Flipping Homes Is Tougher Than It Appears
Gary M. Singer is a board-certified real estate lawyer that answers all sorts of questions about the housing market. Each Friday Singer answers questions about mortgages, short sales, refinancing and other residential real estate topics.
Q: Since home prices have been rising, I am hearing a lot about people who are making money "flipping" houses. What exactly does a house flipper do? -- Anonymous
A: Someone who is flipping homes is buying properties at a low price so they can put them right back on the market for a higher price. Throughout the housing boom, real estate investors were flipping houses very quickly due to the run-up in property prices. Today most house flippers buy run down homes with potential, fix them up and then sell them for a profit as quickly as possible.
House flipping is a legitimate business opportunity as long as buyers do not lie to a lender about their intentions. Those who lie about their true intentions are scamming the lending system.
In spite of what those attractive infomercials and radio advertisements portray, investing in property is a risky business. If it were actually as easy as some of the experts claim they would devote all of their time to flipping houses for profit rather than teaching seminars on the subject.
People should be aware of the possible pitfalls of buying and selling multiple homes. They may get a great deal on a property but have trouble selling it. A potential buyer may have a lender that requires investors to own the property for a certain amount of time or they may have limits set on the resale price. This is the reason why most buyers pay cash when it comes to house flipping. Cash buyers usually have plenty of experience so as a house flipper you can end up stuck with a property for many months if you do not buy it for the right price.
The most effective way to become a successful house flipper is to learn everything you can about the marketplace. You can learn about real estate by working as a contractor, appraiser or real estate agent. This will make you an expert in finding undervalued properties that have profit potential.
The information and advice given on this blog site is not legal advice and is intended only for general informational purposes. No attorney-client collaboration is formed and no such collaboration should be implied. None of the information on this blog should be substituted for legal advice. You should speak with a licensed attorney in your area to receive the advice you need.