Posted by CarolFL on April 12, 2000 at 08:02:06:
Steve, we will roll oranges from our cell to yours … Florida oranges of course.
Carol
I Was Actually Considering Flipping These Two Properties I Found But… - Posted by Michelle Roogie
Posted by Michelle Roogie on April 11, 2000 at 18:49:08:
Hi,
I was actually considering flipping these two properties I found here in my neighborhood but I got turned off by a realestate broker when he told me that flipping property was illegal. Look I’M only 26 years old and just recently decided that real estate was for me especially flipping properties. I was given advice by someone that flipping properties is the best thing to get into if you need to make money fast. Now I’m not in it to make money fast because I want to learn as much as I going along in doing deals. And besides I like to learn real estate this way and not go into this so quickly. I am a true newbie to this and I am just asking for someone’s second opinion on what this broker said to me. It really disappointed me because I thought I was getting somewhere and doing something new and good in my life. I was really turned off and now I don’t know what to do about these properties I found. And what makes it so bad I really thought I was doing something. I went to city hall to get the names and addresses of the previous owners of both boarded up propertties I found.
I was getting ready to send out letters stating how I saw their property and was interested in buying it and also was going to ask if they are interested in selling etc. etc. Well not now. So if this is true what the realtor said, then I will no longer pursue real estate and find another interest. My family and friends are still all behind me in doing this because they want to see me succeed. They feel that if I succeed and do well in this since I’ve talked about doing this for such a long time now, then most of them are actually considering becoming a REI and succeed like I would have. I apologize for such a long post but this is how much it really bothered me what that realtor said about flipping. This is why I need a sure second opinion. Thank you all for your time.
Sincerely,
Michelle Roogie
Re: Say how about we call it " QUICK TURN " intstead. - Posted by Ike
Posted by Ike on April 13, 2000 at 03:17:46:
Hello Michelle, the responders to your post, at least the last three , really hit the nail on the head.Flipping, like Steve(" the confusion comes from ") mentioned flipping is only illegal if the appraised value of the property ( as determined by an appraiser ) is “spruced” up and submited to a lender
to finance the sale at the back end. A mortgage is now issued on the property that is higher that the actual value of the property.Again like Steve said for this to work the investors are usually in cohorts with appraisers and yes sometimes the loan officers themselves.In the end if the property were to go into foreclosure ( of cource the investor and his gang would be long gone by then )the bank will invariably be stuck with an “overpriced” house that nobody wants (not even investors unless the bank is willing to take a loss, in order to move the property off their books ).This is what happened in the height of the realestate boom in the eightys’ and is what led to the down fall of so many savings and loans ,hence the creation of R.T.C…
And I also think that this was why the government kicked investors out of the 203k program( wright now it is only available to owner occupants ).
In the end of this “fairy tale” guess who gets to pick up the slack,? the “almighty” tax payers , and this my freind is why the word “FLIPPING " leaves a sour taste in the minds of people who are not “in the know”. “Flipping” for those of us “in the know” simply means buying at one price and selling at whatever the market would dictate.This applies to flipping to rehabbers ( wholesaling ) as well as to the end users/homeowners(retailing ).
So in conclusion ,all of us investors should all get together and do as Mark suggested,we should “rename it”—How about using a Ron Legrand term " QUICK TURN”.
To your continued success,
Ike.
N.B:One more note of advice, don’t let the ignorance of other people ( in this case your broker ) ruin the impressive progress you have already made. Cheers
Re: I Was Actually Considering Flipping These Two Properties I Found But… - Posted by Steve C., Remax
Posted by Steve C., Remax on April 12, 2000 at 17:41:43:
Just to throw in another 2 cents…I’m a Realtor and I don’t know what motivated the person you spoke with. I suspect it’s a move to protect their (perceived) commissions.
Mark’s post probably said it best: call it something else. Tell them you buy and sell real estate, and mention that you appreciate loyalty and plan to do several transactions per year. If that doesn’t do it. move on to a smarter realtor.
We should re-name it. - Posted by Mark-NC
Posted by Mark-NC on April 12, 2000 at 16:13:44:
Michelle,
I think the best thing to do would be, not to mention the flip word. Apparently it is a 4 letter word that has the whole real estate industry in an uproar.
A lot of people don’t even know exactly what a flip is, but they know it is bad because of the headlines.
So the ideal situation would be not to mention the word to prospective people involved in your deal.
You could call yourself somthing else like a “property retailer”. You explain to them that you just buy properties at a discount and sell at retail, and some times even on the same day.
Mark
The confusion comes from… - Posted by steve
Posted by steve on April 12, 2000 at 12:52:57:
…only reading headlines. Usually, the headline says something about “so-and-so convicted of flipping property”. It works into broker’s world view to believe that flipping is illegal, since he/she won’t be getting a commission, and it’s certainly not the typical deal brokers are used to seeing, either. So it just has to be illegal.
Flipping is simple business economics - buy low, sell high. Nothing inherently illegal about that. On the other hand, any business deal is illegal if it’s based on fraud, and that’s what those headlines are about: dishonest investors in cahoots with dishonest appraisers to inflate values on the retail end and give the lender the shaft.
Consider this your first lesson: Real estate brokers are not experts in all areas of real estate - and some of them aren’t experts in ANY area of real estate!
If flipping is illegal, I’ll be in jail for quite some time- Will you visit me? - Posted by SCook85
Posted by SCook85 on April 11, 2000 at 23:31:49:
Just to reiterate what everyone else has said, THIS IS NONSENSE. A new term has come about in recent months and it is called “Illegal Flips”. Many people misinterpret this as Flipping is Illegal. I don’t know why they do but they do.
