How to Flip Houses with No Money
Finding fix and flip financing with little to no money down is not as tricky as you may think. A question generally asked is how to get started flipping houses. The most common way is hard money loans. The exact loan terms of a hard money loan will vary based on the specific contract between the borrower and the lender. Once the contract is agreed upon by the borrower, the borrower receives the money, while the lender receives monthly interest on the loan until the loan is paid back in full. A Hard Money Lender will also often charge the borrower an up-front, one-time fee in order to process the loan. A hard money loan is backed by the physical asset, which is the property being purchased. The benefit of this type of loan is that it is generally quicker than a conventional loan and is not solely based on the borrower’s credit score. Furthermore, a borrower’s credit score could increase their chances of receiving 100% financing hard money loans with no money down hard money lenders.
Another common loan type is a private money loan. This is similar to a hard money loan, however, with a private money loan, there’s no financial institution backing the investor. An example of a private money loan would be a loan from a friend, family member, or an individual investor. Similar to a hard money loan, a private money lender invests their capital into real estate deals in exchange for interest paid on the loan. The private money lender must see potential in the property being purchased, rehabbed for a reasonable price, and resold for a profit
Aside from hard money loans and private money loans, another source that can be utilized to obtain money for flipping houses is through Real Estate Investment Partnerships. Real Estate Investment Partnerships are common in real estate and can be an excellent way to raise the necessary financing to purchase your fixandflip. A Real Estate Partnership could be either an active partnership or a passive partnership. An active partnership is exactly what it sounds like; all partners are active in the day-to-day work of the business. A passive partnership is when one partner generally does the majority of the leg work regarding finding a property and the other partner uses their capital and credit for financing the house flip. This way if you do not have the funding for flipping houses but have discovered profitable properties, your partner could provide the capital needed to fund your fixandflip.
There are also government loans available for financing a house flip but these are generally much more tedious and often come with higher fees and lower LTCs.
Consider your financing options to find the best fix and flip loans. After you work with a talented realtor to find an ideal investment property you need to find the necessary financing. There are a number of loan options available for financing a house flip. Compare lenders and search for the loan with the best rates on your financing to enjoy long-term savings. Work with a professional financial institution to enjoy competitive terms to start your commercial real estate investment portfolio.