Editorial|&utm_term=|Website-Editorial-NAT(Website)|"> Auction.com. Still, investor intent varies considerably by type of auction—live event vs. online—and investor profile.

The firm did a nationwide survey of real estate investors bidding on properties offered for auction during Q4 2014 to gain 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.

Survey respondents who indicated that they were making a one-time purchase preferred a hold-to-rent strategy. Respondents identifying themselves as full-time “real estate investors” and those indicating that they were working on behalf of another investor favored flipping, according to the report.

“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,” says Rick Sharga, EVP of Auction.com. “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.”

The type of auction also plays into preferences, the report shows. Investors bidding at live events appeared to be more likely to flip the properties they purchased, 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.

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.

Sharga tells GlobeSt.com, “I think the difference in investor intent is less about whether the auction is online or a live event and more about the types of properties and the geographic regions involved. We have investors who target specific geographies because they're excellent rental markets—cities in Michigan, Ohio, Illinois and Indianapolis—where we have online properties, but don't do live events. Some of the more prominent markets where we do live events—California, Arizona and Nevada, for example—the conditions are more conducive to flipping: higher-priced homes and low inventory of existing homes for sale.”

Frequency of purchase also came into play. 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.

Sharga comments, “This is a 'back-to-the-future' sort of phenomenon. Prior to institutional investors buying thousands of properties, the buy-and-rent market was almost entirely made up of investors who owned less than five properties. Buying and renting a property provides an ongoing stream of revenue, without quite as much risk as buying, fixing and flipping a property for investors with limited capital. If we see demand pick up significantly, or home prices begin to appreciate rapidly again, many of these investors will likely cash out and become flippers until market conditions revert to normal.”

As GlobeSt.com reported in December 2014, the decision over whether to flip a residential property or hold it to rent has a lot to do with home prices in the property's region, according to a report from

Instant Insights /

Investors Prefer Flipping Over Renting

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