What does microflipping mean in real estate?

Microflipping is a real estate strategy that focuses solely on buying and reselling properties for a quick profit without the renovations you’d typically see in a traditional house flip. Instead of putting time and money into repairs or upgrades, microflippers rely on rapid transactions and small price differences to make their returns.

Unlike the flips that involve tearing down walls or updating kitchens, microflipping is purely a financial play. It’s all about speed, timing, and market insight. Take a look at some of the details below to see if microflipping could be the right investment tool for you.

What is microflipping?

Microflipping is a type of short-term real estate investment in which properties are bought and resold very quickly, often within days or weeks, using mostly digital tools. Unlike traditional house flipping, which involves hands-on renovations, microflipping is handled almost entirely online. Investors use data platforms, market analytics, and property listing services to identify undervalued homes, purchase them quickly, and resell them to another buyer.

The “micro” in microflipping refers both to the speed of the turnaround and the relatively small profit margins compared to traditional flips. A microflip might yield around $5,000 – $20,000 in profit, while the average profit for a standard home flip in Q2 2024 was more than $73,000, according to property and real estate date site ATTOM. Because of its digital nature and lower profit margins, this strategy depends on volume and efficiency. The more properties turned over in a short time, the greater the potential overall return.

How microflipping works

Microflipping follows a simple, streamlined process that’s almost entirely digital. Instead of searching neighborhoods in person or making repairs, investors use technology to identify opportunities, connect with potential buyers, and complete transactions quickly. Because there’s no renovation phase, deals can move from purchase to resale in just days.

Here’s what the process typically looks like:

1. Find a property: Buyers use digital tools and market data to locate homes they can purchase below market value.
2. Line up a buyer: They identify a buyer, such as an investor or iBuyer, who may be interested in purchasing the property.
3. Close and resell: They buy the home and quickly sell it to that buyer at a profit.

A quick example:

A microflipper sees a homeowner in preforeclosure who needs to sell fast. They also find an iBuyer actively looking for properties in that neighborhood. The microflipper purchases the home for $275,000 and resells it almost immediately for $290,000, making a $15,000 profit.

What are iBuyers?

An iBuyer is an individual investor or real estate company that purchases undervalued properties, often with the intention of turning them into rentals or reselling them for a profit. Like microflippers, iBuyers focus on speed and efficiency, but they usually operate on a larger scale, using data-driven strategies to make quick purchase decisions.

One of the biggest advantages of selling to an iBuyer is the simplified sales process. They often skip the traditional steps of listing with a real estate agent, staging the home, or waiting for buyer contingencies to clear. Instead, they make fast, direct offers and handle the transaction almost entirely online. For homeowners looking to sell quickly, this can be an attractive option. For microflippers, it means iBuyers are both potential business partners and major competition in the marketplace.

Microflipping vs. wholesaling

Microflipping and wholesaling share the same core idea: Buy a property at a lower price and resell it at a higher price for profit. Both strategies avoid renovations, focusing instead on the transaction itself. However, the methods and tools used in execution are different.

Wholesaling relies heavily on building relationships with buyers and sellers, often targeting distressed properties and negotiating deals that can take weeks to close. Microflipping, on the other hand, is driven by technology and automation, using real estate data and online platforms to identify, purchase, and resell properties in a matter of days. While microflips typically have smaller profit margins, they’re faster and often involve properties in better condition.

Highlights and key differences:

How to start microflipping

Microflipping has gained momentum as a quick, lower-cost entry point into real estate investing. By focusing on fast, data-driven transactions instead of renovations, this strategy can generate returns in a fraction of the time of traditional flips. If you’re ready to explore this digital-first approach, here’s how to take your first steps.

Find buyers

Building a strong network of buyers is essential for successful microflipping. The more qualified buyers you know, the faster you can close deals. Listing properties on the MLS or posting targeted online ads can help expand your reach beyond your immediate contacts, attracting investors who are actively searching for opportunities.

Cash buyers can be especially valuable. While you might earn a slightly smaller profit, cash sales often close faster and carry less risk of the deal falling through, making them a smart choice when speed is your priority.

Get the right tools

Since microflipping happens almost entirely online, having the right digital tools is essential to finding properties quickly and managing deals effectively. Instead of driving through neighborhoods or sorting public records manually, you can use specialized software to identify opportunities, analyze property data, and connect with potential buyers.

Some popular tools for microflippers include:

• PropStream: Provides nationwide property data, including ownership history, mortgage details, and comparable sales, with powerful filters to find undervalued homes.
• FlipperForce: Offers project management tools tailored for real estate investors, helping track leads, analyze deals, and organize transactions.
• Realeflow: Combines lead generation, marketing automation, and deal analysis in one platform for faster decision-making.
• Homesnap: A mobile-friendly app that gives real-time MLS access, property history, and market trends to help identify and evaluate potential deals on the go.

Figure out your financing

Because microflipping moves quickly, it’s important to have your funding secured before you make an offer. Without financing in place, you risk losing a property to a faster buyer. Since you’ll typically be purchasing homes in good condition, often at market-rate prices, knowing exactly how you’ll cover the cost is vital.

Common funding options for microflippers include:

• Conventional loan: A standard mortgage from a bank or credit union, which may offer lower interest rates, but can take longer to process.
• Hard money loan: A short-term, asset-based loan with faster approval, ideal for quick purchases but often with higher interest rates.
• Cash: The fastest and most competitive option, allowing you to close quickly and avoid financing contingencies.

Connect with experts

Even in a digital-first strategy like microflipping, having the right people in your corner can make all the difference. Partnering with trusted professionals, such as real estate agents, REALTORS^®, iBuyers, or mortgage brokers, can help you navigate contracts, secure financing, and find qualified buyers quickly. Their expertise can shorten your learning curve and increase your chances of turning speedy, profitable deals.

Is microflipping a good investment?

Like any real estate strategy, microflipping comes with both advantages and challenges. While its speed and low labor requirements are appealing, the trade-off is smaller profits and the need to act fast in a competitive market. Here’s a closer look at the pros and cons of these quick, small flips.

Pros

• Faster payouts: Because deals can close in days or weeks, you see returns much sooner than with traditional flips.
• No renovations required: You avoid the time, cost, and risk of remodeling.
• Low labor once streamlined: After setting up your process and tools, managing microflips can be relatively hands-off compared to other investments.

Cons

• Competitive market: Finding undervalued properties before iBuyers or other investors can be challenging.
• Smaller profits: A typical microflip may yield $5,000 to $20,000, which is far less than the $73,000+ average for traditional flips.
• Buyer dependency: You’ll need to have a buyer ready quickly to keep deals moving and avoid holding costs.

The bottom line: Microflipping can be a good option for tech-savvy investors

Microflipping offers a fast-paced, digitally driven way to profit from real estate without the need for renovations. While the returns per property are smaller than traditional flips, the speed and efficiency can add up for investors who can move quickly and manage multiple deals at once. Success in this space depends on using the right tools, having financing ready, and building a reliable network of buyers. For tech-savvy investors comfortable with competition and tight timelines, microflipping can be a rewarding strategy to add to their portfolio.

If you’re interested in financing an investment property and are ready to get started on your mortgage application, you can apply online now with Rocket Mortgage^®.