Flopping houses is all about fixing prices, and real estate agents are the primary cogs in the machine. When a short-sale or foreclosure is listed on the market, a felonious agent will value the house far below its actual market price. They’ll convince the lender that the house will never sell for what it’s actually worth, and once the lender agrees to list the house at the lowered price, the agent will recruit a “straw buyer” to make an offer. The agent will “hide” every other offer on the home so that the straw buyer ends up taking the title. Then the straw buyer and the agent will turn around and sell the home for what it’s actually worth, turning a profit that can exceed $80,000 for a flopped luxury property.

As you can imagine, this is illegal on so many levels. First of all, a buyer and an agent must disclose any relationship they have to the seller under federal law. Second, by withholding bid information from the seller, an agent is committing fraud. Finally, it’s illegal for a buyer to resell a home purchased under the Home Affordable Foreclosure Alternatives Program within 90 days of closing.

Despite all these laws – which exist to prevent flopping – the scheme is disturbingly easy to pull off. Lenders are so waterlogged with distressed properties that they don’t have the time to investigate every short-sale as thoroughly as they should. According to research firm CoreLogic, one in every 52 short sales last year was a flop, and Freddie Mac reported that the scheme was the focus of 50% of its investigations.

While we support cunning real estate investors, we will never condone breaking the law to make a buck. If anyone you know has been raking in an exorbitant amount of cash from flipping houses, there’s a good chance that a few of those properties were flopped. You can report any flopping in your area to Fannie Mae’s investigative team by calling 1-800-7-FANNIE or emailing mortgagefraud_tips@fanniemae.com.

Not only are floppers committing a crime, they’re making the market more difficult for everyone. If we work together to report illegal short sales as soon as we see them, we can put a stop to this practice once and for all.

1)    Doomsday Shelters. One of the most lucrative underground real estate markets is literally under the ground. Fallout shelters, originally designed to protect families from nuclear radiation in the 1940’s, have gained a small-but-steady following of survivalist homeowners in the past few years. These WWIII-proof bunkers are so popular that even a small one can add $40,000 to a house’s property value.

2)    Retro Houses. If you don’t think a 60-year-old house is a good real estate investment, you’ve clearly never met a retro renovator. These architecture enthusiasts are wild about 50′s-style houses, and they’ll pay top dollar for an original home in good condition. If you’ve got a knack for flipping houses, you might want to consider going retro for your next project.

3)    Gay Retirement Communities. Baby boomers who are getting ready to enjoy retirement face a problem if they’re gay: LBGTA-friendly retirement communities are hard to find. But retirement communities in general are booming, and a smart real estate investor can make good money by converting weathered clusters of condos into progressive-minded playgrounds.

4)    Haunted Houses. America has had a love affair with haunted houses ever since Edgar Allen Poe published “The Fall of The House of Usher.” If you can find a home with a paranormal past – especially one that was the scene of a grisly crime – you could get a king’s ransom for it from a buyer with eccentric tastes. We don’t know why anyone would want to settle down in a haunted house, but if they’re willing to pay for it, then we’re not complaining.

It takes different strokes for different folks, especially when you’re talking about buying a house. Although making a real estate investment in some of these markets could be construed as being a little off the wall, you could make a healthy profit if you’re willing to step out of your comfort zone and get a little experimental. You’ll also have stories to tell.

• Mitt Romney. Romney stuck to his guns in last Thursday’s Jacksonville GOP debate. As president, he would repeal the Dodd-Frank Act, which Republicans believe is preventing the housing market from realigning itself naturally. “Let [the foreclosure crisis] run its course and hit the bottom,” he said. “Allow investors to buy homes, put renters in them, fix the homes up and let it turn around and come back up.” Romney also said that he wouldn’t be opposed to working with banks to renegotiate the mortgages of homeowners in default.
• Newt Gingrich. Newt’s proposal for fixing the housing crisis is simple: he wants to colonize the moon. Yes, we’re serious. The former speaker of the House first advocated repealing the Dodd-Frank Act. “If they would repeal it tomorrow morning,” he said, “you would have a better housing market the next day.” He then advocated lunar colonization as a way to ease the housing crisis while jump-starting the stagnant economy. Former senator and astronaut John Glenn called Gingrich’s space case “optimistic at best.”
• Ron Paul. Although Paul only has 12% of the vote, he’s starting to gain serious support within the GOP as the only candidate with a definite plan to cut government spending. He’s proposing a $1 trillion cut to the budget, including giving the axe to the Department of Housing and Urban Development. He also supports repealing the Dodd-Frank Act.

What exactly the GOP contenders would do about the housing crisis isn’t yet fully clear. We’re waiting, but at least they’re beginning to talk about it. Look for the housing crisis to stay in the spotlight throughout the Nevada and Maine primaries, and remember to stop back here for even more tips, tricks and news from the world of real estate.

