Property Flipping

Flipping is the practice of buying a real estate property, making improvements to it, and reselling it for a higher price, thus making a profit.  A flipper is someone who flips houses or other properties in this manner.

 

The basic rules of economics dictate that to make a profit, the flipper must sell the house for more than the original purchase price plus the cost of repairs (including all materials and labor).  It is not always possible to sell a property for such a value, so flipping is not always a profitable job.

 

Many experts blame the U.S. real estate bubble in 2004 and 2005 on investor speculation and flipping.  However, the practice of flipping existed long before the recent real estate bubble.

 

One type of flip is called wholesaling. In wholesaling, an investor re-sells a property to another investor at a below market value.  This second purchaser then could re-sell at a retail value after some improvements and repairs are done.

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