Economic uncertainties - combined with banks keeping a tighter grip on credit - might lead a first-time real estate investor to shy away from buying a fixer-upper for a low price and reselling high, doing what's commonly known as "flipping."

But some experts say this dark hour may be the best time for such a venture.

Carole Moore of Bankrate.com recently reported - based upon data from RealtyTrac - that as the foreclosure rate reached its highest level in 50 years in 2007 and has since risen to record numbers in the third quarter of 2008, real estate investors are finding bargains everywhere, particularly in formerly hot housing markets.

Moore's report indicated the rules have changed since the halcyon days of the housing boom which saw the start to the flipping craze. The fundamentals, according to experts, are:

• Stick with familiar territory. Find the bargains in neighborhoods where the investor would like to live. Also, note areas undergoing urban renewal present good investment opportunities.

• Check your capital. In the recent past, many flippers found themselves in trouble because they had not calculated correctly the amount of money it would take to finish a flip and market it. Investors should figure out how much money they'll require up front, not just the purchase price. Carrying costs in the way of house payments can subtract thousands from an investor's bottom line. Interest paid at the top of the flip probably won't be earned back in the sale.

• A bank loan is a possibility, but cash remains crucial. Although it's certainly more difficult these days to obtain a loan, it still can be done. Experts advise would-be flippers looking for a loan to be prepared to plop down 25 percent and maintain 18 months of reserves in the bank.

• Cut costs creatively. Flipping in an economy that's not terribly user-friendly takes guts and creativity. Consider it a long-term investment. Revamp business practices in preparation of holding the property for several years as a rental.

"Home flippers can still find plenty of opportunities, though they're not entirely without risk," Moore concluded.

As for any stigma attached to the practice, insiders expect the changing economy has chased away the bad actors.

While the market may have reduced the number of investors looking to illegally flip homes, experienced flippers can still improve a home and turn a profit, Wendy Baldwin of the Columbus-based Baldwin Realty Group told The Daily Reporter.

"There are always people who don't know what they're doing or not doing a proper rehab, but overall I think it's a good thing when investors come in and rehab homes," she said. "It brings property values up and improves the neighborhood. Everybody wins."

Most house flippers target homes in need of repair. They purchase the properties and make the necessary improvements, then place the homes back on the market within in a reasonably short period of time.

"It is a buyer's market, so that does make it harder for a retail flip," she added.

First-time flippers can get into trouble by overlooking holding and carrying costs or can put too much work into a house, causing its price to increase too much for the area it is in, thereby making it a hard sell.

"It's a numbers game. You have to make the numbers work," Baldwin said.

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