Full of regal maple trees and rows of colonial, red-brick buildings, Trumbull is a haven for anyone who wants to escape the hustle and bustle of the big city. Its parks are enchanting, its streets are inviting and the air is amazingly free of the pretense that you normally find in New York’s bedroom communities. Maybe that’s why it was named the 7th best place for families by Family Circle and the 15th best place to retire by Money magazine.

The town’s 36,000 residents love Trumbull for the way it epitomizes community life in America, from the bicentennial fountain in the town square to high school football in the fall. And they’re good at it too, this community life thing. Trumbull isn’t the only town that has a nature conservatory and a school marching band, but Trumbull’s nature conservatory has been nationally recognized and its school marching band has been voted the best in Connecticut for the last 10 years. Even the apple pie from Trumbull’s weekly farmers market tastes better than in other towns, they say.

As both a contemporary family town and a popular summer retreat for wealthy New Yorkers, Trumbull covers the spread when it comes to Connecticut real estate. You can find a reasonably large four-bedroom home in Trumbull for about $250,000 – and a very unreasonably large one for around $600,000. It all depends on whether you want to be closer to the high-tech recreation center or the soft, rolling plains of Fairfield County.

If you’re buying a house in Connecticut, you can’t do any better than Trumbull. It does small-town America better than most Connecticut towns, and the way things are going, it looks like Trumbull will hang onto the title for quite a while.

Until the government figures out what to do with all those foreclosures, far too many Americans will be underwater on their mortgages. Money will be squandered. Jobs will be lost. We’ll be helpless to change any of it.

However, there’s a silver lining to every cloud, and in this case that lining comes in the form of small cities. Previously “obscure” metropolitan areas like Pittsburgh and Boston are all the rage right now, so if you’re lucky enough to own property in one of these markets, you should be able to find a buyer within a reasonable amount of time. Suburbs should also remain stable enough throughout 2013 as well, but we can’t make any promises.

The biggest problem a real estate investor will face next year will be trying to sell properties in a small town or in a slumping city like Cleveland. The average market value is already in the pits in these areas, and it definitely won’t get any better in 2013. Our best advice for any investor with these sorts of properties is to get comfortable. Consider renting out vacant houses to offset costs. If you find a buyer, sell.

We’ll be the first to admit that things aren’t looking good for anyone in the business of flipping houses, but that’s no reason to panic. The market will recover eventually – it always has. Until then, just do your best to grin and bear it, knowing that we’re right here with you.

It all comes down to how long you plan on living in the house. If your job requires you to move every year, you should obviously rent. If you’re planning on raising a family in the house you’re currently living in, you should buy. However, if you’re one of the 72% of Americans that plan on buying a house eventually, then you need to do some math.
Using this handy New York Times calculator, you can see that paying $1,000 per month to rent a home that is worth $172,000 is cheaper than paying a mortgage up until the fifth year of residence. At that point, a mortgage with a 5.5% interest rate and a 20% principal becomes exponentially more affordable than continuing to rent the house.

Since there are so many variables to consider with this type of calculation, there’s no rule of thumb that we can recommend following. What’s important to remember is that there will always be a point at which renting becomes more expensive than paying off a mortgage, even if you’re planning to ultimately move into a different house than the one you’re renting. Play around with the figures to find when your turning point will be. When you get your answer, you should decide whether you intend to live in the house for that long or not.

There’s no denying that more families are choosing to rent in this economy. They want to stay upwardly mobile until they find a job that’s secure enough and enjoyable enough to settle down. However, with mortgage interest rates at record lows, you could save more than $100,000 by taking the plunge now rather than 10 years down the line. In the end, it’s up to you to crunch the numbers, weigh your options and make the call.

Carmel Valley isn’t dotted with green hills and vineyards like its NorCal namesake, but what it lacks in landscape it more than makes up for in luxury. Every road, walkway and hedge has been carefully sculpted to provide a rich sensory experience that emphasizes open spaces and breathtaking views of the Pacific Ocean. Though the houses are among the largest in San Diego, their subtle architectural details and their proximity to one another combine to create a sense of warmth and neighborliness that you won’t find in other master-developed neighborhoods.

Residents of Carmel Valley take comfort in knowing that their community is served by the Del Mar Union School District, which is considered among the best in San Diego. There are four elementary schools located in the neighborhood, as well as two middle schools, a public high school and three private academies. On top of that, the University of California at San Diego is just a short drive away.

From four-diamond golf courses to gourmet restaurants, you’ll never run out of things to do in Carmel Valley. The neighborhood has access to two different public beaches as well as multiple open-space parks and nature reserves. It even shares a border with Torrey Pines State Reserve, home to one of the last two remaining stands of the endangered Torrey Pine.

