If you are thinking of investing in property, or have studied the real estate investment market, you have probably come across the term "flipping." What is flipping? Flipping was once a lucrative way to make money in the real estate market in many parts of the country. In some cases, the amount of investors purchasing property with the intent to "flip" them at the closing, caused a surplus in new construction that eventually led to more supply than demand, hence causing the real estate market in those areas to decline.

Flipping is still a way to make money in real estate investing, but you have to know the market where you are planning to buy. Much of the United States is now experiencing a depressed real estate market. In many areas, investors drove the price of homes up so much, only to find that they didn't have enough buyers to purchase the finished product, causing an excess in new home construction and, eventually, the decline of the market in those areas.

In an area where the home prices are rapidly appreciating in value, flipping is still popular. What is flipping? It entails purchasing a home, holding onto it for several months and then "flipping" it by selling it to a buyer after it has gone up in value considerably. Flipping often takes place with new construction properties. The investor purchases a new construction home from a builder, waits for it to be completed and then sells it to another buyer. In many areas, new construction homes gain considerable value from the time the builder begins building the home to the time it is completed. New construction flipping is the most popular way to invest in real estate as an investor only has to put down a small percentage to have the home built. At the closing, the investor turns the property over to another buyer, never actually taking possession of the home. The new buyer buys the home from the investor at the same time the investor buys the house from the builder. The investor never comes up with any more money than what was required for the down payment.

Those interested in real estate investment often ask themselves "what is flipping?" Hopefully, this will give you a better understanding of the term and exactly how it works.