Flipping Houses is like Being Gay
In the real estate investment industry, the term "flipping houses" is similar to the way "gay" was used in the
50s. People are conflicted about the meaning.
real estate investment, real estate investing, investing in real estate
In the 21st century, everyone knows the word "gay" refers to people that are homosexual, but back in the
1950s, the meaning was contested. The alternate definition was "full of joy and mirth."
Can you imagine the confusion? Tell one group of people that you're "gay" and they'll assume you're happy.
Tell another group and they'll reach for a cross and a can of gasoline.
Right now, "flipping houses" creates the same effect. It has two definitions:
1) The process of *legally* selling a property for a fast profit, sometimes using little or none of your own
2) The process of *illegally* selling property for an artificially inflated value, often involving a group of
criminal appraisers, loan officers, and investors
Do you see the similarity with "gay?" One definition is upbeat and accepted, while the other is (currently)
unacceptable and downright scary. The majority of the world understands "flipping" as an illegal activity,
where a small minority are trying to redefine it as a legitimate real estate investment strategy.
The reason: good old Uncle Sam. When the government talks about flipping, they use the second definition.
According to the Department of Housing and Urban Development, flipping occurs when:
<i>A recently acquired property is resold for a considerable profit with an artificially inflated value</i>
Being closely related to the government, attorneys, accountants, and the press are hanging on to that
definition. So, the next time you visit them, don't be surprised if they "flip out" (pun intended) at your
The exact opposite is true with real estate investors. You can buy a house and then "flip" it to another
investor for a small but fast profit, allowing you to reinvest your money and repeat the process. You can
also assign contracts for a fee (another form of flipping), allowing another buyer to close on the property in
Which definition will win? If "flipping houses" follows the etymology of "gay," the more acceptable
definition will come out ahead. Who knows? Maybe they'll make a movie about it.
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