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Is Flipping A Legitimate Real Estate Strategy?

Feb 26, 2008
"Flipping" is an ordinary part of the real estate business that some may have misconceptions about regarding its legality, but is actually legal.

Flipping is when you buy a piece of property that you can "flip" or sell to another buyer for a profit. Anytime you buy and sell a house is called flipping. But the term is more associated with wholesaling.

What is wholesaling? Wholesaling is when you control a piece of property and sell it to a buyer for a profit. The difference between wholesaling against other activities in real estate is that you don't have to purchase the property so that you can sell it. You don't need to put out your money for you to control it. All you have to do is to find a property that you can put under contract (Contract to Purchase or Option to Purchase), and find a buyer for that house. When you find a buyer, the buyer will finance the property, and you will get your profit. It's a quick, easy, legal way to earn money.

Although flipping is legal, there are some investors who go about flipping fraudulently, by not properly representing the property to the buyer and not disclosing correct information to the buyer about the property's true condition, just to get that contract closed. That is not legal. It is the investor's duty to protect the seller's and the buyer's interest, if you want to remain in good standing within the business community.

Falsifying documents that are required to get the buyer approved is also fraudulent act.

Some investors might do some tweaking on the requirements to get the loans approved, which might be a common practice for the lower income buyers. All loans are based on facts investors provide, and if the some documents are falsified, even when the buyer is not qualified, it would cause loan defaults.
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