As more Sacramento homes slip into foreclosure, scores of house "flippers" have swooped in to buy properties at rock-bottom prices and sell them for quick profits.

The most prolific players include some venerated names in the Sacramento business community, a different class of people from the horde of neophytes who tried their hand at house-flipping during the real estate boom.

This new breed of flippers started buying in earnest last year – a sign that they think prices are near their bottom.

Larry Kelley is one of those who see a big opportunity. Kelley, 66, supervised construction of the 3,500-acre Stanford Ranch subdivision in Rocklin, and now runs the McClellan Business Park.

Thomas P. Winn, 55, whose Winncrest Homes was once the region's largest home builder, also has jumped in.

"You're sad for people that have gone through this," Kelley said of the people losing their houses to foreclosure. "But the market is trying to correct itself."

Flipping is not as popular – or as damaging to the local market – as it was during the housing boom. Then, investors simultaneously rode and helped create a wave of unsustainable home prices. In hindsight, they bought at an absurdly high price and sold for an even more outrageous sum.

Today's flippers follow a more tested, but still risky, strategy: Buy low, sell high.

You can see them – or their representatives – in a huddle every weekday morning near the Sacramento County Courthouse's main entrance, where foreclosure auctions are held. Most wear earbuds attached to cell phones. Several cover their mouths with pieces of paper to hide their words as they speak with their partners on the other end of the line.

Equity is king at these auctions: The opening bid is usually based on how much the homeowner owed on the mortgage, plus any fees or penalties. The more the homeowner paid off, the greater the opportunity for a bargain. This isn't always true, because sometimes lenders discount homes below what the borrower owed.

The goal is to find a home worth at least 20 percent more than its final auction price.

Most homes don't meet that benchmark, and the auctioneer wastes words as investors wait nearby. Leave that one to the banks, their silence implies.

But if the price is right, investors pounce. They snag a fifth of foreclosures in the region, according to figures from real estate tracking firm DataQuick Information Systems.

Eighty percent of these homes will be flipped within a year. Typically, they will fetch about $30,000 – or 20 percent – more than the flipper paid.

Flippers often pay cash and buy starter or midlevel homes. They're criticized for crowding out other buyers, and their newly improved homes come with a question mark: They look great, but are the fixes superficial?

Mostly, though, flippers are helping Sacramento recover, said DataQuick analyst Andrew LePage. Banks are the alternatives to home flippers, and banks usually won't spend much time or money improving homes. In some Sacramento-area neighborhoods, lender-owned properties have turned into vacant eyesores.

A flipper, on the other hand, wants a quick buck, and is motivated to make the house look good – fast. After the home is flipped, an owner or tenant usually moves in quickly.

"There's a real estate ecosystem and these investors play an important role in it," LePage said. "In nature, you need scavengers."

It's not that easy to flip

Like many flippers, Kelley got busy in 2010. He and his son Denton invest in foreclosures through his company LDK Capital. The firm has bought about 60 properties at foreclosure auctions, mostly in Rancho Cordova, Elk Grove and Natomas.

People think flipping is an easy business, said Kelley, who has an MBA from Harvard University. Anyone can go buy a property for cheap, he said, but "making money is where it's difficult."

Flippers need a lot of cash or reliable financing to make a profit. They need to know how to fix properties themselves, or know someone who can do it at a good price. They need good instincts and a deep understanding of the market.

It's risky, and failure hurts. For instance, scores of homes bought by flippers at the tail end of the housing boom have been sitting on the market for years, losing money for their owners the whole time. The popular online blog "Sacramento Flippers in Trouble" shows dozens of estate homes that have lost more than $200,000 in value after investors bought them but could not resell.

Tom Winn oversaw construction of some of those homes – and many of the other houses that investors are now flipping. These days, he flips homes himself.

Like Kelley, Winn holds a degree from Harvard. He and his two brothers formerly operated Winncrest Homes, which merged with national home building giant Lennar Communities in 2000.

Through their company River City Investors, Winn and colleague Jason Belles have purchased 101 properties through Sacramento County foreclosure auctions since 2010, records show.

Reached by phone, Belles declined to comment. Winn did not return phone calls.

As prominent developers enter the local fray, so do a number of private equity firms, which raise money from investors.

Michael O'Connell, a Sacramento-area commercial developer, now buys distressed houses under various names, including Pacific Mortgage Servicing LP and Electronic Mortgage Servicing. He has leveraged private equity funds to buy at least 59 properties since 2010.

Klaraos Ventures, an Incline Village, Nev., company, has bought 48 Sacramento County properties through foreclosure auctions since 2010. Caymus Capital out of Sonoma has bought 27.

George Sutcliffe is the chief operating officer of Caymus. The firm started its fund to buy distressed assets a couple of years ago, he said.

The key to success is speed, especially with home prices declining again, Sutcliffe said. "If things go well we can get it back on the market very quickly – within three weeks."

While business has been good, it's getting harder to make money as increased competition is shrinking profit margins. "Word has gotten out," Sutcliffe said.

Realtors dislike flippers

Despite the glamour of reality shows like A&E network's "Flip This House," home flippers are not highly regarded by many in Sacramento. They are, after all, making money largely due to another person's misfortune.

A fairly common story in the region goes like this: Local worker makes 15 years of payments and builds equity on home; gets laid off; bank starts foreclosure; flipper takes advantage of the former homeowner's equity and buys home for cheap at auction; sells home for profit.

Flippers also have a bad reputation with some area Realtors. "If there are similar homes on the market that are not flipped, I'll tell clients to pass on the flipped one," said Elizabeth Weintraub, a veteran broker with Lyon Real Estate.

Home flippers often make cosmetic improvements to a home while ignoring hard-to-notice problems like a rotten subfloor, Weintraub said. "They are doing the absolute least they can to maximize profit potential."

Several investors countered that they regularly spend tens of thousands of dollars on a home – fixing drywall, painting, carpeting and installing new cabinets. "It looks simple from the surface, but it takes work," said Sutcliffe, the Caymus official.

Ultimately, though, the best case flippers can make for themselves is to ask local residents to consider what happens if they disappear.

"It's better than letting them sit vacant," Kelley said.

"I wouldn't be doing this if we couldn't make money," he added, but, in contrast to some banks, "we're not letting neighborhoods go to wreck and ruin."

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