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‘Flipping’ an option in housing slump

“Flipping” real estate properties has been a growing trend in recent years, a trend that Teresa McLeod teaches.

Flipping real estate involves buying properties at a low price and selling it at a profit.

“This business take patience, takes loyalty, takes creativity; it does not necessarily take experience,” McLeod said. But it does take research.

According to McLeod, there are three ways to do this: as a scout or “bird dog,” who finds properties and alerts other realtors or investors; as a wholesaler, who buys property and immediately sells it, and as a retailer, who buys a property, renovates and sells it.

Any of these methods earns the investor money; the difference is in how much. Bird dogs are paid finders’ fees. Wholesalers and retailers make higher profit on the houses they buy.

“Flipping is basically where you buy a house at either a low amount of money and sell it for a low amount of money, and that is called a wholesaler, where you don’t ever move in or renovate, you just buy it, clean it up and turn around to resell it immediately,” McLeod said.

“And you make modest amounts of money that way,” she added.

“The retailer is the person who actually renovates it, whether you buy it and decide to retail it yourself or whether you buy it and and clean it, renovate it, and turn around and put it with a realtor or if you sell it for sell by owner or if you decide to become a landlord and keep it as a rental property,” she said.

“And they make the most money,” she added. McLeod is a retailer, as well as a trained paralegal and realtor. She is also a licensed affiliate broker, a licensed appraiser intern, a icesnsed contractor in Tennessee and an investment flipper. McLeod also has served as a certified disaster inspector and fraud investigator for the Federal Emergency Management Agency Disaster Housing Project.

“The government frowns on the word ‘flipping.’ They have strict, strict guidelines and they watch you very closely,” McLeod said.

McLeod does not see the recent economic slump as a problem to real estate. “A few years ago, it was very hard to find the properties because there were so many people in the business. You could get a loan but you couldn’t find the properties,” she said.

“And now it has flipped: you can find the houses because there are tons of foreclosures ... I’m teaching [my students] that in a recession, you don’t sell your house. You renovate it and put a renter in it so that you can start generating income. You don’t automatically have to flip it, because [for] all these people that are losing houses, you’re providing a service to them to get them into a house,” she said.

McLeod’s most recent class was taught at Pellissippi State Technical Community College on Thursday, March 13. She also periodically offers classes at The University of Tennessee and Walters State Community College in Morristown.


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