How to Find Money to Flip Houses
As with almost everything in life, if you want someone to do something for you, then you must do something in return. Learning how to find money to flip houses is no different. It’s just understanding what the investor wants and showcasing your ability to deliver.
Real estate investing/lending for flip house projects is pretty straightforward. Both sides want to make money (win). Long-lasting partnerships only succeed with win-win deals. You need investors/lenders to lend you money. In return, you agree to create value by finding, buying, fixing, and reselling a project house in a timely manner. In the end, the value YOU created brings the money back with a profit to split. Pretty easy right?
Well…. it’s not exactly that simple. Real estate transactions require a lot of money! In this section, we try to answer questions such as: Who are the right investors/lenders? Where do you find them? How do you convince them to invest in you? And the granddaddy of them all …. “Can you really flip houses with no money?” To save the suspense, yes. You can, but it won’t be easy! Let’s get to it.
Three Types of Lenders/Investors
The best lender or investor for you really depends on your situation. The level of risk for the investor/lender decreases as the house flipper becomes more experienced. Higher risk always brings higher reward for disciplined investors. You should expect the cost of borrowing the money (interest) to decrease as you become more established. Not only will the cost decrease, but the pool of willing investors will increase as well.
Here, we consider three different investor/lender options and discuss each. They are conventional lenders, private money (hard money) lenders, and build-your-own investors/lenders.
How to Close the Deal With Your New Investor
The investors role in house flipping is usually passive. Most often, the investors will not know the contractors or the real estate agents personally. They do not work alongside of them. They only know the flipper with whom they develop a personal relationship based on experience and trust.
You have to create that relationship. Start by convincing them that their money is safe with you. This is the key to learning how to find money to flip houses.
Can “No Money Down” be Profitable?
I know, I know, I know! The infomercials say that EVERYBODY can flip houses with no money down! They play constantly on every channel. TV, radio, internet, everywhere. The problem is that they are selling something. Is there a better way to sell than to make false promises that they don’t have to keep? Let’s consider this in greater detail.
Yes, you CAN flip properties without money, but it won’t be easy! The real question is should you flip properties without money even if you can?
What is Wholesaling Real Estate?
You should seriously consider wholesaling properties if you are in this situation. Wholesaling is mostly networking. This will help you build the network that you need to flip properties!