What is House Flipping?
House flipping involves buying a home, improving it, and then quickly selling it again, presumably for a profit. For example, say a house goes on the market that is a real eyesore. A house flipper buys it and makes some cosmetic changes before putting it back on the market at a much higher price. How do you make it work? Any old house won’t do for house flipping. Just because a house is in dilapidated condition and priced low does not necessarily mean that it is prime for flipping. There are certain factors that increase the potential for a successful “flip.” • Location, location, location. The old adage of real estate holds true in house flipping, too. You can buy a house with the greatest potential at the cheapest price, but if its location is bad, it could be a recipe for disaster. For example, a house with train tracks running through the backyard is not going to sell no matter how nice you make it. • Stick with cosmetic changes. If you have to gut a house, add rooms, blow out the
Very simply, it’s contracting to buy a property, then selling your right to buy to a third person. And yes, it is perfectly legal in all states. A “quick flip” example Here’s an example of how a typical flip might work. You find a house that is run down and vacant; there’s no for sale sign in the yard. Through persistence and a little detective work, you locate the owner and negotiate a “risk-free” contract to buy the property at 50% below the after repaired value with a very low earnest money deposit ($10). You contact an investor who rehabs houses in the area, offer to sell him the house for $3,000 more than your contract amount. When he agrees, you fill out a one-page “Assignment of Contract” form and get $500 in earnest money. A few days later, the transaction closes at a title company or an attorney’s office, and you get a check for $3,000 PLUS your $10 earnest money. A word of caution . . . You’ll need to be very persistent–it’s NOT always easy. Some months you may find two, thr
House flipping is buying a “fixer upper” home and selling it quickly after renovating it. “Flipping” refers to a fast sell of a home, as it is crucial in making a good profit. Television shows such as Flip This House and Property Ladder have helped increase the popularity of house flipping. “Flippers” must make a good investment when buying the home. The best homes to flip are those that do not present well to potential buyers because of cosmetic problems such as bad carpeting, old paint, and poorly kept yards. These problems can easily be repaired and updated to increase the value of the home without adding major expenses. Homes needing new wiring, plumbing, and structural repairs, however, can quickly eat up much of the flipper’s expected profit. Experienced flippers are better able to estimate the profit versus expenses calculation of a home needing major work than those new to house flipping. The neighborhood and not just the house must be considered when choosing the right house t
House flipping is a relatively simple strategy to explain – but much harder to execute as we’ll discuss later on. House flipping is the term used to describe a three step process: • Buying a Home • Renovating the Home • Selling the Home for a Profit A house flip occurs when someone buys a home, fixes / remodels the home in a very short timeframe (several months) and then turns around and sells the home for a profit. Now while all this sounds pretty simple, making money flipping real estate is not a sure thing. The driving force behind the profitability of flipping properties has to do with inefficiency in the real estate market. That’s because the “average” person looking to buy a home cannot distinguish between cosmetic “damage” to a home and structural problems – which can be far more expensive to fix, and when corrected don’t add a lot to the buyer’s perceived value of the home.
