California is home to some of the hottest and most expensive real estate markets in the entire country. The prices in California tend to be higher when compared with many other states, largely because the demand for real property is high.
Recently, people who would like to buy their first homes and even apartment tenants have started to speak up about trends in real estate, and lawmakers want to take action. Limiting how many properties people buy or own at once, as well as restricting profit margins on short-term resale projects or requiring that owners hold a property for a set amount of time before selling would make flipping houses very difficult.
House flippers make money by purchasing cheaper properties, often in poor condition, and then making repairs to resell them quickly, often in less than a year. Properly staging the home and relisting it might lead to significant profit. Is it still legal for people to buy and flip real estate in California?
Yes, house flipping is legal
Currently, California does not impose restrictions on real property ownership regarding how long you have to wait to relist a property or how many properties you can purchase. You also do not need a real estate license to make the majority of your money as a house flipper. However, there are many ways in which house flipping could potentially lead to criminal charges.
One of the most common involves mortgage fraud. House flippers and other real estate investors usually pay higher interest rates because they do not occupy the properties that they purchase. Lying about whether you live in a property or other personal factors, like the value of your other assets, might lead to mortgage fraud accusations from the lender financing your transaction.
The sellers could also run afoul of the law if they cover up defects with the property and fail to disclose them to buyers in writing as they should.
Every real estate transaction comes with risk
There are many things that can go wrong when buying or selling real estate. There could be title claims that affect your ownership rights. There could be a problem with the appraisal that means your lender won’t finalize your loan. There is also always the possibility that you will make a crucial mistake when listing your property for sale or attempting to purchase a new investment property.
Getting professional help with real estate transactions will reduce the financial and legal risk you take when flipping homes.