The continued increase in the number of available distressed properties has led to a renewed interest in flipping houses. Adding impetus to this trend is the fact that the government has recently granted an extension for an FHA mortgage program that offers advantages for those desiring to flip houses in the Los Angeles real estate market for a fast profit.

Flipping houses is a money-making strategy used by investors for decades, especially during housing booms. Generally speaking, it involves purchasing a home and reselling it quickly for more than the purchase price. Although this practice no longer holds the “get rich quick” promise of a decade ago, investors in Los Angeles real estate can still make a profit because of the high availability of distressed homes. Real estate that has a tax lien or is foreclosure can often be picked up below cost, especially at estate auctions.

Last year, FHA lifted the financing ban temporarily in an effort to help investors sell foreclosed homes. The goal was to help stimulate the depressed housing market. FHA Commissioner David Stevens said, “This action enables our borrowers, especially first-time buyers, to take advantage of this opportunity and buy a home that has recently been rehabilitated.” Stevens continued, “It will also help to move more foreclosed properties off the market and reduce the number of vacant homes in neighborhoods throughout this country.” And recently HUD extended the FHA home financing program that enables buyers of flipped homes to obtain home mortgage loans backed by the FHA. (In 2003 that agency had banned buyers from obtaining government-backed mortgage insurance on Los Angeles real estateflipping they purchased less than 90 days after a previous sale.)

Those who participate in flipping believe they are helping fix up foreclosure properties that are often left in bad shape and hard to sell, which is good for the market. Anyone who depletes the foreclosure inventory is helping the marketplace because we will not see appreciation or increases in values until foreclosures go away,” notes one. David Galfetti, an investor new to flipping, and others like him say that they know the volume of foreclosures and current opportunities won’t last forever, but that they are an important part of the market. “It’s unfortunately the whole state of the union, but we’re doing a favor to the lowest end of the market, which has to get cleaned up before the regular stuff can sell,” Galfetti says.

However, flipping is not a game for the faint of heart, and those in the know advise against rushing headlong into what may appear to be a foolproof scheme. That caution is warranted because it’s rarely a smooth path from the purchase to the sale. It is a risky business, and most foreclosure flippers have at least one story of a property that didn’t work out as they had expected

Then again, the profit opportunities can be significant. Quite often investor-purchased homes sell for more than 20% higher than their acquisition cost--a quick turnaround gain that potentially works for sellers, buyers, and neighborhoods.

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Eileen Walsh has a reputation for tough, yet fair, negotiation, and for facilitating real estate transactions to a successful close. She has earned the loyalty of repeat clients who rely on her for all of their real estate needs. Eileen's goals are to ensure Los Angeles real estate sellers that they receive top net dollar for their properties in the shortest amount of time and to help Los Angeles homebuyers find the property which best meets their objectives at the fairest price. 

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