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.