What most people loosely refer to as ‘real estate flipping’ these days is no flipping at all – it is reselling for a profit. This is so because most market participants finalize the transaction before reselling their newly acquired interest in land for a mark-up. The implication is that they actually use their own money to complete – a classic real estate investment. The true fine art of ‘flipping’ houses or other real assets, on the other hand, consists in reselling an interest prior to closing. A Buyer of a subjects-free contract of purchase and sale will find another Buyer for the same interest ready, willing and able to purchase prior to the first Buyer completing the deal. The implication is that the first Buyer merely puts the deposit out of his own funds – a classic real estate speculation.True real estate flipping, albeit not an illegal practice per se, will get you in trouble more often than not and notwithstanding anything Donald Trump will have to say on the subject. In fact, it’s gotten him in trouble as well. It is also a practice not favorably looked upon by many Boards and professional associations within organized real estate. At… Read full this story
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