The Ultimate Guide to Flipping Houses with No Money

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One of the questions that I continually get asked is: “how do I flip houses with no money?”

People see all the TV shows that show people flipping houses with no money and they really want to know if it actually can be done! The problem is that many of those shows just make it all seem so easy.

Truth be told, “the gurus” have it half right. You can learn how to flip houses with no money down. In fact, I do it all the time. On just about every house flip I do, I have minimal, if any cash of my own in the deal.

Is it easier to flip houses if you have money of your own?  It definitely is – especially when you’re just starting out. But there are many ways to flip houses with no money using some funding sources you might not have thought about.

Which Comes First, The Deal or the Money?

money-iconIn many cases, new investors just don’t know whether to get the money first or get the deals first. This is another question that seems to come up a lot.

The short answer is that there is really no right or wrong one on this.  If you get the money first and have no deals then you need to find a deal real quick. Likewise, if you find a good deal, but don’t have the money for it, you’ll need to get the money fast so you wont lose the deal. Realistically, you need to be working both sides of the house flipping equation, virtually all the time.

Dont let any of that get in your way. If you say you can’t do a deal without the money, then you’ll never do the deal. If you say you can’t get money without a deal, you’ll never get the money. It’s a catch-22 and a big trap for you. The bottom line is this:

Money is everywhere – you just need to go get it!

So go out and get the deals and the money at the same time. In this guide, we’ll teach you how to get the money.

Flipping Houses with No Money: The First Steps

Before we get into the how-to’s of flipping houses with no money, lets take a step back on what you should do before you start looking for money to fund your house flips.

Of course, it would be ideal if money just “came to you”. It doesn’t.  I’ve tried to raise money sitting on my couch watching TV and trust me, this approach doesn’t work. A few hundred thousand dollars doesn’t just “walk in the door”…although that would be nice if it did!

So, before you go out there and start on your quest for house flipping cash, here are a few things you should do before you get started:

  • Read: G12-Book-3-iconStart reading books and learn everything you can about house flipping. Get your education.  The fact that you are reading this right now is a very good first step. You are on one of the best platforms for learning how to invest in real estate on the planet. So good job there!  Do a Google search for “how to flip houses with no money” – you’ll find plenty of information there as well.
  • Surround: Immerse yourself with people who are doing the business and are more successful than you. Who you associate with speaks volumes about who you are. Hang out with super successful people. This success mindset will rub off on you…and they also may be great sources of capital to fund your house flips as well.
  • Study: Study your market. Get to know it as well as you possibly can. Understand the trends, the kinds of houses, the neighborhoods, the streets. Get in your car and start driving around. If you’re close, just walk it. You’ll be amazed at how much you’ll learn. Call some real estate agents on listings you see. Ask questions. Make inquiries. Get dirty. The more you know and feel your market, the better prepared you’ll be when you talk to your money people.
  • Expose: This does not mean rip off all your clothes and streak the neighborhood. What it does mean is that house flipping is a contact sport, so go out and make some contacts. In the process, you’ll need to start formulating your own all-star house flipping team. It means getting out and meeting people.
  • Think Abundance: Always be open to creative ways to come up with the money to finance your deals. Thinking abundance is the primary way to do this. To be successful in real estate investing, you can’t have a closed mind. Creativity rules the day. Yes, there are rules, but there is a tremendous amount of creativity that goes along with successful real state investing. If you shut your mind off from any new ideas, you are not thinking abundance. Always think in terms of “how can I get this deal funded?” Ask this question to yourself and you’ll find that creative ideas will all of a sudden start appearing in front of you.

Flipping House with No Money: The List

Although the list below is by no means all-inclusive, they may even spark ideas of your own that allow you to realize your house flipping goals without the use of your own cash. Be open to new ideas – look for other ways to expand on this list below. Although this list covers the majority of the ways to flip houses with no money, any combination of these factors can also be used to create new, creative ways to fund your flips.

Your Own “Money”

Most new investors don’t realize that there are money resources that they already have. What’s lesser known is how to flip houses with no money with resources you actually may already have at your disposal already!

I thought this was an article on how to flip houses with no money? It is. Even though the resources are your own, there is no outlay of cash on your part, which is the best part. The key is finding the money to use then to flip. If you look carefully there, there are a number of ways to do this:

  • Home Equity Loan: Using the equity in your primary residence is a very popular way to flip houses with no money. If you can leverage that money into a few deals with a private moneylender, there’s no cash outlay for you as your closing costs can also be rolled into the loan as well. You can also use this method in combination with any other strategy flipping houses with no money.
  • Credit Cards: visa-credit-card-iconYou want to use these wisely and responsibly but it is an option and one that is very popular with new house flippers. As one of the most common ways to start a business, credit cards have been used in this way for years to finance all kinds of business ventures. Be careful not to over extend yourself, but credit cards can be used very effectively as a short-term source of funding.
  • Credit Lines: In addition to the methods above, when you are funding your rehab, you can use your good credit to get a line of credit with your suppliers for building materials, kitchen cabinets, flooring or any other building materials that may be needed in the house flip renovation. You may even be able to get your contractor to be paid after you sell.
  • IRAs: Did you know that you can use your own IRA money to invest in real estate? It’s called a self-directed IRA and many of the investors we use to flip houses use this method to finance many of our flips. Make sure you consult your accountant, lawyer and your financial planner before you jump in. They will be able to tell you if there are any kinds of early withdrawal penalties that need to be avoided – so make sure you check with them before you do anything. A self-directed IRA is the lesser known of IRA options in which the account owner can make active investments on behalf of the plan. To open one, an owner must hire a trustee or custodian to hold the IRA assets. That person is then responsible for administering the account and filing required documents with the IRS. Do your homework and beware that a misstep can disqualify your IRA’s tax-deferred status, forcing you to pay tax on its full value plus penalties if you’re under age 59½.

