Property investments will still be smart in 2020, and house flipping is an incredible investing experience to try in the new year. But what can you do if you don’t have the money to put up? Don’t worry – flipping houses with no money is not only possible, but it’s also easier than you think!
Partnering Up
One of the easiest ways to start investing in property flipping with no money is to get a partner who has the money. This partner could be anyone you trust: a close friend or family member, a co-worker or business associate, or even another real estate investor. If you have the right opportunity, you could easily get them on board.
A typical arrangement in this type of partnership would be for your partner to finance the deal and for you to close it. You would do everything related to the flip but the two of you would still split the profits evenly.
Hard Money Lenders Or Seller Financing
In Canada, hard money lenders are private mortgage investors who lend out money for real estate deals based on the value of the property rather than your credit score or savings. These arrangements go by the name “hard money loans” because the terms are more strict than other lenders, with higher fees and short terms.
While it’s good to be wary about them for your own home, hard money lenders can help investors without money get started. If you can borrow enough money to buy the property, fix it up and sell it for a profit, you’ve made money without using any of your own money. There is a cost of borrowing that money, but the rewards outweigh the expenses!
Almost the inverse of this is seller financing. Seller financing is when investors pitch to interested sellers rather than someone pitching to the investor. Instead of using traditional lenders, seller financing allows investors to work directly with former property owners. The investors find these opportunities either by searching for properties that include “seller financing” in the ad copy or by pitching the idea to a seller they know.
This is an attractive choice for flipping houses with no money because investors have more flexibility when negotiating the terms of the loan. This can lead to smaller down payments, favourable schedules, and even simpler approval terms for the partner with no money. In these cases though, they would already have a property under their control.
Partner With A House Flipping Investor
There is one more way to flip a property when you have no money: partner with a dedicated house flipping investor. Instead of taking the deal by yourself, you can team up with someone that has already started a business dealing with these investments to provide you with the necessary funding.
You should note that as a partner with no money, you need to be able to carry your weight. Whether it’s with a friend or an investor, if you aren’t bringing any funds, you should be able to bring a lot of value in other areas. Maybe you know of a deal that otherwise wouldn’t have been found, have the right contacts, or the time to do the renovations yourself. Whatever the situation, be prepared to do some of the heavy lifting!
Partnering with investors that already have money is a great way to get into house flipping. If you have the right opportunity and a strong partner, you’re well on your way!
