A lot of people have the false impression of flipping, on whether or not it is legal. There have been some situations where investors, in their eagerness to close on deals, do some tweaking with the activities involved in flipping properties. However, flipping, in itself, is NOT illegal, but is a very legal, profitable business.
Flipping is when you buy a piece of property that you can "flip" or sell to another buyer for a profit. Anytime you buy and sell a house is called flipping. But the term is more associated with wholesaling.
How is that legal? Well, what happens is that you find a good piece of property, put it under contract at a price you agree on, you find a buyer, have the buyer close on the contract at the price you and the buyer agree on. Basically, you are only acting as the middleman who locates a property for a buyer. Now how is that illegal? It's just like charging for your professional fee for your services. Both the seller and the buyer need you. The seller needs you to find a buyer, and the buyer needs you to locate a piece of property he can purchase.
There are investors out there who cover up problems and misrepresent the property to be in good condition when it is not just to get that deal closed. That is fraud. As an investor, it is your duty to provide accurate information, both to your buyer and seller, to maintain credibility.
Rigging or falsifying documents to get the buyer approved is illegal.
Some investors might do some tweaking on the requirements to get the loans approved, which might be a common practice for the lower income buyers. All loans are based on facts investors provide, and if the some documents are falsified, even when the buyer is not qualified, it would cause loan defaults.
Flipping is when you buy a piece of property that you can "flip" or sell to another buyer for a profit. Anytime you buy and sell a house is called flipping. But the term is more associated with wholesaling.
How is that legal? Well, what happens is that you find a good piece of property, put it under contract at a price you agree on, you find a buyer, have the buyer close on the contract at the price you and the buyer agree on. Basically, you are only acting as the middleman who locates a property for a buyer. Now how is that illegal? It's just like charging for your professional fee for your services. Both the seller and the buyer need you. The seller needs you to find a buyer, and the buyer needs you to locate a piece of property he can purchase.
There are investors out there who cover up problems and misrepresent the property to be in good condition when it is not just to get that deal closed. That is fraud. As an investor, it is your duty to provide accurate information, both to your buyer and seller, to maintain credibility.
Rigging or falsifying documents to get the buyer approved is illegal.
Some investors might do some tweaking on the requirements to get the loans approved, which might be a common practice for the lower income buyers. All loans are based on facts investors provide, and if the some documents are falsified, even when the buyer is not qualified, it would cause loan defaults.
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