All this luxury comes at a price, though. A modestly sized four-bedroom home in Carmel Valley sells for around $500,000 on a good day. A not-so-modestly sized house with the same number of bedrooms can cost up to $2 million. While this puts the community out of reach for many buyers, it’s definitely worth the investment if you can afford it. After all, San Diego real estate this good doesn’t come along every day.

If you want to live the California dream in the lap of luxury, give Carmel Valley a look. With so much to offer in such a great location, it’s the neighborhood that everyone buying a house in San Diego is talking about.

For the smart real estate investor, that means it’s time to get back up on the horse. But listen – a few things have changed since wholesaling real estate was last in style. Renting a home is now more popular than owning one, which means that the days of rehabbing and reselling properties to end-users are over. Your biggest customers now will be mid- to large-scale owners who want to develop or rent out entire portions of neighborhoods. Simply put, the game is more focused on location than ever before.

If you’re a small-time real estate investor, you’ll be limited in terms of the number of moves you can make. Since the Fed has 250,000 foreclosures that it needs to unload, it plans to sell them way below market value – but in bundles of 10 or more.

Maybe you’re a great negotiator and you manage to pick up a set of $100,000 homes for $60,000 each. Great, but you’re still looking at a loan that exceeds half a million dollars. On top of that, most real estate companies and developers will prefer to do renovations and demolitions themselves – so don’t expect to increase your profit margins by slapping a coat of paint on your empty houses.

To make a profit wholesaling real estate in the current market, you’ll need a sharp eye and a lot of patience. If you live in an emerging market like Rochester or San Diego, find the foreclosures with the most potential and stake your claim before anyone else gets there. If you’re stuck out in the country, go to auctions and see where the major players are buying land. Buy a small patch of houses adjacent to a major forthcoming development and wait until the area catches on and grows. In the meantime, you can rent the properties out to defer the cost of your mortgage.

The game has changed. A bundle of houses is composed of individual properties, yes, but that bundle is also a section of the urban landscape, and that’s what’s important today. It’s a difficult switch to make. It takes time to begin to see the opportunities. But if you can change the way you think, you’ll be one wealthy real estate investor.

1)    A Wal-Mart faucet has no place in a designer sink. If you plan on flipping luxury properties, be prepared to pull out all the stops. That means investing in high-end appliances, top-shelf paint, boutique lights and the best of everything else. To keep the interior of the home consistent, you might have to add six figures to your renovation budget. It’s going to hurt to spend all that money, but on the bright side, you’ll recoup the costs at closing.

2)    To furnish or not to furnish. Don’t be surprised if the previous owners left a set of furniture behind when they moved. Rich people do that sometimes. However, don’t use those leftover dining tables and couches in the home unless you’re willing to fully furnish it. Luxury buyers expect their new houses to be fully furnished or completely empty. If you don’t have the budget to furnish the entire real estate investment, just strip it out and sell what you can at auction.

3)    Forget about fixer-uppers. When you’re buying a house for the “one percenters,” you should avoid any properties marked “as is.” Water damage or structural issues aren’t going to fly with the rich, and the repair bills will be so large that you’ll eat up your entire budget just trying to pass inspection. When you find a very expensive home in that sort of condition – even if it’s in a great location – just walk away.

Flipping houses for the rich and famous isn’t easy. Something about putting top-end appliances into a home you’ll never be able to afford for yourself just eats at the soul. But this year, if you’re in a position to give it a shot, flipping these homes can be a worthwhile pursuit. If you can find a way to handle the high overhead and the increased workload, you’ll be able to turn out property after luxury property for a very healthy income this year.

Strategic default used to be portrayed as something deadbeat homeowners did when they couldn’t keep up with the mortgage. That changed in 2009, when the Wall Street journal ran a piece on a couple who cut their monthly living expenses from $4,000 to $2,000 by defaulting on their home and renting a new one. As the real estate market continued to slide, homeowners around the country – many of whom had never missed a loan payment in their lives – started to seriously weigh their options. According to “Underwater Home” author Brent White, right now “a large number of Americans who are underwater on their mortgages would be better off financially if they walked away from their homes.”

Strategic default works for a few different reasons. Many people who are thinking about selling are close to retirement and want to downsize anyway. Since they won’t apply for a home loan ever again, they can stand to take the hit of a foreclosure on their credit score. People might also choose to walk away if they live in a state like California, where lenders are allowed to foreclose but are not allowed to sue for the balance of the mortgage. But the biggest reason is this: banks simply don’t want to deal with the paperwork. They’re so backed up thanks to the robo-signing scandal that they’re willing to accept a loss on a short sale to save them the effort of pursuing your debt.

If you think that a strategic default would benefit you, research your local real estate laws or get in touch with a professional defaulting agency today. After all, if you’re drowning in your mortgage, starting a new life could be as easy as walking away.