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Can You Really Flip Houses With No Money?

by Michael LaCava on September 8, 2012 · 77 comments

  
flipping houses with no money

To many, it seems like there’s no way you can get started flipping houses without at least a little money of your own.

True, whether it’s buy and hold real estate investing, flipping houses or any other kind of real estate investing, it is a lot easier to do it with money than without…no doubt.

However, flipping houses with no money is not only possible to do, but it’s not as hard as you might think. In fact, there’s no “hidden secret” to investing in real estate with no money of your own. All it takes is a little bit of hutzpah, some courage to get out of your comfort zone and a simple understanding of how to start and where to look.

How to Flip Houses With No Money Down: The True Story

If you’re not familiar with how it works, flipping houses with no money involves using other people’s money (called “OPM”) to fully finance your deals. The investor lends you money to purchase and fund the rehab of the property and you pay them interest on the money they lend.

So where do you find “OPM”?

There’s lots of places to look when you want to invest with no money down, but here’s a starter list to get you going:

1. Partners

One of the simplest ways to get started investing with no money is to get a partner who has money to invest. This partner could be a close friend, a business associate, a co-worker, a relative, a business owner or even another real estate investor.

If you can’t think of anyone off the top of your head, then start thinking about the people you see on a regular basis. This may include:

  • Anyone in your neighborhood who has a successful business
  • Your doctor or your dentist
  • Your attorney
  • Anyone who invests in the stock market

The simplest arrangement in a partnership is for you to ask the partner for the money to finance the deal and for you to do all the legwork to make it happen. In this simple arrangement, you’ll do everything related to the flip but the two of you will split the profits 50-50.

In essence, your partner reaps the financial rewards of the deal by chipping in the money, but not the time.

When you first get into flipping houses it may be tempting to form a formalized partnership with someone to start. Although this may seem like a good idea, you should probably hold off for now.

What you’ll soon find that although there are a lot of great real estate investment partnerships that have succeeded wildly, there are just as many bad ones that end up in pure misery. When you’re first starting out, it’s best to stay independent and do your partnerships one deal at a time.

2. Hard Money Lenders

Another great source of funding for a deal is the hard money lender. Hard money lenders are individuals who lend to others at a very high interest rate and usually charge points on top of that.

This source of OPM can be especially useful if the house you are flipping can be completed in a very short period of time. Like any other kind of loan, the shorter you hold the loan; the less you’ll pay in interest. The longer you hold the property, the more you pay in interest.

And when interest is typically between 14 and 20 % and often with 4 to 6 points on top of that, hard money loans are especially important to pay off quickly. Although hard money lenders are a great place to start in your real estate career, there are better sources of funding with better rates.

For example, if you borrow $100,000 from a hard money lender at 16% and it takes you 6 months from start to finish to pay it back, your interest charges would be $8,000. And if you had to pay points at say 4 points, that’s a further $4,000, adding up to grand total in $12,000 in interest charges!

If you held the flipped the property in half that time, your interest charges would be $6,000, which is why hard money is far more preferable for properties you know you can flip quickly.

3. Private Money Lenders

Perhaps the best source of funding for no money deals are private money lenders. Private money lenders are just regular people with disposable money looking to invest. In many cases, they may not be actively looking to invest, they just have it sitting around and may be open to investing with you…but only if you ask them.

Private money lenders might have money in the bank, IRAs, 401Ks, mutual funds or even an abundance of equity in their home. This money can then be leveraged for real estate investing.

Because you can typically negotiate better interest rates in my experience, private money lenders are preferable to hard money lenders. With private money lenders, you get a much higher level of control over terms and interest rates; you set the rules and rates…not the lender.

The real key to success with private money lenders is in offering them a high enough interest rate to entice them to invest with you in the first place. The rate has to be lucrative enough for them to be interested, but at the same time fair enough for you to lock in profits – even in a worst case scenario. Even better, if you can find out what they are getting for a return on some of their other investments, this is a great way to get them to invest with you. And with stock market on a roller coaster like it has been in the past few years, I’ve found this to be a very effective strategy.

A list of potential private money lenders could be the same list we used above for seeking partners.

Learn to calculate ALL the expenses on your next flip! Check out the new BiggerPockets Fix and Flip Analysis and Reporting Tool. Try it out for free today!

Where to Find Investors to Finance Your House Flips

The first thing is you’ll need to do is get off the couch and get out there!

