The real estate industry is a haven for trends. The savviest investors like to run in front of the competition, leveraging new technologies early on — and micro-flipping is the latest bandwagon.

Bradley Ransome says that contrary to popular belief, micro-flipping isn’t a fix-and-flip method. Instead, it’s a wholesaling strategy utilizing data and technology to find undervalued buildings. Upon identifying the properties, investors buy them, turn around, and sell them immediately. But why call it micro-flipping? This references the speed of the transactions.

Essentially, micro-flipping is to real estate what day-trading is to the stock market.

A Volume-Over-Profit Methodology

Unlike traditional house flipping, micro real estate investing holds volume in higher regard than profit. So, investors only make a few thousand dollars from each transaction.

However, the buy-sell speed is so fast that it allows them to make many deals in a relatively short time. Investors aren’t typically making any repairs or renovations when micro-flipping. Instead, they’re selling the properties on instantly for a small profit.

The Legality of Micro-Flipping

Micro-flipping real estate is legal in all states except Illinois. And even then, Illinois law hasn’t banned the pursuit; the state’s regulations are just making it hard to flip contracts.

Experts always recommend new real estate investors seek advice from an attorney before hopping aboard the micro-flipping bandwagon. That way, they’ll ensure they follow local regulations.

Isn’t This Process the Same as Wholesaling

Real estate wholesaling and micro-flipping have a lot in common but aren’t the same.

Firstly, wholesaling offers a higher profit. The catch, however, is that it requires more active engagement from the investor. Micro-flipping doesn’t require the same attention. But investors must turn higher volumes due to the lower profit margins.

Secondly, wholesalers seek undervalued and distressed properties requiring a lot of renovations before selling. Micro-flippers, on the other hand, look for undervalued properties that need next to no work.

Micro-Flipping vs. Conventional Flipping

Traditional house flippers purchase houses, selling them only after making improvements. Usually, they conduct major renovations that could last months and require a substantial amount of capital.

The profit margin here depends on the success of the renovations, whether price appreciation has happened in the area, and whether an extension or meaningful addition was conducted.

It can be exceptionally profitable. But it comes with considerable risk.

In contrast, micro-flipping real estate is low risk, provided the investor knows the market and has buyers lined up. Plus, the necessary capital investment is low since micro-flippers don’t perform home improvements.

Instead, the key components are careful research and analysis.

Profitability

Making money by micro-flipping requires volume. With just a few hours of work, transactions can be signed, sealed, and paid for.

However, the amount of money investors make depends on various factors. On average, they make a few thousand dollars per transaction. So, the profitability of a micro-flipping business is directly related to how many deals the investor conducts every month.

The Bottom Line

Micro-flipping is real estate’s latest trend, and it appears it’s here to stay. Investors with a keen eye for data combing and identifying promising houses can make substantial amounts with this methodology.