Flipping houses is one of the quick ways to make money in the real estate industry. It involves buying a house below the market price, making the necessary renovations and updates to increase its value, and then selling it for a profit. However, flipping homes isn’t as easy as it sounds. It requires a significant amount of money to cover the property acquisition costs, renovation expenses, insurance, utilities, and marketing costs.
Therefore, money plays a crucial part in expediting the house flipping process. While home buying companies like Problem Property Pals have the funds to buy properties quickly for cash, home flippers often don’t have enough money to fix and flip houses. Fortunately, there are different financing options that you can leverage and start flipping houses even with no money. Below are the three best ways to flip houses with no money:
If you have the experience and technical skills to flip properties but lack the funds, this is an option worth considering. Private lenders are often individuals with the funds and are willing to invest and earn a higher return. However, most private lenders lack the time or experience to invest in real estate.
The fact that you don’t have to jump endless hoops to get the funding you need makes private lending one of the greatest sources of financing for investors. Find a private lender willing to provide the funding for your fix and flip business for a predetermined interest rate.
Crowdfunding is one of the modern ways to finance a fix-and-flip business. Nowadays, there are many crowdfunding sites where you can post your business idea, asking for funds from a large pool of people in exchange for a stake in your business. Create a crowdfunding campaign on one of the sites and set the target amount you’re looking to raise for purchasing, renovating, and flipping properties. Those that fund you get a stake in the properties you buy equal to their investment amount divided by the total amount raised.
Hard Money Lenders
Another great way to flip houses with no money is getting a loan from hard money lenders. These are usually people willing to put their money into real estate investments. While hard money lenders will loan you relatively more than conventional institutions, their loans are primarily short-term with higher interest rates. If you’ve not been lucky to secure a loan from a traditional lender, but you still want to flip houses with no money, then a hard money lender might be your best option.
A hard money loan also makes an excellent financing option if you are an experienced investor in real estate and already have several properties. It can also be a great option if you have a lot of equity on your home and a solid credit score. It’s also worth noting that qualifying for hard money loans doesn’t depend on your creditworthiness. However, these lenders will loan you only a percentage of the total acquisition costs. That means you need to have another funding source to give you the rest of the funds.
The lack of funds shouldn’t prevent you from getting into the lucrative business of flipping houses. If you’ve been planning to flip houses but don’t have the funds to cover the flipping costs, there are numerous financing options available to you. Take advantage of any of the above mentioned methods and jump into the real estate space without putting any of your own money up front.
Research and consult with different financial advisors to understand what each financing option entails, how to qualify, and the interest rates. This will make you make an informed decision when choosing the best financing option for your house flipping business.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.