Flipping

Reviewed by Vineeth | Updated on Sep 28, 2020

Introduction

Flipping pertains to the buying of a security or an asset to sell it for a short-term profit instead of holding on to the same for a long-term to let its worth increase. Flipping is utilised to represent short-term real estate deals and the actions of a few investors in the IPOs (initial public offerings) as well.

Despite these being some of the most general uses in the finance world, flipping can be utilised to represent the purchase of a security or an asset which is for sale shortly to make profits. This includes cryptocurrencies, such as bitcoin; cars; tickets of a concert; and so on.

Understanding Flipping

Flipping is more extensively related to real estate, where it points to a strategy of buying properties and selling them over a short timeframe for the purpose of making profits.

In real estate, flipping is generally classified into two types. The first of them is in which the real estate investors can target properties, which are in a fast-paced appreciating market and reselling within a small or no extra investment in any physical properties. This is a ploy used on the market scenario instead of the property in itself.

The second type is a swift flip fix in which a real estate investor will make use of his or her knowledge in deciding what purchasers would like to buy in order to pump up the undervalued properties with revamps, renovation, and ramifications, which is called as a reno flip.

Risk

Flipping has resulted in fortunes. However, it looks like it is going to produce more advertisements than repeated outcomes. Flipping in hot markets is, the more precious of the two. This is because the hot markets can sometimes cool off unexpectedly. If this happens, then investors may suffer losses as the asset’s value depreciates.

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