Flipping is the common terminology for buying something at a bargain price and on-selling it at true market value.
In effect, this strategy relies on being able to buy something sufficiently under current market value to be able to on-sell it, after paying the purchase and selling costs, at a profit.
What you are doing is buying immediate equity!
Let us have a look at situations where you might be able to buy immediate equity. The reason I want to go through this section is because there will be some people out there who will tell you:
- There is no such thing as a wholesale market in properties
- There is no such thing as being able to buy a property under market value
- Value is what you pay for a property, so there is no such thing as ‘under market value’.
There are countless examples of properties that have been sold at bargain prices, which have meant that within a very short space of time, these properties could be on-sold at a profit. Sometimes, the property may need a quick fix up before being sold at a higher price.
Other times not a thing needs to be done in order to pick up a quick profit from on-selling.
Sometimes this on-selling process can happen simultaneously. I mean that, at the same time you purchase the property, you also on-sell it to the next buyer.
Basically, when you buy something under market value, or at a price that is considered lower than the other prices in the surrounding area for the same kind of property and you are able to on-sell that property in a relatively short space of time, that process is called a flip.
We always recommend that you seek professional advice as this blog is for general information only