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
1) The process of *legally* selling a property for a fast profit,
sometimes using little or none of your own money
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 your place.
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.