How to Flip Houses With Little Money
One might wonder if it’s even possible to flip houses without spending a lot of money. More than the money, however, patience is critical for making the best decision.
In the initial stages, it is essential to put in time and effort to get the first deal. Once you complete your first sale, generate a positive cash flow, and start to perform research into the house flipping field, you will notice that things will begin to fall in place and the process will become much smoother and faster. This will be the groundwork to climb up the ladder.
To help you with the house dipping process, here are 5 ways to try flipping houses with little money. The first three ways to flip houses are through buying a fixer-upper, restoring it, and selling it in retail to another party who’d like to live in it. The last two methods focus on flipping by actually gaining ownership in the process. This might appeal to many individuals as it reduces the risk and requirement to fix up the houses.
1. Partnering and Splitting the Profits
A money partner is called a mentor. They take some part of the profit but will help throughout the deal. It might not be easy to find a mentor to work with you if you are new in the field, but an excellent place to look for this is through the local Real Estate Investor Association (REIA) meetings.
A mentor relationship requires compatibility with the personality of the person and their business practises. Therefore, it’s important to assess the relationship and the likelihood of partnering up with a mentor who will share the same values and business principles as yourself.
2. Usage of Hard Money
By hard money, we’re talking about the cost of the loan. It is beneficial to talk to a few lenders who work with investment properties and know their specific terms to figure out what works best for you. Not all lenders offer the same rates or terms. Therefore, it’s best to perform your research when using a loan to finance your purchase.
3. Usage of Private Money
Using private money means getting loans by private individuals such as family and friends. This is recommended once some experience is gained and you have a track record. It can become a lucrative option once you have experience in the field and can seek private money who can possibly partner up in future deals once they see the benefits of the business.
4. Birddog
Birddog is a lead from one deal to another investor. The investor helps find a seller and you could get a pay called ‘finder’s fee’. It’s crucial to find an investor with experience to perform this type of deal. It’s necessary to ensure that the seller is willing to sell at a discounted price to make this a profitable deal for everyone.
5. Wholesaling
Wholesaling takes you a little further than bird-dogging. This is the space where more efforts are required on your end and you put the house under contract. This contract is assigned to a different investor who gives an assignment fee. Assignment fees are usually much higher than Birddog fees.
Final Thoughts
As daunting as it may appear, flipping houses with little money could be easily achieved with the right systems in place. Use the tips given above to delve right into the process!
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