Order some business cards from Vista Print and start networking. Surround yourself with people who are actually doing what you want to be doing. Immerse yourself in the local real estate market. If you are going to places where people like this hang out, then you’re in the right place.

The people you meet at networking events are usually the best places to find potential partners as well as  funding for your no money house flips. And as long as you stay open to it, you’ll absorb tons of information from these people; more you could ever learn by doing a Google search.

Here are a few suggestions to get you started networking:

  • Your local REIA (Real Estate Investors Association); chances are you’ll find a meeting being held right in your local area
  • Your local community organizations like Little League Baseball and other town organizations
  • Volunteer at a local charity
  • Form your own local real estate investors association

If you want to flip houses with no money, don’t wait for them to come to you. Instead go find your investors on your own. So go out there and make it happen.

Thanks for reading! If you made it this far, please leave me a comment below! I’d love to hear about your no money down real estate investing strategies or questions about anything at all relating to real estate!

Photo: Darcy J

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{ 77 comments… read them below or add one }

Dale Osborn September 8, 2012 at 12:11 pm

The One That Got Away: In the 1980′s, I had talked an individual into paying all closing costs and an additional $5000 to buy his house as he was being transferred to Germany. Got cold feet and backed out, but should have pulled the trigger on that one.

Dale

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Mike LaCava September 8, 2012 at 5:51 pm

That one sound tought. I have far too many myself to tell…that one hurts though. What kind of deals have you done since then? Thanks for the comment! Mike.

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Dale Osborn September 8, 2012 at 7:23 pm

Got into apartments for about 10 years then on to MHPs.

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Mike September 9, 2012 at 6:33 am

Nice. Single family starter flips here, but a sometime partner of mine does MHPs exclusively and is does extremely well there. So many ways to make money in this biz.

Esteban April 17, 2013 at 7:49 pm

Michael how are you bro..well am new on this thank you fpr all the information real good stuff.Like i said i really have a big question is that i have always want it to be in the real estate business but due to a felonie am not sure if i can get a state licence,my question is how can i start learning and investing on property i have save about 20,000 dlls and i wanna get on the flipping business am a handy man myself know about almost everything from installing tile to electricity,drywall etc…i just dont know anybody in this business and how to go about it can you guide me?

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Michael April 18, 2013 at 6:19 am

Hello Estaban,
I would recommend you get the Ultimate Beginners Guide offered here at BP. You can also get my ebook which is good basic reading to get started. I would also recommend The book on flipping houses from a BP contributor Jay Scott right here on this site. At the end of this article I gave you ways to get out there to network and make contacts. I suggest you start right away especially at the local REIA meetings.

Jeff Brown September 8, 2012 at 12:55 pm

Welcome Mike — Lookin’ forward to more posts.

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Mike LaCava September 8, 2012 at 5:50 pm

Thanks for the welcome Jeff. glad to be a part of the Bigger Pockets team here! Mike

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Mike LaCava September 8, 2012 at 1:06 pm

Thanks for the welcome Jeff! Glad to be a part of the Bigger Pockets team. Mike

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Brandon Turner September 9, 2012 at 12:12 am

Hey Mike! Great article. I love the partner method. I’d like to add- one of the best benefits of using a partner is that they can often refinance the property into a fixed mortgage if the market changes or the house won’t sell. I use partners who have good credit/job/income so that I have a rock-solid Plan B no matter what happens. I’d gladly trade 50% of my profit for the peace of mind that offers.

Also,its totally possible to combine those options. For example, right now I’m about to flip a house using a partner who is going to fund the repairs but a private lender who will be funding the acquisition costs. I’ll be overseeing the project. In the end, we all win. That is the ideal business relationship.

Thanks for the great article Mike! I look forward to some good stuff from you!

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Mike September 9, 2012 at 6:45 am

Hey Brandon, great insights and ideas there. I agree, I’d gladly exchange the peace of mind for half the profits. The market here is so heated, its not something Ive had to do as of yet, but what you mention is an excellent exit strategy.

Sounds like the deal you have going right now is really interesting, you can get so creative peicing it all together which makes the business so much fun. Nice work, hope you crush it there!

Thanks for the kind words on my first post…just trying to keep up with your quality stuff!

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Jason September 9, 2012 at 11:07 am

It just seems like 50% of the profits seems a bit high these days for a standard flip deal especially with a market inundated with “investors” and “flippers”.

in your marketplace, are investors willing to give up 50% of the profits for putting up all the capital? Or do you have to offer them a preferred return?

