To flip or not to flip. Is this something that is illegal? Not if all parties are aware of what your intension’s are. No double escrows or straw buyers - Keep it Straight.
As you probably have seen from the Current Real Estate market, it leaves you with a lot being desired. Since the fall of the largest sub-prime lender back in early 2007, the market has been on a steady decline from it’s Past HIGH state. The Real Estate market has started and continues to build in the amounts of foreclosures, short sales and other distressed properties including Notice of Defaults being filed. We have several options when it comes to working the distressed properties. Whether in the Santa Clarita Valley, Antelope Valley, San Fernando Valley, Ventura County, or the areas surrounding and including Los Angeles -I have put together some Virtual gateways to assist you on your quest - Check out www.REOTool.com and see what I have put together. I think you will be happy with the result of this self-generating - self-updating list of Foreclosures and Short Sales in the aforementioned areas. On to the information about Flipping houses - Santa Clarita Valley and Beyond.
During the housing boom, flipping houses was almost a national pastime. Shows like Flip This House, Flipping Out, and Flip That House attracted huge viewing audiences, and nearly every book in Amazon’s real estate top sellers category had the word “flipping” in its title.
If you mention house flipping to a real estate or law enforcement professional, however, they are more likely to think that you are talking about committing a crime. To them, the word “flip” is a nasty four-letter word. HUD (the U.S. Department of Housing and Urban Development) declared it so when it released its FR (Final Rule)-4615 Prohibition of Property Flipping.
So, is flipping good or bad? Legal or illegal?
Well, that depends which form of flipping you’re talking about. The illegal variety consists of selling a home multiple times over a relatively short period in order to artificially inflate the home’s value and cash out the inflated equity. To begin, a con artist will purchase a home (typically a dilapidated property that costs very little).
He or she will then obtain an inflated appraisal for the property – by finding an appraiser willing to go along with the scam, stealing an appraiser’s identity to forge a fake appraisal, or using a phony appraisal document. The con artist can then apply for a loan for the inflated amount. (Or, the con artist will apply for the loan and then, with the help of a cooperative loan officer, obtain the inflated appraisal to present to the lender.) In either case, the con artist usually takes out the loan in the name of a straw buyer (someone who owns the home in name only) or by using a fake or stolen identity.
Eventually, the house flipper either sells the home to somebody who is unaware of its true value or abandons the home.
That’s illegal flipping in a nutshell.
Legal flipping consists of buying a home for less than its true market value (usually at least 20 percent less), fixing it up, and then selling it at or near its true market value. This fix-and-flip approach is the type of flipping they do on TV shows like Flip This House and Flip That House. It is a shrewd and honorable way to earn a buck in real estate.
As a consumer, knowing the difference between the two types of flipping is important. Know the illegal form of flipping so you don’t break the law or get stuck with an overpriced piece of real estate that’s being used in a flipping scheme. Know the legal form of flipping, so you can fix and flip your way to wealth in real estate.
About the Author: Ralph R. Roberts, GRI, CRS is an experienced real estate investor and consultant and the author of Flipping Houses For Dummies (John Wiley & Sons).
As you can see there is a lot to learn about Flipping homes and the key thing is how you identify a target property that would work good in the flipping arena. Something that you don’t have to have the extra ordinary cash on file such as an auction. $10,000 cashiers check for deposit to bid - 10% of the purchase price ready to go. No inspections, cancellations, or other things that I would be screaming to you to do to protect yourself. We aren’t kicking the tires and wanting to know the mileage. We are purchasing something that is much more substantial.
When have you every purchased a vehicle and had it increase in value when you drove it off the lot. But in Real Estate that is something that is very common. You can’t look at the last 1.7 years to see a good trend in the Real Estate market. In fact, back in the early 1990’s the inventory is double what it is now, and the interest rates were through the roof. Businesses were moving out of Southern California in droves. Now they are clawing to come back. People were fleeing the state due to crappy unemployment - But now are returning in the tens of thousands each day. I know because I am blessed to be helping some of them find a home www.Renter911.com.
