Flipping real estate The term ‘flipping’ denotes the purchase of a revenue generating asset and reselling it immediately (flipping) for profit. The asset here may even be real estate or IFOs (Initial Public Offerings). The only thing in the world whose value continues to rise (and sadly it cannot be manufactured) is that of land. One can never really have enough of it. Flipping real estate is an excellent means of quick income in areas with high land value. The profit from flipping real estate is either obtained from buying cheap and selling high, or buying a piece of property and fixing it up before selling it. The ‘fix and flip’ procedure is comparatively a long term investment requiring careful planning. The buyer has to research the land value, market trends, repair costs and resell value. The investor will probably buy a dilapidated house at a throwaway price (often much lower than the actual value). The ‘throwaway’ price arises from different conditions, and the investors look for them—major renovations, relocation or pending foreclosure of the owner etc). The buyer will then renovate and repair the house and sell it rather quickly closer to the market value of new houses, thereby making a substantial profit. However, flipping is also considered a criminal offence sometimes. Flipping property illegally is considered a scheme where a person commits fraud to make profit—a property bought low is sold at a substantial profit by inflating its value artificially. As formerly said, the property is sold off in a relatively short time period. Almost all the times the repairs and renovations are only cosmetic in nature. So the ultimate buyer may be duped in such cases. But, in some scenarios the house, after renovation, is in better condition and lasts longer. Thus, it can be sold at much higher price later as land and property value generally go up and rarely down. There is another important advantage. An overlooked and unkempt area attracts antisocial elements thereby driving out persons living responsibly, which in turn attracts more of the former. This continues to degrade the locality. However, a mass renovation generates local jobs and increased sales for local vendors. The rejuvenated homes will usher new populations and boost the local economic growth. In addition the newly developed homes acquire higher asset values thereby bringing more property tax revenues. This is especially beneficial to the local governing bodies to do more renovating work.
For more information, please visit:
http://www.flipproperty.org/