It's a trend that's picking up in Hawaii and across the nation. It's even the focus of a reality TV series called "Property Ladder" premiering on cable's TLC in the spring. There's no doubt that folks are just flipping over "flipping."

"Flipping is simply buying a property and quickly reselling it," says William Bronchick, a Colorado-based attorney and author of "Flipping Properties." "There are several varieties including purchasing a contract and assigning it to someone else before closing, or buying to rehab and flip."

Many focus on the latter – buying homes to fix up and resell for profit. But it's not as easy as it sounds. Would-be flippers should proceed with caution.

"Make sure the home is in good structural shape," says Abe Lee, a Hawaii Realtor who has been flipping homes for nearly 25 years. "If it's too far gone, it's not worth it since it's like buying vacant land." Lee stresses that location is still everything, and "it's important to know the market so you don't overpay."

Lee adds that the real estate boom hitting the Islands has made purchase prices higher, but the sales price post-rehab is higher too, so it evens out.

"The bad thing is to buy high, rehab and then sell in a down market and lose money," he explains. "If a buyer is watching the market trends, he should be able to avoid the downturn if he can sell the property quickly."

And "quickly" is the key. That's where the term "flip" came from.

When flipping, Lee recommends sticking to the basics.

"Cosmetics are important & painting both inside and out, roof, carpets, appliances and flooring. It's not necessary to knock down walls," he says.

Most flippers keep a close eye on the bottom line, says Lee.

"You don't need to use expensive materials, but use good quality. It's also very important to make your home attractive to buyers. A house is more attractive to buyers when they know they don't have to fix it up. There are so many cases of husbands promising their wives that they'll fix it up and it never gets done," Lee chuckles.

Another local Realtor has a slightly different approach to flipping. Harris Zane, of Urban Real Estate Co., who has flipped five homes in the past six years, says he considers himself somewhat of an "accidental flipper." In fact, one might question whether he is a flipper at all since he doesn't necessarily rehab and sell quickly.

"I never plan to move – ever," says Zane. "When I find a property, I always plan to live there forever." But Zane, who recently sold his Alewa Heights residence, is now ready to move into a house he bought in Wahiawa. He describes all the homes he purchases as structurally sound, but in need of work. He refers to his rehab efforts as "maximizing a home's potential." In doing so, Zane marches to the beat of his own drum.

"I'm doing it for me," he explains.

"Everything is real – no vinyl, very minimal tile. If you do it for yourself with the intention you're not ever going to leave, there's no disappointment if you can't sell it. But I've never had a problem finding a buyer."

Zane prides himself on not building for the masses. He purchased his most recent project high atop Alewa Heights two years ago for $475,000, and put in $200,000 in remodeling.

He replaced oak and Formica with mango wood and granite. Natural slate took the place of vinyl. Light was brought in through dimmers and modern/techno lighting to complement the home's Japanese design. He knocked down some walls, built an addition and turned a three-bedroom house into a one-bedroom residence. But Zane insists he did keep the next buyer in mind."

"I think it's important to give options to the next owner. I turned this house into a one-bedroom house with an open floor plan, but if someone wanted to, they could easily turn it back into a three-bedroom house."

He recently sold it for $1.2 million, making a $400,000 profit. It really is a profit, too. Internal Revenue Code 121 allows flippers like Zane to enjoy their profits tax free if certain conditions are met. If a home is your principal residence for at least two years before resale, you can claim up to $250,000 in tax-free sales profits, and up to $500,000 for a married couple filing jointly.

Zane once vowed he would never sell the home. "With a view from Dowsett Highlands to Ewa, it's like sitting on top of the world," he says. He put it on the market just to see how much it would fetch and was pleasantly surprised.

Profit is the goal, of course, but Zane says he gets something more from his flipping endeavors – simple satisfaction. His most positive flipping experience happened at an open house for a home he fixed up a few years ago.

"The first couple to walk through the door was there for over an hour," he reflects. "They made an offer that night and bought it. It was very rewarding because we truly maximized the home and it was like creating a work of art."

But flipping brings challenges, too. Sometimes costly ones. Both Zane and Lee caution the inexperienced.

"I think flipping is best left for people who are dedicated to watching market trends," says Zane.

Lee, meanwhile, stresses that knowing the right people is important and potential flippers really need to do their homework.

"Make sure you have an inspector check the structure and integrity of the house. Unexpected cost overruns can kill you, and picking your skilled people is critical to a project's success," he says. "I've had contractors run away with my money, and as careful as you are, sometimes you get ripped."

Zane, who has been in the real estate business since 1992, says his property management background prepared him well for flipping.

"Property management is not just collecting rent," he explains. "It's building value for your owners, and part of this is making improvements that create value." He suggests property owners who want to start flipping don't need to look far for a project – it's as close as their own four walls.

"Do your own home. If you don't really have the finances, or don't want to take a risky leap, do your own place and wait until the time is right to sell," says Zane.

And when it comes to flipping, the experts seem to agree with that – timing is everything.    HS