House Flipping Revisited

House flipping, while being one of the most common avenues for real estate investing is also the one most closely associated with scams.

Illegal house flipping occurs when a recently purchased property is resold for a considerable profit with a falsely inflated value. Illegal house flipping generally involves some form of collusion between an appraiser, a closing agent and the mortgage originator. Since an artificially inflated appraisal report is required for this scam, the cooperation af a real estate appraiser is a necessity.

Despite it's somewhat dubious reputation, house flipping remains an extremely popular and lucrative method of real estate investing. This popularity has been perpetuated by the media with the introduction of a host of new television programs on the subject.

Some experts are concerned that the influx of new investors will create a glut of new properies on the market, causing a downward spiral for the real estate market and the economy in general. This argument appears to be something of a contradiction, as the houses these new investors are buying would have to be on the market to be available to them.

Of greater concern may be the quality of the houses. Often, inexperienced investors will take shortcuts or overlook important tasks in their haste to get a property back on the market. This emphasizes the importance of self-educating oneself about the real estate market before making that all important first investment.

An often overlooked type of house flipping is 'bird dogging' or wholesaling. This involves finding bargain properties for other investors. To become a successful 'bird dog', an investor needs to become proficient at finding bargain properties as well as building and maintaining a list of investors to supply these wholesale properties to.

While wholesaling is one of the least expensive ways of investing, there is a lot of competition in this area and it takes a lot of time, effort, and persistence to build a reputation as a successful 'bird dog'.


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