Fix and Flip
Fix and flip is a real estate term to describe the activity of buying a house, rehabbing it, and selling it for a profit.
Let's look at an example:
House A was in poor condition and available for sale on OfferMarket for significantly below it's after repair value (ARV). Joe the flipper bought the house for $100,000 because he knew that if he invested an additional $100,000 into repairs, he would be able to sell it for $300,000 based on comparable homes ("comps") in the neighborhood. Because he sold his completed fix and flip on OfferMarket, he avoided real estate agent commissions and received a competitive price because he made buyers compete with an auction listing. Joe made $100,000 in gross profit and over $50,000 in profit net of short term capital gains tax, closing costs and interested owed to his private lender.
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