House flipping is the practice of buying a bank owned home from auction or a distressed property on the market, fixing it up, and selling it for a profit. In the last year we have seen many of ameuter investors on the Courthouse steps, often driving prices up and leaving little to no room for profit on a flip.
This is really a serious business. Risks include title issues, unknown property defects including structural, mold, or foundation issues, and an unstable real estate market. According to Foreclosure Radar margins in San Diego County can be thin.
Investors who work in teams scout for bargains, close quickly with cash, gut and beautify, and market the homes to agents — all while the timer’s ticking. If everything goes right, their money and muscle will yield enough profit to keep that machine churning.
“It’s not for the weak of heart,” said Chief Denney, a Rancho Santa Fe investor whose company Compass Real Estate Capital will flip 100 homes this year. “It looks easy … but it could be disastrous for someone who doesn’t know what they’re doing.”
There is another article on House Flipping For Beginners on SF Gate. The article includes 8 steps for those considering house flipping.
The term “house flipping” refers to the act of purchasing a residential property, making necessary renovations and quickly selling the property for a profit. The idea is to invest in relatively inexpensive improvements that will generate a significant increase in potential market value. Time is an important element in house flipping. Ideally, a house flipper seeks to sell the home before a mortgage payment is due, in order to minimize monetary investment and maximize profit.