Understanding Condo Flipping

Have you heard about people who make money by purchasing condominiums and then selling them without ever moving in? If so, you have probably heard that these same people are making a whole lot of money with this practice. While it is possible to make a good profit from “flipping” condominiums in this way, the practice isn’t as common as you might think.

What is Condo Flipping?

When you flip a piece of property, whether it is condo or any other type of property, you purchase the property and then sell it without actually living in the home. In some cases, you may have to make repairs to the property before you sell it. In other cases, you may simply purchase the property on speculation that the value will increase rapidly. Once the value does increase, you turn around and sell the property for a profit.

When it comes to condos, some investors purchase the condo while it is still being built. Then, once it is completed, they sell it to someone that is actually interested in living in the condo. Of course, there are risks associated with this type of investment. After all, there is always the chance that the condo won’t be valued as highly by the public as the investor thinks it will be. As a result, he or she may actually lose money in the process. If the investor carefully researchers the neighborhood in which the condo is being built as well as the reputation of the developer, however, these investments are generally profitable.

How Often Does this Really Happen?

If you watch late night infomercials or listen to slick salesmen, you might get the impression that condo flipping happens all of time. According to researchers, only about 10 to 15% of condos are purchased and the resold within six months from the purchase. When it comes to those that are under construction, a larger percentage of condos may be flipped. Depending upon the location, as many as 33% of these condos may be purchased and then resold after construction is complete. It should be noted, however, that many of these condos are purchased by a small group of investors, with each investor purchasing multiple condos.

Although condo flipping isn’t considered to be a particularly common practice, there are certain times when it does become more regular. These peaks usually occur when the market is particularly hot or when the economy is very stable. Condo flipping can also occur when the economy is in turmoil as owners try to get rid of a condo they can no longer afford. Between the years of 1979 and 1981, for example, approximately 45% of condos were flipped in the Vancouver area in Canada when the market experienced a major meltdown.

About the Author:
Shannon Kietzman is a well known author and trusted resource. Shannon regularly writes for www.ByOwnerMLS.com, a For Sale By Owner MLS service, the leading real estate search engine of homes for sale by owner (FSBO). For more information, please visit www.byownermls.com.