Partnerships and Flipping Houses
One thing that you'll notice right away in this business is that every deal is different. The way you work your first house flip deal will most likely be very different from how you work your second house flip deal and so on.
For me this helps to keep this business exciting. For you, deal making flexibility is important because it is possible (as we talk about a lot here on the blog) to flip houses without using your own money.
Instead of using your own money to fund a deal, you use other people's money - which we refer to as OPM. Why would you use someone else's money you ask? Well the most likely scenario is that you don't have enough money of your own to fund a house flip deal, which is of course A-OK.
Often times the best house flip deals appear and disappear very quickly. If you have identified a good deal on a property using ARV, MOA and the 70% Rule, then the next step to take is action.
Flipping Houses With No Money | Partnering on a deal
When you do not have any money of your own I urge you to strongly consider a partnership. Partnering on a deal is a great way to get into a deal without using any of your own money.
So who is a potential house flip partner?
Well, your partner is going to have to have some money. Work your personal network and think about the people in your life who have some money and who would be interested in earning more.
Examples of potential partners could be:
- Your dentist
- Your attorney
- Your doctor
- Your accountant
- A friend who runs a successful business
The list of potential partners goes on and on...
Now in most instances a potential partner is not going to simply hand over a large sum of money. It is important for you to be transparent and share the numbers with them. Explain the intricacies of the deal with your potential partner, and be sure that they completely understand how the deal works.
And of course, tell them you are willing to offer 50% equity on the deal.
Needless to say there is a lot of due diligence that goes into partnering on a deal. Be sure to follow all the rules we have talked about previously here on the blog. If you need a refresher just click on one of the below links.
Determining After Repair Value
House Flip Partnerships | What's the worst that could happen?
Without a doubt, forming a solid partnership requires a lot of due diligence. Partnerships are just one way of getting a deal done. They work when you don't have any money of your own, and they also work if you'd just prefer to not use your own money to fund a deal.
The most important component to establishing a successful partnership is to take ACTION. Ask yourself "what is the absolute worst that could happen?" Odds are the worst possible outcome is that the person you have approached plainly states that they are not interested.
If someone says they are not interested in doing a deal with you, remember that only means they are not interested at the present moment. Once you have a few successful house flips under you belt, this person may approach you asking to partner on a deal.
At the end of the day it is 100% possible to pocket $15,000 or more in profit without ever placing your own dollars on the table. You just have to go out and give it a try.
Best of luck securing your first partnership - I'll see you at the top!
I am newbie in this business,my fear is to borrow and not be able to repay!!! Please how can I start without money?? What’s your advice in that?
Great question Sylvie, lets start a forum discussion…I am happy to help.
We just opened the forum up for free, and it’d be great to have you as a community forum member. Just sign up here for free https://houseflippingschool.com/register-free/ and then post your question in the forum and my team and I can assist.
We are happy to help!
I own a two family fixer-upper in rPark Slope Brooklyn.
My wife and I decided not to renovate for ourselves but rather partner with experienced flipper/contractor and renovate to sell.
Where do you recommend I find a partner for a project like this?
I would suggest you put together an investment package that talks about all the property details and your plans for improvement and what the house will be worth when you go to sell it. Show the projected profit…….Go to REIA meeting in your area. If you don’t know where they are just google it. This is where all the real estate investors new and seasoned go so you can strike a deal there possibly if the #’s work well in your projections.
I am interested in the house flipping business , Can some please get back to me as to where to start?
One of the easiest and best ways to start is by attending a REIA meeting in your area > http://www.nationalreia.com
If you want to learn the specifics of how to get started in the house flipping business, then I would recommend downloading Mike’s Tool Kit > https://houseflippingschool.com/tool-kit/
The Tool Kit contains valuable information at a price that is actually reasonable and affordable. Best of luck with your new venture!
Hi sirs I want to how much I have to invest to get started.
You can get answers/information regarding how much you need to invest by downloading Mike’s toolkit > https://houseflippingschool.com/tool-kit/
Great information and great value.
We are looking at putting up about 30% of the money for a house flip with relatives. They will be doing all the work, we are to be silent partners. They
want to add 10% for their work. That means we would get 20% of any profits.
Is that fairly standard?
Hi Bill, sounds like you have an interesting project going on.
I would recommend downloading Mike’s Tool Kit, which will answer most beginner questions > https://houseflippingschool.com/tool-kit/
I wish you the best with your flip!
We are heading into our first flip with other people. We have myself(real estate agent) my husband (the contractor) a slient investor (will get a % return on her money) and another guy who we will split the profits with (he was the money guy but got the slient investor to step in) my question is how do we purchase the home to keep everyone’s interest protected. Im not sure I want to form a partnership with them yet. I would like to set up taxes as an s corp (I think). Thanks
Mike discusses Partnerships in detail in Module #2 of his program > https://houseflippingschool.com/tool-kit/
Check it out and let us know what you think.