DEFINITION of 'Flipping'

A type of real estate investment strategy in which an investor purchases properties with the goal of reselling them for a profit. Profit is generated either through the price appreciation that occurs as a result of a hot housing market and/or from renovations and capital improvements. Investors who employ these strategies face the risk of price depreciation in bad housing markets.

BREAKING DOWN 'Flipping'

Investors can execute this investment strategy in several ways. For example, investors that prefer a short-term approach might buy several properties with mortgages and then hold them for only three or four months in the hope that their value will increase. Conversely, an investor can take a longer-term approach by buying a single, moderately priced property and renovating it to "flip" it for a profit.

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