Learning how to flip houses with no money is one of the biggest sticking points most people experience when trying to learn how to flip houses.
They just donâ€™t know whether to get the money first or get the deals first.
So which one do you do first?
There is really no right or wrong answer to this. The bottom line is that in order to learn how to flip houses with no money, you need to be working both sides of the house flipping equation all the time.
If you get a house flip deal first but have no money then you need to be confident that you'll find the money by using "the Secret" to house flipping success.
Of course, if you get the money first and have no deals then you need to find a deal real quick.
Although it may be hard to visualize...the bottom line is this: money is everywhereÂ - you just need to go get it!
How to Flip Houses With No Money...The Magic of OPM
Flipping houses with no money involves using other people's money - called "OPM" - to finance your deals. OPM can be found using many sources, many of which are very obvious. Below is a list of potential sources of money to fund your next house flip with no money of your own:
1. Get Partners to Flip Houses With No Money
When you are first starting flipping houses, an easy way to get some "house flip momentum" going is to partner up with someone. This partner could be a business partner, a friend, a co-worker, a relative, a business owner or another house flipping or real estate investor.
Although it may be tempting to form a formalized partnership with someone when first starting to flip houses, I strongly discourage this. It's far better to do it on a deal by deal basis and not as a formalized partner in the business.Â When you are first starting house flipping, you'll soon find that although there are a lot of great house flipping partnerships, there are also a lot of bad ones as well and you don't want to be tied to any one in particular.
You can simply ask the partner for the money to finance the house flip. Explain to your partner how you'll do everything else but the two of you will split the profits 50-50. your partner reaps the rewards while only contributing the cash and not the effort. This kind of house flipping arrangement ends up being a good deal for the both of you.
2. Using Hard Money Lenders to Flip Houses With No Money
These kinds of loans can be especially useful if the flip can be done in a short period of time. This is because you can typically expect to pay anywhere between 14 and 20 % with four to even six points on top of that. Some house flippers use them all the time, but in my opinion, there are better place to get your money and at better rates.
The cost of hard money lenders may be a bit restrictive for the starting house flipper, but depending on the situation, they may be useful - but there are risks to be aware of.
As an example on a $100,000 loan at 18%, if it took you 6 months to repay, your interest would be $9,000 and $5,000 for 5 points. All tolled, that's over $14,000 in costs!
Chances are very good that if you hold onto the money for longer than 6 months, then you may just kiss your profits good-bye.
3. How to Flip Houses With No Money Using Private Money Lenders
Private money lenders are just regular people with disposable money looking to invest it. In many cases, they may not be actively looking to invest, they just have it sitting around and may be open to investing with you if they are asked.
They could have money in the bank, IRAs, 401Ks, mutual funds or even an abundance of equity in their home. This isÂ money that can easily be used for real estate investing.
Private money lenders are much preferable to hard money lenders, largely due to the fact that you, the house flipper maintains control. You set the rules and rates...not the lender.
The real key to success is to offer them a high enough interest rate on their money to entice them to do it with you in the first place. if you can find out what they are getting for a return on some of their other investments, then you can offer something more lucrative that both ensures you stay profitable but is high enough to entice them to invest.
4. Traditional Banking: Another Way to Flip Houses with No Money
If you have a good relationship with your bank, this is another way to flip houses with no money. Traditional bank loans are more challenging at times, but if you have a solid business plan and fully explain to them what you are doing, many new house flippers have found great success here. Although this house flipping fiance method may not happen right away, it may eventually and could be another source for getting money to fund your deals.
The point is that when you are learning how to flip houses with no money, think abundance. There are plenty of people with money, you just have to find them.
If you can't think of anyone off the top of your head, then start thinking about the people you deal with every day.
- Talk to you Doctor or Dentist.
- Talk to your attorney.
- Talk to anyone in your neighborhood who has a successful business.
- Talk to anyone who invests in the stock market.
People are always looking to get a better deal on their investments and making money flipping houses is an extremely lucrative way to do that. When you learn how to flip houses with no money using OPM, you'll never have the need to invest your own money in the future because as soon as you turn your first successful house flip, you'll find people coming out of the woodwork to start lending you money to get their own piece of the house flipping pie.