What is "flipping"? Flipping is when an investor buys a piece of property and sells it a short time later for a profit. In real estate, anytime you buy a piece of property and then sell it, whether soon after or years after, is flipping. However, it is a term more commonly used in wholesaling, which is really wonderful, hassle-free business in real estate where you don't actually have to buy the property, but you can have control over it and sell it to someone else for a profit.

In wholesaling, when you have a property under contract, you will only need to find an interested buyer who will then finance the property. You do not have to acquire the house for you to sell it, you can simply put the property under contract, and you will have control over it. Once you find a buyer, the buyer can close with you so you will have the money to close on the contract with the seller. It is the buyer who will provide the funding for the property, and you will get your profit from your selling price to the buyer. That is flipping.

It is a perfectly normal real estate operation; however, there are investors out there who perform illegal practices while "flipping" properties. When investors try to mislead a buyer about the property's condition or when the deal is not as it seems on the contract, which is fraud.

Rigging or falsifying documents to get the buyer approved is illegal.

Some overeager investors may try to adjust some facts on the documents to get the unqualified low income buyers loans approved. That is lenders fraud and is illegal. These practices are just some of the fraudulent acts that some investors do just to get that contract closed. Although flipping is entirely legal, some investors do things illegally when they're flipping.