Found: Flippers in Sacramento

It seems like idiocy for anyone to use the word "flipping" in today's market. Or does it?

Unfortunately, the word "flipping" in my opinion has got a pretty bad rap lately. It went from being a bad word which meant buying and selling property with no attempts at rehabbing it while profiting from the market upswing to lately adding sweat equity and then selling the home for maybe a bigger profit.

However, flipping is essentially a speculative activity. Which doesn't mean that there is no research and work involved. It simply means that it is one of the more riskier investments you will undertake.

Here are five things to keep in mind when considering flipping a home:

1. Math is always important. Here's a handy calculator for your improvements. Always over-calculate by about 25% - that way, all your surprises will be pleasant.

2. Know the neighborhood. Know the numbers - bedrooms, baths, what homes sell for, what square footage is common, even what homes rent for.

3. Stay with the neighborhood - don't overbuild. Understand that the home value is determined by the value of the neighborhood. Overbuilding won't necessarily get you the best return on your investment dollars.

4. Maintain adequate reserves. Can you hold on to the house if the market goes down further? Can you rent it out to cover your mortgage? This is thinking that has to be done before you buy the home.

5. Remember the old adage, "Be greedy when others are scared and scared when others are greedy." There's a reason it is a cliche.

Happy House Hunting!