Auction.com: Investors Currently Prefer Renting To Flipping

Posted by Patrick Barnard on December 22, 2014 No Comments
Categories : Residential Mortgage

Real estate investors, in general, favored renting over flipping during November, according to Auction.com's Real Estate Investor Activity Report.

The nationwide survey of real estate investors found that in November, 72.2% of investors making a one-time purchase planned to rent the property after closing, while 24.4% planned on flipping it.

In addition, 50.4% of institutional investors planned to rent while 46.7% planned to flip.

The survey shows that the percentage of investors who planned to rent or flip varied by region. For example, in the South, 57.1% of investors planned to rent while 40.5% planned to flip, and in the Northeast, 41.9% planned to rent while 54.1% planned to flip.

So, the number of investors that plan to rent and the number that plan to flip is sometimes flip-flopped.

Meanwhile, in the West, it was about even: About 50.5% planned to rent and about 49.5% planned to flip.

When acquiring higher-value properties, however, flipping is apparently the preferred way to go. Rick Sharga, executive vice president for Auction.com, explains that investors are ‘more likely to flip a property in those regions where home values are higher.’

‘Higher prices can translate to a faster and potentially more significant short-term return on investment,’ he says. ‘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.’

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