Land Flip

AAA

DEFINITION of 'Land Flip'

A fraudulent practice in the real estate business of selling undeveloped land at highly inflated prices. A land flip occurs when a group of dishonest buyers trades the land among its members, increasing the price with each transaction. The group will then finally unload the property onto an unsuspecting outside buyer at a price that the buyer will likely never be able to recoup from its own sale of the land.

INVESTOPEDIA EXPLAINS 'Land Flip'

Financial institutions face the risk of land flip with any loan made to purchase undeveloped property. They therefore take equity positions by investing directly in the land. Otherwise, they risk taking a loss if the land value decreases.

RELATED TERMS
  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Land Trust

    A legal agreement where a trustee is appointed to maintain ownership ...
  3. Chattel Mortgage

    A term used to describe a loan arrangement in which an item of ...
  4. Real Estate

    Land plus anything permanently fixed to it, including buildings, ...
  5. Real Estate Agent

    A person with a state/provincial license to represent a buyer ...
  6. Land Contract

    An agreement between a buyer and seller of property in which ...
Related Articles
  1. Should You Buy Property On Leased Land? ...
    Retirement

    Should You Buy Property On Leased Land? ...

  2. Sell Your Rental Property For A Profit
    Taxes

    Sell Your Rental Property For A Profit

  3. Simple Ways To Invest In Real Estate
    Home & Auto

    Simple Ways To Invest In Real Estate

  4. Uncover The Next Real Estate Hot Spot
    Home & Auto

    Uncover The Next Real Estate Hot Spot

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center