Remember when “flipping” was all the rage? It was even done with real estate on Sanibel Island. It seems everywhere you went you’d be hearing stories of how your neighbor, grocer and even the taxi driver had purchased a piece of property, held it for a short time period and then “flipped” for a cool profit. Many experts have said this practice helped to fuel the real estate bubble that we experienced recently. Of course there is nothing wrong with buying a property and then selling if for a profit, after all, that’s the American way! There are several variations to flipping real estate. You can read books, take courses or attend seminars to learn some of the various techniques. The most common way is make sure you’re getting a true bargain when you purchase your property. Many times the best prices are on properties that are in need of some fix up. You then purchase the property, make the necessary repairs and turn around and sell it to someone that didn’t have the time or inclination to do the repairs themselves. It’s best to find houses that are basically sound but in need of cosmetic repairs. These repairs will not be expensive, such as paint and floor coverings but will make the house look clean, neat and well cared for from a prospective buyer’s eye. The danger to this technique though is once you get into the rehab you find that much more is needed and the cost is more expensive than you budgeted. Also, depending on the local market it may take you longer to turn the property over, increasing your holding costs and eating into your profits. A little different technique is to buy a property, fix it up and then refinance it with the new improvements. The next step is to sell it with a lease option or hold the mortgage for monthly income. This may increase the potential buyer’s pool since you’re not limited to people that can qualify for a conventional mortgage loan. If structured correctly the rent/lease will more than cover your expenses and if your tenant exercises the option to purchase after at least a 12 month period you would qualify for a lower capital gains tax rate. This situation is a winner for everyone! If you see a truly great bargain you can buy it and “flip” it without doing anything. This technique works best in a very hot real estate market when it’s a seller’s market. You won’t make as much money if you did the repairs yourself but then you also don’t have the upfront costs and time involved either. As I said, there is nothing wrong going into a transaction with the idea of not holding it for a long period of time, just be sure if this is the case that you know your local market and are confident what repairs need to be made so you can quickly turn it over and move on to the next project.