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Michael September 10, 2012 at 12:29 pm

HI Jason,

You make a great point. Depending on your local market and what your competition is paying will some what determine where you should be. I say some what because your visibility and credibility go a long way to determine if people will do business/invest with you.
There trust in you is everything. If the other “guy” is offering a higher rate or percentage of deal but he is not that well trusted then it won’t matter what he pays! I happen to do mostly note holder’s vs equity partners because I have the ability to do that. In the beginning 50% split is a great way to get started or less if your market doesn’t support that. The way I look at it, if you have none of your own money to invest and you hooked up with an investor with a lot of money & you were only getting 30% of many deals what is wrong with that.
The bottom line is you have to start some where and make adjustments as you go. It is like what Brandon Turner says in his post there is no cookie cutter perfect system to follow. You must be willing to evolve and constantly improve. I know that is what I keep doing.
Hope to have helped clarify that for you.

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Dan Stein September 9, 2012 at 3:33 pm

Great article, Mike! And thanks for the free Ebook at http://houseflippingschool.com/

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Mike September 9, 2012 at 7:21 pm

Thanks Dan! I am real excited to get this opportunity to guest blog on bigger pockets, this is an awesome site for like minded real estate investors. Hope your doing well. I did talk to my marketing team Friday and shared your comments and suggestions. Thanks again. Mike

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K Smith September 10, 2012 at 1:44 pm

This was very informative being that I need a private lender for a flip as we speak.

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Michael September 10, 2012 at 2:40 pm

Good Luck K Smith – I hope you get that lender. There are plenty of them out there so go get them!!!

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Luis September 11, 2012 at 7:02 am

Welcome Mike!

Although your suggestions are valid my experience has taught me that you have a couple of caveats that you did not cover in this post and of course its important to cover both the good and the bad.

First your headline is deceiving because in reality it’s practically impossible to flip houses with no money. The money has to come from somewhere.

Second although 1 and 3 are realistic funding sources I don’t know any people with money that will give $20, 50, 100k + to someone that has no experience and/or has never done a flip. And if you use a hard money lender you will absolutely have to use some of your own money.

BTW, to call a hard money lender a “great source of funding” is not accurate at all, if it is please give me the contact information for your hard money lender because all of the ones in my town are not “great sources of funding”.

Your forgot family and friends as source or private money lending. It might actually be easier to get a loan from “Uncle Joe” than from a total stranger.

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Michael September 11, 2012 at 7:32 am

Hi Luis, Thanks & I look forward to contributing to this great forum.
My intentions are never to deceive. Very quickly in the article we mention OPM (other peoples money). That is why the headline is phrased as a question. It is what is asked most often & I wanted to answer a very popular question from new investors.
To your second comment you have to go find those people. They are absolutely out there.
True it is harder in the beginning but you must educate yourself relentlessly, get a mentor and just be up front and honest with who you are trying to partner or raise money with.
We have to start somewhere & if a deal is good you will find someone!!!
True about the hard money lenders that you “may” have to fund some of your own money. I say may because it is not always the case. The nice thing about Real Estate you can be creative. If you secure a hard money lender that is a start & how about finding a partner to lend you or partner with you for the required money by the HML.
They are all great sources because the bottom line if you get a deal done and make money with any of the lenders we suggest then you are on your way! There are some good hard money lenders out there. Go to some of the local REIA clubs to meet them.
We mentioned relatives in Partners but thanks for elaborating. Family and friends could be a great place to start because your credibility may be best with them in the beginning.
One of the things I teach in my coaching is all about Mind set & I have some information about it in my ebook. Its free so check it out. I hope I helped to answer some of your concerns. Best of Luck.

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Zayne December 5, 2012 at 4:16 pm

This is not a true “no money down” way of flipping houses.

Why put your credit at risk like that?

You don’t have to borrow money from anyone to start flipping houses.

Just take control of the home with a contract and assign it to an investor OR a lease option buyer if there’s not enough equity in it.

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Michael December 5, 2012 at 5:10 pm

Zayne – It is most certainly, read on in the article right in the beginning the no money means OPM. I am very clear about that.
If you are serious & have a solid financial plan for your projections the idea is to minimize risk as much as possible. Life is a risk and it is how you manage it to minimize the risk.
The flipping your referring to is flipping contracts not houses which is clear in the article as well Even tying up contracts you still need to put money down on offers & more once it is accepted on REO’s. Of course there are situations on privately owned properties with equity where you can get it under contract with little or no money but it is more difficult especially if you have competition. Most are upside down these days so there are not as many of those around like they use to be.
Thanks for your comments but it looks like they are different investment strategies.
Please share yours & let me know where you are flipping contracts as I am an active investor and may be interested in what you have to assign.

this is why Bigger Pockets is a great place!!!

