorg.com, (310) 373-0103