Doing Some Flips

Physician's Money Digest, February29 2004, Volume 11, Issue 4

"Flipping" real estate once referredonly to a legitimate buyer who turned aproperty around quickly and pocketeda profit in the process. The term hasearned an uglier meaning lately, however,and now applies almost exclusively towhat the Federal Housing Administration(FHA; www.hud.gov) calls predatoryflipping. The FHA has issued new regulationsto thwart real estate flippers,who generally buy rundown properties,which they then sell at inflated priceswith the help of crooked appraisers.Under the new regulations, the FHA willno longer provide mortgage insurancefor houses sold within 90 days of purchase.If flippers can't secure mortgagemoney, the deal becomes a lot less attractive.Also, the FHA wants a new appraisalon any properties resold within91 days to 6 months.