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Steve Murray on new brokerage models, CFPB crackdowns

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Auction.com: Here’s who is renting and where

Higher home prices equal higher return

Investors tend to gravitate toward renting properties rather than flipping them, according to a new November industry report from Auction.com.

The Real Estate Investor Activity Report is a nationwide survey of real estate investors bidding on properties offered for auction during the month.

“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,” he added.

Investor intent:

Click picture to enlarge

Auction.com

Source Auction.com

Respondents who indicated that they were making a one-time purchase continued to prefer a hold-to-rent strategy, along with respondents who identified themselves as full-time “real estate investors.”

However, the majority of respondents that indicated they were working on behalf of another investor overwhelmingly preferred to flip.

Across the nation:

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Auction.com

Source Auction.com

Purchasing property to rent is more prevalent in the Midwest and South, while there is a higher tendency to flip among real estate investors in the Northeast.

Regional events:

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Auction.com

Source Auction.com

Meanwhile, investors bidding at live events appear to be more likely to flip the properties they purchase, but there were very strong regional variances.

Investor size:

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Auction.com

Source Auction.com

Additionally, investors purchasing multiple properties per year – particularly institutional investors — preferred to flip.

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