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Tommy December 11, 2012 at 1:38 pm

Mike I know of three homes right now that could be flipped for 40 to 60 I just need funding??
The Market hear is not that good. as far as sales goes.

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Michael December 11, 2012 at 8:11 pm

Not sure on the comment Tommy. You say you can flip right now 3 houses for 40-60K but then say the market is not good for sales? You may be thinking something else but it appears to be written differently.
Also that is a big spread for the same property sales of 50%. Carefully get a qualified CMA & find an aggressive sell price and don’t count on a range like that.
Funding is available in many, many ways to get deals done.
Partnership, hard money, private money, contractor’s…..to name a few.
You must present an opportunity for anyone investing in YOU! Never ask for money.

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Mel December 30, 2012 at 10:18 pm

Hi Mike, thank you for share your knowledge, it is helpful. I live in Portland, OR and the market is improving. I just got my real estate liecense and my dream is to get into fixer upper business. I am passionate about starting the business and I would love to talk to you about INVESTING.

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mike December 31, 2012 at 6:14 am

Hi Mel
Congrats on getting your license
Sure we can talk
Send me an email and I will schedule a time
Happy New Year

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Mel January 1, 2013 at 6:06 pm
Ashley Scroggins February 12, 2013 at 1:09 pm

Thank you so much for writting this article. I am very interested in house flipping and I feel like this article helped with what resources I can reach out to. Thanks!!

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Michael February 18, 2013 at 4:38 pm

Your welcome Ashley. BP is a great resource so make sure you check out all the other great content provided for free.

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Terry P February 20, 2013 at 11:18 am

I am finding that using OPM is not that easy. If I have a friend or family member for example with case they are subjected to the SAFE and not a maybe a new JOBs act….Legal red tape, lending laws, that keeps them from lending money.

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Deana April 19, 2013 at 6:11 pm

Hi Mike,
I am such a newbie to all of this. But, I am grateful for the wealth of free information found here. Thanks for a great article. I’ll keep reading them if you keep writing them.
All the best,
Deana

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mike April 20, 2013 at 6:44 am

Your welcome Deana. Glad the information is helpful to you.
I appreciate you reading and commenting. Check out all the other articles as well in BP as you will find there is a wealth of information here.
Ty

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Raymond April 20, 2013 at 12:32 am

Hey Mike, I recently attended an Armando Montelongo Real Estate Investment Seminar. It was pretty pricey and left way too many wholes in understanding the process of house flipping. I really need some more help in learning how this really works. The seminar lasted 3 days but the course structure was sloppy and bounced around to way too many topics at once without making sure everything was understood. At the end of the course they were asking for 29k to be part of a house flipping tour in orlando, which at that point was a little ridiculous. If you have any info on where I can be educated on house flipping at an affordable rate, please tell me, lol. Thanks.

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Michael April 21, 2013 at 9:58 am

Hey Raymond – That is a lot of money to spend for a weekend bus tour. You can get so much information here at BP from me and other bloggers. Check out the forums also. Check out Jay Scott’s new book being promoted here and get the Ultimate Guide here from BP for free. You can also get my free ebook. After you read all these and checked out articles and so on…….here at BP.
You will have started to make progress. You can also try to find a local mentor and take him or her out to lunch & let them know you want to find them deals and you will bring them to them if they help you learn. So many ways to learn for free & so many ways to learn for a small investment into your education. If you were to pay a large sum I would suggest you find a local real estate investment coach that does this full time and will teach every step of what to do and what not to do & maybe even partner with you. I believe you would be much better served in this capacity. Best of luck and keep us posted on your progress.

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Raymond April 22, 2013 at 5:54 am

Thanks for the info mike. I’d love to find myself a mentor so I can really get started. Just wouldn’t even know how to find one. I’m going to definitely google some after this. Where can I find your free ebook? I’m trying to soak up as much information and knowledge as possible. I need to find my first deal so I can continue from there and at least introduce it to investors. I have little to no connections in this field since I’ve been a retail manager for so long. I definitely need to network.

