Due to tight inventory and rising home prices in most areas of the U.S., flipping continued to edge out renting as the preferred investment strategy during the second quarter, according to Auction.com's Real Estate Investor Activity Report.
Survey data collected from investors bidding on properties online and at live events across the country show that flipping continued to edge out the hold-to-rent strategy in the second quarter. It was the third consecutive quarter that flipping was more popular than renting, Auction.com says.
‘Rounding out the first half of 2015, most of the country and most investor segments performed in a manner very consistent with what we've been seeing for about a year,’ says Rick Sharga, executive vice president for Auction.com, in a release. ‘We're seeing two major trends that are driving these numbers. First, we're seeing a return of the 'mom and pop' investor in the single-family rental space – smaller investors with an intimate knowledge of their local markets, who are willing to buy properties that deliver long-term returns based on monthly cashflow. Second, investors are focusing more and more on flipping properties in regions where prices have rebounded from the 2008 crash and [where the] inventory of homes for sale remains scarce – an almost perfect scenario for investors looking for a short-term profit.’
Auction.com notes, however, that investor intent varies considerably by the type of auction (a live event versus an 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 who identified themselves as full-time ‘real estate investors’ and those who indicated that they were working on behalf of another investor did, in fact, favor flipping.