Flipping

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Flipping is buying an asset to sell it quickly for a profit. In real estate, it means buying a property, fixing it up, and selling it soon after for more money.

In the United States, flipping is common but not everyday. In 2017 about 207,000 houses or condos were flipped, making up about 5.9% of all single-family home sales that year.

Why people flip: easy credit and a fast-moving market can push prices up when investors buy to resell rather than to live in the homes. This can create a short-term boom, which can burst if demand falters or lending rules tighten. The big housing crash around 2008 happened after a period of rapid borrowing and speculation.

Advantages: flipping can revive neglected neighborhoods by funding renovations and bringing in new businesses. When properties look better and neighborhoods improve, nearby home values can rise too. Rapid renovations can push out crime from run-down areas, a result some associate with the idea that cleaner, safer neighborhoods attract residents and investors.

Disadvantages: when lots of flipping happens, nearby home values and taxes can rise, increasing costs for neighbors. Finding reliable contractors and budgeting for unexpected renovation issues can be stressful and costly. Quick fixes may overlook major problems, and the resulting higher taxes and rents can affect long-time residents.

Risk and legality: not all flipping is legitimate. There have been scams where properties are bought and sold with inflated values to deceive lenders or buyers. A quick, cosmetic “lipstick flip” might hide serious problems like faulty foundations or wiring. To guard against fraud, appraisal and mortgage standards monitor transactions.

Regulation and oversight: regulations exist to curb predatory flipping. In the mid-2000s, rules about how long a seller had to hold a property for FHA financing were tightened, then relaxed again in 2010. Real estate appraisal and financing watchdogs work to spot illegal flipping and protect lenders and buyers.

Media and culture: interest in flipping has grown with TV shows and online content that spotlight quick makeovers and fast profits, shaping how many people view real estate investing.