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Michael April 22, 2013 at 1:04 pm

Hey Raymond just go to my website & you can get it there. good luck & don’t’ forget to get those other Items found here on BP as I know they will help you as well.

Travis May 30, 2013 at 5:27 pm

I am a superintendent in a construction company, sick of traveling, and want financial independence. My homework is done as far as knowing what a property needs to increase its value however, I dont want to risk my savings account while learning the process of flipping property. Do you know of any investors willing to take on an apprentice?

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Michael May 30, 2013 at 7:29 pm

Hey Travis. Tell me more about yourself and where you’re from. I would like to talk to you about this if you are in my area. You can email me if you like and leave your #.

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Alfred G. June 2, 2013 at 7:24 pm

Mike,
I’ve been looking into different avenues for real estate, and one I’m truly interested in is flipping land. I’ve signed up for your ebook, but haven’t looked into it yet.

Do you cover land flipping at all, or only real estate? Thanks for your support here.

Alfred G.

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Michael June 3, 2013 at 9:18 am

I don’t get into land flipping. Where you from Alfred? I have some people I work with that are land experts. Are you looking to flop raw land or getting permits in place?

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Alfred G. June 3, 2013 at 6:10 pm

I’m in Florida. I’m looking to flip land in any state (after doing my homework, of course), plus invest in some in the future for passive profits. However, I’m a total newbie to it.

Thanks for offering to hook me up with your friends. I’d really appreciate that.

Alfred

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Alfred G. June 3, 2013 at 6:11 pm

And I’m looking to flip raw land to start.

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kim July 8, 2013 at 3:16 pm

Hi Mike,
Here in my area there are a lot of homes that are available and the sales are up 21% in the last year. I need an investor but my credit is shot from losing a business and house in 2008 from the bad economy. Is there anyone that will lend me money if I haven’t ever “professionally” flipped houses before? I helped family buy several hud homes and remodeled them.

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Michael July 8, 2013 at 8:37 pm

Yes but you will have to work at and prove you have what it takes. You might be better off partnering and giving up at least 50% of a deal to get started. Don’t just think of hard money, think of people you may know that may not be making much on their money if it is in a bank or cd. The good thing is that you have some experience in remodeling which will help you in the rehab process. Start going to REIA meetings in your local area and take out experienced investors for lunch and tell them what you are trying to do and if you bring them a deal would they be willing to partner with you. Best of luck

Mike

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David July 14, 2013 at 10:35 am

Hello Michael,

Thank you for a very informative article. First of all, do not mind all the doubters and nitpickers – it comes with blogging (I know from the experience). Secondly, you are providing a great service to folks (like me) who are new to real estate investing, and therefore introducing competitors into the crowded market place. This is rarely welcomed by the professionals who feel annoyed by the newcomers, as we are less informed but hungrier than them by default, will have to work harder as we make stupid mistakes, but will take less profit and outbid them in the process of purchase. Many of them are probably laughing at my comments, but will remember that this is exactly what killed the real estate market – amateures like me coming to the forefront of house flipping right before the bottom dropped out.

So my question will concentrate on the inventory pitfalls of the house-flipping in current environment, where flipping is made very hard by institutional investors and hedge funds entering the marketplace for packaged deals, and also some Chinese money floating around in the hands of locals (mostly anecdotally, but probably very true). I am sure you would agree that insurmountable tasks of acquiring the properties are now on courthouse steps (pre-foreclosures), as well as in bread-and-butter neighborhoods, where properties are scarce and go for extreme premiums, as investors are competing with limited supply combined with emotional owner-occupants. This leaves us with undesirable neighborhoods and run-down properties (requiring a lot more than cosmetic repairs) – hardly where a newbie would want to start.

Please enlighten me on what your course of action would be in this market. I am a professional stock market trader and have purchased my own home through pre-foreclosure (for 30% below the appraised value) on courthouse steps in the middle of real estate market collapse. I know very little about house flipping but know quite a bit about real estate in general. I realize that I am asking a question not related to no-money-down techniques discussed here. I am open to discussion through email, if you prefer.

