For_Investors

Property Flipping: boon or bane?

Property "flipping" has become quite the rage in the past few years Whenever something
gets publicized on prime time TV shows such as "Flip This House", it's time for investors to
steer clear, as far as I am concerned. In my 17+ years in the real estate business, I have
seen many trends come and go, be used and abused, until someone eventually gets
really hurt. Then enter the government to legislate it. Flipping isn't too far behind that
legislation.

My E&O insurance provider (Errors and Omissions) just sent out a warning by snail mail,
that they will not insure brokers involved in flipping transactions. Banks are beginning to
insist that the buyers of flipped property justify the price they are paying. Why would a
property be worth $30,000 more in a matter of months unless a huge renovation was
done to it to add value per USPAP standards (appraisal standards).

INVESTORS BEWARE!

Don't buy a property with the idea of flipping unless you are willing to hold on to it at least
a year so that your ownership can "season". The buyers of your property may not be
able to get the financing based on your sale price and in the worst case scenario, you
may be implicated in bank fraud. Easy money isn't so easy anymore.

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