House Flipping Gains Traction for Investors
Cynthia Badiey, Editor | February 19, 2015
Investors bidding on property online and at live events are showing a preference for flipping over a hold-to-rent strategy, even as demand for rental housing continues to surge in many markets, according to the January 2015 Real Estate Investor Activity Report from Auction.com.
The Market for Investors
“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,” says Rick Sharga, executive vice president at Auction.com. “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.”
Investors bidding at live auction events showed more propensity toward flipping properties purchased than those who purchased properties online. The trend was evident across states Auction.com looked at, except in two states where hold-to-renting strategies prevailed at live auctions – Georgia and Missouri.
Also, investors who were making a one-time purchase at an auction tended to prefer a hold-to-rent strategy, while those who identified themselves as full-time “real estate investors” tended to say they were working on behalf of another investor who favored flipping.