Newbie real estate investors often ask how to flip houses with no money. And to them, it might feel like a stupid question: There’s no way you can get started flipping houses without at least a little money of your own… right?
True—to a degree. Investing in real estate is easier with money. But you can indeed flip houses with no money. It’s not even as hard as you might think—even if you’re a new investor. You just need a little bit of hutzpah, the courage to escape your comfort zone, and an understanding of how to start.
How to Flip Houses With No Money Down
Flipping houses without funding projects yourself involves using other people’s money (also called “OPM”) to fully finance your deals. A lender extends a loan to you to purchase and rehab the property, and you repay them the initial loan amount plus interest.
However, traditional banks and lenders rarely extend a loan covering both the property and rehab. So where do you find OPM for flipping homes?
1. Real estate investor partners
One of the simplest ways to start investing with no money is to find a partner with money. Think about close friends, business associates, co-workers, relatives, business owners, or even another real estate investor or rental property owner.
If you can’t think of anyone off the top of your head, then start thinking about the people you see on a regular basis. This may include:
Anyone in your network with a successful business
Your doctor or your dentist
Anyone who invests in the stock market
Ideally, you ask the partner for the money to finance the deal and you to do all the legwork. In this simple arrangement, the two of you will split the profits 50-50. Your partner reaps the financial rewards of the deal by chipping in the money but not the time.
When you first enter the house flipping business, it may be tempting to create a formal partnership right away. We recommend holding off for now. Many real estate investment partnerships succeed wildly, but just as many go down in flames. As an amateur home flipper or new investor, remain independent until you have a business plan and the flipping know-how needed to attract a solid partner.
PRO TIP: Real estate investors of any sort can make great partners, but investors already flipping homes will likely be even better. A veteran home flipper brings both money and experience to the table.
To attract an experienced investor, figure out first what value you add to the deal. Maybe you have the deal-finding know-how or a long list of contacts. Utilize all your skills and exhaust all your options.
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