The definitions given earlier of illegal flips are right on the button. Don’t commit fraud in any way and you will be OK.
Best of Luck and Happy Investing!
Steve Cook
Re: I Was Actually Considering Flipping These Two Properties I Found But… - Posted by JoeB(Atlanta)
Posted by JoeB(Atlanta) on April 11, 2000 at 22:06:38:
Hi Michelle, everyone’s right: flipping is not illegal and hold your head up and politely ignore the more ignorant folks out there…
BUT, there is a slight derivation on flipping that some people practice that is illegal in some states.
If you put a buyer and seller together and you have NO controlling interest in the property (ie you do NOT have the property under contract and you are NOT a partial owner/partner) then you are ‘acting like a real estate agent’ without being a licensed agent and in Georgia the Board of Realtors has sued (in civil court) several investors for doing this. The Board did not win, but what a headache for the investors!!
So make sure you always have the house under contract before you sell it – don’t go out putting buyers and sellers together without you having a contract to buy the house – unless of course you become an agent.
BTW, don’t let what I just wrote discourage you–I’ve been a very happy ‘flipper’ for 8 years in Atlanta!
Best of success,
Joe Brillante
Re: I Was Actually Considering Flipping These Two Properties I Found But… - Posted by CORDERO
Posted by CORDERO on April 11, 2000 at 21:36:58:
I’m also new at this and I have found much the same response. Most cash buyers and investors understand what I’m doing and so does my attorney. Most realtors don’t. and I’ve even had the “expert” advise from a realitive tell me it sounds illegal. “don’t you have to be a real estate agent or broker to do that?” As you’ve seen in the other replies, don’t take someones word for it if they don’t know what they’re talking about. Find the people who know and understand the laws and CRE in your are and ask them. I’ve never seen someone present a paper with a law on it saying it is illegal. But don’t take my word for it.
Re: I Was Actually Considering Flipping These Two Properties I Found But… - Posted by Tim Jensen
Posted by Tim Jensen on April 11, 2000 at 21:26:21:
Michelle,
I think you are getting some bad advice from the broker. This is my opinion.
The broker probably told you that because they sees you buying houses and they are not getting their commission. I see this a lot with brokers and realtors. When you see this broker say this: “So, you say that flipping is illegal. I am so glad that you informed me about that, could you plaese direct me to the place where you say that law? I do not want to do anything illegal and what better way to make sure I do things right then by looking at the law myself.” I have a feeling the guy is going to start to stammer and huff and stumble. To my knowledge there is no law against buying a place then immediately selling it for a profit. I think this broker is just a little upset that he may not get a commission. I would not be surprised if the broker goes after the owner once your contract is expired.
I have had a similar experience with a realtor about 10 days ago. This realtor calls me up at 7AM and tells me how my signs(Quick cash for your house) are illegal and that only realtors can put up signs and that if I do not remove them by 1PM he will have the Board of Realtors arrest me. Well, it is 10 days later and I’m still here.
Bottom line, sounds like this Realtor has his head so far up his a s s he could use his own skull for a colostimy(sp) bag.
Tim
Re: I Was Actually Considering Flipping These Two Properties I Found But… - Posted by phil fernandez
Posted by phil fernandez on April 11, 2000 at 20:48:47:
Michelle,
Nonsense. Show me the law that says flipping is illegal. In fact I have an assignment for you tommorrow. I want you to go see this realtor face to face and ask him what law says that flipping is illegal. I want the realtor to get an actual copy of this law, make a copy of it and give it to you.
You see talk is cheap and realtors are all about talk. They can talk, but very few can do the walk. The uninformed always say it can’t be done.
Re: I Was Actually Considering Flipping These Two Properties I Found But… - Posted by Rob FL
Posted by Rob FL on April 11, 2000 at 20:18:03:
Flipping in itself is not illegal. Flipping is simply buying low and selling high, something that has been going on for thousands of years. Day traders on the stock market do this; retail stores do this; car dealers do this; and real estate investors do this.
What is illegal is what is known as an “illegal land flip.” What makes an “illegal land flip” illegal is the fact that some type of mortgage fraud ocurred. An inflated appraisal, 2 sets of closing statements, faked credit reports, things of that nature that are created in order to defraud some bank into loaning money against a property. People who say flipping properties is illegal are very ignorant. They need to be saying mortgage fraud is illegal.
Just a word of advice… - Posted by Charity
Posted by Charity on April 11, 2000 at 19:53:41:
I don’t know where you live and I am a newbie too, but one thing I have learned is not to take the word or advice of someone who does not do real estate investing full time or at least have a lot of good experience. I am a Realtor just like this person you mentioned and I can honestly say that we are trained to think a whole different way than an investor thinks. You have two things working against you when you ask a realtor who does not work in the creative financing area: Number 1, they don’t understand how they will make a commission because of the way many of these deals are structured. Number 2, because of the way we are trained, many of the creative financing techniques do sound too good to be true and possibly illegal.
Again, I cannot really answer your question, but you need to understand that just because someone tells you something like that does not mean it is true. Many Realtors, unfortunately, are uneducated about REI. Also, even if it is illegal, you shouldn’t just give up on REI altogether. There are many, many ways to do these deals.
Charity
Steve, Leavenworth is close… - Posted by Mark R in KCMO
Posted by Mark R in KCMO on April 12, 2000 at 14:15:55:
Steve,
Leavenworth in the Fed Prison, there are no Flipers there… But there Are a few realtors… and a few bankers… what do that tell ya…
Mark R in KCMO