Why do People Flip, Anyway?

Keep in mind that this article has nothing whatsoever to do with gymnastics or tumbling. We’re discussing the flipping (or the purchase followed in short order by the sale) of a piece of real estate. There are several reasons why people flip, and unfortunately none of them are especially good. Considering that flippers pay higher taxes, and tend to drive up the prices of local real estate into unsustainably (and often unjustifiably) high levels, the evidence exists that flipping is just generally bad news. So why is it that whenever you discuss real estate with nearly anyone, they always figure that the goal is to sell it as quickly as possible?

Well, for one thing, flipping is sexy. There is something about how, even if you usually make $30,000 per year, you can purchase a house and then sell it a few months later for a profit of $50,000 or more. Even though it’s not really that much money in the grand scheme of things, it lets an otherwise completely average and undistinguished person feel like some kind of rock star trader to be able to effectively double their income in that way. And when you couple that with the illusion that flipping doesn’t require work, it is all too easy to put forth an image of being “too cool for school” and no longer needing to work at all.

Another reason why people flip properties is because they really don’t want them. Cash is comforting, whereas real estate has a lot of unknowns associated with it. Neighborhoods change, and a drug dealer (or even a minority) moving in down the street can trigger the flight of the most affluent members of a community. This can cause the sale price of a property to plummet, and can even lower the rent one can reasonably expect to collect. This is scary to most people, so they want to take their cash and hit the road, now.