What is Flipping Property?

Flipping is the technique wherein the asset holder buys the asset with the aim of selling it for quick profit. Generally, is a form of arbitrage. This is contrasted with buying and assets, holding it for long period, and then selling it to take advantage of price appreciation. The term is usually used in IPOs and short-term real estate transactions. Assets commonly bought for flipping include cars, concert tickets, cryptocurrencies, etc.

How Does Flipping Property Work?

Flipping is mostly seen in real estate. It involves purchasing real property and selling it within a year to earn a profit. Real estate flipping happens in two manners:

• the investors buy property in fast rising markets and resell it with zero or little additional investment; or
• the investors works invests time and effort in enhancing the value or attractiveness of the property before selling it.

Flipping real estate is a tricky business. If the market conditions fluctuate before the property is sold, the investor may be left holding a depreciated asset. There is less risk in flipping renovated property, as the holder does not depend solely on property appreciation to make a profit. A unique forms of flipping include wholesaling. Wholesalers purchases real estate with the purpose of selling it to another investor for a fixed fee or percentage. Their main business is to identify undervalued property that would be a great investment for flipping. Another method of flipping is to purchase the outstanding debt on abandoned or upside down properties (properties where the mortgages and other liens are greater than the property value). The purchaser negotiated reduced prices to purchase the debts. As a result, she can consolidate all debts and sell the property for more value than she has in the property.