Thanks,

David

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mike July 14, 2013 at 4:36 pm

Hi David
There is a blog by Brandon Turner I believe about this question on hedge funds and the market.go check it out.
He asks other BP Bloggers and are different oppions on this.
Really depends on your market. I have not fealt any restrictions on deal flow as a result
My Capacity has increased.
You can also get on the forum and ask in your geographic area.
I cam add some more information later

Ty

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Anthony August 10, 2013 at 11:23 pm

Hey mike, I just wanted some more quick information. Can you take out a business loan to start flipping houses? I would like to make it a business in my area, housing market is low here because all the houses are out dated and mostly just need a update but no one wants to take the time or spend their money to. Any ideas or tips would help out alot ! Thanks

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Michael August 11, 2013 at 7:21 am

Hi Anthony-
Depends on your credit and history and of course the property potential. You should create a simple business plan and financial statement and start calling your local banks and set up meetings with the loan officers. Being prepared on what you want to do will help your case. Let me know how you make out. Good Luck!

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Warren June 22, 2014 at 9:15 am

Anthony,

I am curious to know how you are doing? Please let me and all of us know how your business loan came through or what obstacles you are facing?

Warren

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Cece August 16, 2013 at 10:20 pm

Thanks, Mike…JUST the info I’ve been looking for…going to a reia come Monday!

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Michael August 18, 2013 at 9:15 am

Excellent Cece – Let me know how you make. What REIA meeting you going to?

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Sherryann gaumer September 2, 2013 at 8:26 pm

Hi Michael,

You have a lot of valuable information here. I am not new to real estate, I have been a brokers assistant, bought several homes for me as well as helped friends and family for many years. I have a few questions I have wondered about.
Do you have to have your real estate license to flip or can you hire a realtor?
Should you hire a contractor and architect for remodeling and do most homes need to be remodeled? My thought is get foreclosure a fix them back up and resell, is this a good way to flip?

Seems in my area in Florida folks are in bidding wars on homes that are move in ready. I have the drive, a lot of knowledge but not all and want to learn and work with the best!

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Michael September 5, 2013 at 5:32 pm

Hi Sherry,
You don’t need your real estate license to invest.
I think you should always used a licensed contractor and an architect only when needed on more complex layouts where you would need them.
That is the basic idea.
Buy, fix and flip or hold for rental.

All the best

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Chuck September 16, 2013 at 6:28 am

Michael,
I am a total Newbie to this but have been thinking about it for a long long time. I couldn’t do it before as I was in the HVAC business as a service manager and then as a sales consultant so I didn’t have time because I am in the Southeast and well, Air conditioning takes precedence. :)
Anyway, I am disabled now,no longer can climb on those roof tops or in attics or on decks etc,, am on a fixed income Social security disability which is really hard to handle when you have always worked and made money all your life. I am 55 years old. I got an offer though from an investor to start out as a Bird Dogger? My credit is borderline at 658 and I have a bankruptcy that is over 36 months old but I surrendered a home in that bankruptcy and was current on the loan at the time. I just knew I could not pay for it, I was laid off at the time, Bank of America took their sweet time taking that home out of my name.My bankruptcy discharged 3/26/10 but they didn’t take home out of my name until 02/12/12 !!! Really screwed me up. So, I just got turned down for a USDA Rural Development Loan because of, I am assuming I cannot get the money to flip houses either? So I was going to work the Bird dog angle for a while, I wanted to know what you thought of this? is this worth a look? they are supposed to send me some details today such as the criteria for the homes they are interested in etc… Should I make up my own contract for them and hold back property info I find until they sign a contract agreeing to pay me for the info? I need some advise. Thanks so much Chuck

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An'drea September 21, 2013 at 6:27 am

Hello Micheal,
I LOVE THIS WEBSITE!!!!! I found this gem at 10pm it’s 5am and I’m still wide awake. I’ve read the guides and many articles.

I’m a 27y Leo, Life path 8, USAF vet, current Real Estate student with a construction background. I’m the Jane of All trades type you can put me in any situation and I will excel the question is happiness. I can score high on any test if I’m given the guide. Other than the military where I dominated as a Health Care Admin I spent my life in the sales world. I absolutely hate cubicle clock watching with achievement limitations. My professor said when I can truly say I’m passionate about something that is the road in which to follow. When my duty ended, I returned to Tacoma, Wa to find a whole new town created on the edge of its realm “Dupont” and I was captivated. I quickly enrolled in a construction course. Now in Hollywood, Ca studing RE extremely interested in all aspects of residental, commercial and international investing/development. I’m searching for a compatible mentor. My knowledge has surpassed the individuals within my circle, I have signed up for the local RE Club, there is some kind of fee involved that they will disclose when they contact me…on a student budget so idk. I’m a doer and a HUGE dreamer. I understand the sky is the limit. I’ve been waiting patiently for my chance soaking up every drop of knowledge along the way.

