To many people, it seems as if there’s no way to get into house flipping without spending their own money. While it’s true that real estate investing is easier to do with funding in place, flipping houses with no money is possible—and it’s easier than you think. There are a few places to look when you’re investing without a down payment, and this beginner’s list will get you headed in the right direction.
One of the easiest ways to invest without your own funding is to find a partner, such as a business associate, close friend, relative, or another real estate investor. If you’re having trouble finding someone, think of those you see regularly, like:
- Neighbors who own successful businesses
- Your doctor or dentist
- Your lawyer
- Stock investors
The simplest partnership arrangement is to ask for deal funding and for you to do everything else to make things happen. Then, the profits are split evenly.
A Hard Money Lender
Another viable funding source is a hard money lender. These individuals typically lend money at high interest rates, with points added. This funding source is particularly useful if the home you’re flipping won’t take long to finish. Like other types of loans, the shorter the term, the less interest you’ll pay. Although a hard money lender is a good place to start your house flipping adventure, there are better funding sources with more favorable rates.
Private money lenders are a preferred funding source for no-money deals, as these people are simply looking for an investment. A private money lender may have savings, a retirement account, mutual funds, or substantial home equity, which can be used to invest in real estate. Because it’s easier to negotiate a good interest rate, it’s better to work with a private lender than a hard money lender.
Finding Investors to Finance Your Flips
House flipping is a very hands-on job, and you won’t make any money sitting on the couch. You’ll have to get out there and get things done! Begin by ordering some business cards and doing some networking. Surround yourself with like-minded individuals who are doing the same things, and get into the local real estate market. If you often find yourself talking to real estate agents and investors, you’re in the right place.
The individuals you run into at these networking events are a great source of funding for house flips, and they may make good partners as well. As long as you keep an open mind and you’re willing to be taught, you will absorb a great deal of important information. Below, you’ll find a few tips to get started with networking:
- Consult the nearest REIA (Real Estate Investors Association). Odds are, you’ll find a meeting in your town.
- Find a real estate investors’ meeting on Meetup.com.
- Pay a visit to the local Chamber of Commerce or Business Networking International group.
- Participate in community organizations such as Little League Baseball.
- Volunteer with local charities.
- Start your own real estate investors’ group.
If you really want to flip houses but don’t have the funding, you can’t wait for investors to come to you; you’ll have to do the legwork to find them. Get out there and make things happen!
Flipping houses is a great way to get into the real estate market without risking your own money, but to be successful you’ll need to find a source of funding or a successful partner. By following these tips, you’re more likely to find the help and funding you need.
Deciding how you want to proceed with your business is a crucial step. You may be tired of renting a building. You may also be looking to buy a building to coincide with opening your business. Whatever the situation might be, it’s important to have space that you can call your own.
There are plenty of options available. Whether you’re looking to build from scratch or expand an existing property, you will want to look at the costs involved with the project. At Delancey Street, we can show you the creative financing options that are available to you.
With Massachusetts new construction loans, you can get started in Boston, Salem, Worcester, or anywhere else in the state.
Why Massachusetts New Construction Loans Should Be Considered
It might take hundreds of thousands of dollars to build the property that you want. You may be prioritizing a storefront, office space, or even a warehouse. Whatever it is, you need a construction plan. From there, you have to figure out how you’re going to pay for it. You likely don’t have the money to pay for the whole thing up front.
New construction loans in Massachusetts can provide you with the funding that you need.
What You Need to Know About a Commercial Construction Loan
Many businesses choose commercial construction loans over commercial mortgages. There are a few reasons for this.
First, commercial mortgages can be difficult to obtain. The lender is typically a traditional bank that wants you to fill out an extensive application. Plus, they’re going to look for you to have an above-average credit score.
Second, a commercial mortgage doesn’t have much flexibility. You will get the entire amount as a lump sum in the beginning and provide you with a 10-year repayment plan. In some instances, the mortgage will only be for existing properties, too.
A new construction loan allows you to establish a schedule for when you’re going to get the money. After each step is performed, an inspection is conducted before more funds are released. When it’s done, you can pay in full or finance the amount you have borrowed with the property serving as collateral.
What to Look for in a Lender
There are a lot of lenders that will provide you with new construction loans in Massachusetts. It’s important to consider what their reputation is so that you can decide if you want to do business with them.
Every lender is going to vary based on what they offer as well as the cost of doing business with them. You will want to look at a few things:
- The required down payment
- The number and amount of fees
- The interest rate assigned to your loan
New construction loans are considered high-risk, so it’s important to look at what kind of down payment will be requested of you. Further, the fees and interest rate will impact how much you spend on your loan overall.
You don’t have to do all of the research on your own. Delancey Street lenders will make it easy for you to find a loan that works for your business in Massachusetts. The entire process is personalized to get to know you and your financial needs.
Contact us today to get started on a new construction loan so that you can take your business to the next level.