Im reaching out; Loyalty, Resilience and Desire.
-An’drea

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Joshua Dorkin September 21, 2013 at 7:18 am

I’m glad you’re loving the site, An’drea! Make sure you listen to the podcast as well, and definitely set up an account here so you can connect on our forums!

Good luck!
Josh

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An'drea September 21, 2013 at 1:01 pm

Thank you, Josh! I’ve created an account along with a new forum. ;)

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Michael September 23, 2013 at 12:26 pm

Hey An’drea – nice to see you enjoying all the information on this BP site. Like Josh said start getting on the Forums to ask questions and set up your keyword alerts, you can follow me as well and request me as a colleague. You can check out all my articles along with other great contributors here on BP. Best of luck.

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John Fossetti September 23, 2013 at 6:35 pm

Hello An’Drea, It sounds to me with your background and willingness to be successful you will do a great job in real estate. There is a ton of great information on BP and on top of the information there are a lot of professionals like Mike who take time out of there day to post answers to questions! To your success!

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Michael March 31, 2014 at 5:06 am

Hey Chuck – bird dog is fine & typically it is done on the honor system so you should trust the people your doing business with but a contract is fine as well. As you learn more about the business you should consider wholesaling if you like this angle. You are more in control by having control of the contract and assigning the contract to an investor for a larger than bird dog fee. However don’t look at it as a short cut to investing as most are told this by the Guru’s.
Wholesaling is a business that requires time and effort like any business to be successful.

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Jerry Riley September 25, 2013 at 1:17 pm

Hi Michael, I have been wanting to flip houses. I just have no idea how to get started. Do to a spinal fusion in 2010 I began having severe neck pain and had to leave my job. My credit scorestook a hit. We bought our first house back in 2009 and we have kept up the mmortgage payments. The only problem is the last few years we have drained our savings. Is there any possible way we could get started flipping houses under our current situation. I am looking into refinancing to lower our interest rate from 5.5 to try to double our home equity in hopes to get a loan to invest in another property.

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Michael September 26, 2013 at 5:55 pm

Yes Jerry it is most certainly possible. Your desire, will and determination is more important than any training or education. You need to learn of course but you must have the other traits to put a plan in place. Starting out on BP and getting all the information to learn from other investors is a great way to get started. All the best

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John Fossetti September 27, 2013 at 6:52 am

Hello Jerry, the number one reason that prevents people from getting started in FEAR. I spoke to a lady last night that told me she has always wanted to do what I do. She got laid off at Verizon, they gave her a settlement, and she opened up a taxi service near where I live. Her biggest fear was what if an offer actually gets approved? Ironic? When I first started out, I used my hard money lender paying 6 points and 15 percent. Sounds expensive but it was cheaper than actually getting a 50% money partner. It ended up adding up to about 30% of the deal. Most hard money lenders do not run your credit score and they care mostly on the value of the property. If you use a hard money lender I would recommend that you add 6 months mortgage payments into your cost so you can pay them monthly (if they charge you monthly). There are a lot of ways to get money in becoming a real estate investor, if you get a good deal, the money will come, if you have the money, you will find a good deal. It is strange but it happens that way!

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R.C. Guzman October 21, 2013 at 3:58 pm

Thank you so much for this! I’ve been wanting to do this for a while now just had no idea how I could do it with no credit and no cash in the bank. I have an investor meeting tomorrow with my local REIA and you can bet I’m going to hook an investor with one of these techniques. Thanks again! This information is so simple yet easily overlooked!

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Jonathan December 11, 2013 at 1:14 pm

Hello Michael, I have recently found been doing a lot of research to try to get into house flipping. I cant seem to find all the answers to my questions, so here goes. One thing I am trying to figure out is how can investors or flippers buy a house here in FL fix it up and re-list it in 30 days? I have heard there are laws regarding anti-flipping and that you have to be cautious as tax penalties can be larger for short term investments that actually turn a profit. If this is true what incentive is left for me to even want to proceed? Thank you for any help you may offer!

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Michael December 11, 2013 at 4:29 pm

Hi Jonathan – I haven’t run into on any of our deals. Some govt loans do put 60 or 90 day no flip rules on addendums when you buy but quite honestly by the time you buy, renovate and then sell it will be very rare you do all this in under 90 days anyway.
As far as taxes go & I am not giving any tax advise (disclaimer) but it the difference of short term vs long term capital gains and has noting to do with penalties. You should try and know going in if you are buying to flip short term or buying to hold long term and run your numbers both ways. The best advice is go on the forums and post your question and use Florida for for your key word search and you will here directly from Florida investors.
Thats what is so great about bigger pockets. Good luck

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Erica January 24, 2014 at 9:42 pm

Hello Mike,
Thanks for the free information. I have been wanting to get into real estate for a very long time. I have really been having the itch since I’ve closed on my first home. I have friends who does construction and are willing to help out on the first flip. My father in law has his own construction company also. My father in law has never done anything as far as flipping he has how ever built his own home. I have years of knowledge around me when it comes to construction. This would be my first rodeo, outside of closing on my very own home in 2012. How do I get investors to have the confidence in backing me?

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Michael January 26, 2014 at 4:24 pm

Hi Erica – You will get confidence the more you learn. I suggest you continue to learn about this business and read all my blogs. Work with a coach or mentor but make sure you do your due diligence if you pay for any services. You have the 2nd most important part around you. The renovation. Maybe they would be interested in a partnership of some sort with you. Confidence comes with experience and like myself and many other’s here you have to start somewhere. All the best. Be excited about your plan and let them know how you will protect their money is most important.

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Jolie February 23, 2014 at 7:26 pm

I would love to flip homes but do not know where to starti I absolutely live the real estate business and im currently studying to take my Real Estate PSI exam to get licensed. I do not know the laws in PA about flipping homes but would like to know. Where should I start? Which books or website should I go to learn all the tools i need to become a flipper? Can I loan money from a bank to start my flipping home business? What amount of money is good to start? I appreciate any helpful advice. Thanks in advance!

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Michael March 31, 2014 at 3:46 pm

Starts here Joli on BP. There is so much information. Learn a little every day and get on the forums and ask questions and be specific. Good luck.

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Chris March 10, 2014 at 7:50 pm

Michael

Question about using OPM. I have friends who might be willing invest in my new house flipping business. In your opinion, if they would invest 10k what would be a fair interest rate? I was thinking that once the profit comes in, giving them $200 for every $1000 they invested on top of returning the $10,000 they originally invested. So their total return would be $12,000. Also, what happens if the flip goes really bad and I lose money. Do I still pay the investor something?

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Michael March 31, 2014 at 3:44 pm

Depending on what you need to buy a house $10,000 may not be enough. It isn’t where I am from.
I wouldn’t recommend more than 2 lenders on any property unless you start pooling money and follow SEC guidelines……. not something you want to start of doing.
Find someone to fund 100% and if not get 2 lenders – one in first position and the other in second.
much cleaner that way. Always work with an attorney to do it legally and professionally.
BTW – that would be a very good rate and too much in my opinion. For instance if you paid 20% like you said and you finished the deal in 6 months that would be a 40% return and more than you need to pay.

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Christine March 30, 2014 at 11:51 am

Are you talking about finding an investor or lender to provide the cost of the down payment and not the entire purchase price? So I would still need a mortgage and then also pay interest on the private loan/investor contribution?

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Michael March 31, 2014 at 3:40 pm

You can do it that way as well Christine. You may not find an investor/lender to fund you 100% on your first few deals. A hard money guy most likely wont unless maybe he has an equity position and you can prove he will make good money taking on an equity position. If you did get a hard money loan or lender who put up a majority then yes you would need another lender in 2nd position to put up the rest and pay them interest as well if you didn’t have the money yourself.
Many ways it can be done.

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Warren June 22, 2014 at 9:13 am

Michael,
I noted above that Anthony had asked or reference about a business loan versus a conventional loan or other financing. I did not see a repost regarding his findings.

I am curious, in your experience…are you able to flip using other people’s credit and no cash out of pocket?

Thank you for the article.

Warren

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mike June 22, 2014 at 2:10 pm

Yes Warren I explain in the article how. Many of our private loans and hard money loans are without any of our own cash. You can do this with partners as well.

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Chelsea August 7, 2014 at 4:50 pm

My husband and I both have experience in construction. We flipped one house years ago in Canada but have since moved to the U.S. He’s a licensed real estate agent and would like to start flipping houses again but have NO money. We don’t know many in the area either because we’ve only lived here a short time. Any tips on how to get an investor???

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Michael August 17, 2014 at 7:10 am

Yes start networking. Go to meetups, REIA meetings in your area, chamber of commerce….
create business cards and just start taking action. Be passionate about your investing and just start telling people what you are doing.

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