Traditional Banking

bank-iconI know what you’re saying…“Banks? Mike, have you lost your house flipping mind?”

Yes it’s true, lending is tight right now, but it is worth a shot for you – especially if you’ve been good at formulating your team and getting out and meeting people. This “meeting people” also includes bankers as well.

If you have a good relationship with your bank, this is another way to flip houses with no money. Traditional bank loans are more challenging at times, but if you have a solid business plan and fully explain to them what you are doing, many new house flippers have found great success here. Although this house flipping finance method may not happen right away, it may eventually and could be another source for getting money to fund your deals.

Outside Investors

In certain businesses you may be able to “just fake it till you make it”. Real estate is not such a business. And when you are looking for investors, you have to approach them in a certain way. And that all begins with honesty and integrity. If you don’t, word will get around and you will be labeled as someone people don’t want to do business with.

So here are a few tips when approaching outside investors:

  • Be Honest: When approaching outside investors, be honest and transparent at all times.  There’s nothing wrong with telling an investor that this is your first house flip deal.
  • Be Transparent: If you do tell them that this is your first deal (which I highly recommend) then you should be prepared to convey how serious you are about the deal.  Consider putting together an investor presentation highlighting topics such as the ARV (after repair value), soft costs and projections.  Explain the 70% Rule and show them how you expect the deal to work.
  • Get Your Facts Straight: Have all your facts and details laid out in an orderly, logical format so you can best present the opportunity.
  • Seek a Mentor/Coach: In many cases when you are just starting out, it’s a wise decision to seek out the guidance of a more experienced real estate mentor or real estate coach. This person could be a friend that you meet through a REIA meeting or even a paid coach. Although personal coaches don’t come cheaply, the right one can shorten your learning curve and the tuition you may pay can be recouped in your first deal in many cases. Most importantly, having an experienced and successful real estate investor by your side makes your opportunity pitches to investors much easier as well. You can tell the investor that you are working side by side with someone who knows how to flip a house and has successful experience doing it. This fact alone may help you in convincing some outside investors who otherwise may not be open to lending you money.

The three main kinds of outside investors and they are as follows:

  • Hard Money Lenders

Hard money lenders are people with money that lend to others at a very high interest rate and typically charge points on top of that.

These kinds of loans can be especially useful if the flip can be done in a short period of time. This is because you can typically expect to pay anywhere between 14 and 20 % with four to even six points on top of that. Some house flippers use them all the time, but in my opinion, there are better place to get your money and at better rates.

The cost of hard money lenders may be a bit restrictive for the starting house flipper, but depending on the situation, they may be useful – but there are risks to be aware of.

As an example on a $100,000 loan at 18%, if it took you 6 months to repay, your interest would be $9,000 and $5,000 for 5 points. All in, that’s over $14,000 in costs. But if you factor those costs into your house flipping formulas, you shouldn’t have a problem still making a good profit. In one of my more successful house flips, I funded that deal almost entirely with hard money. But because the margins were so good, the soft costs in interest were more than covered by the profit.

Chances are very good that if you hold onto the money for longer than 6 months, then you may just kiss your profits good-bye.

  • Private Money Lenders

Private money lenders are just regular people with disposable money looking to invest it. 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 if they are asked. These individuals could have money in the bank, IRAs, 401Ks, mutual funds or even an abundance of equity in their home. This is money that can easily be used for real estate investing. They don’t have to be wealthy; they just have to be interested in getting a better return on their money.

In mos cases, private money lenders are much preferable to hard money lenders, largely due to the fact that you, the house flipper maintains control. You set the rules and rates…not the lender.

The real key to success is to offer them a high enough interest rate on their money to entice them to do it with you in the first place. if you can find out what they are getting for a return on some of their other investments, then you can offer something more lucrative that both ensures you stay profitable but is high enough to entice them to invest.

If you can’t think of anyone off the top of your head, then start thinking about the people you deal with every day.

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

People are always looking to get a better deal on their investments and making money flipping houses is an extremely lucrative way to do that. When you learn how to do it, you’ll never have the need to invest your own money in the future because as soon as you turn your first successful house flip, you’ll find people coming out of the woodwork to start lending you money to get their own piece of the house flipping pie.

  • Friends and Family

Another choice is to find lenders through friends and family. Many real estate investors including “The Donald” got their start this way, so you should seriously consider it.turkey-icon This kind of money lending is tricky, however. Whenever family is involved with money lending, things can get complicated fast. If you don’t do your homework and the deal goes south, Thanksgiving dinner could be awfully uncomfortable.

I personally recommend going outside family for funding. Making good contacts is far less complicated and emotional. But if the opportunity is there, go this route but make sure you structure it formally and legally and don’t make the mistake of treating it casually. You’ll find that as soon as you turn your first successful house flipping deal, investors (including family) will suddenly appear. Nobody wants to miss out on an opportunity to make money.

Partners

When you are first starting flipping houses, an easy way to get some “house flip momentum” going is to partner up with someone. This partner could be any number of the following sources:

  • A business partner
  • A friend
  • A co-worker
  • A business owner
  • Another real estate investor
  • A neighbor
  • A family member

Although it may be tempting to form a formalized partnership with someone when first starting to flip houses, I strongly discourage this. It’s far better to do it on a deal-by-deal basis and not as a formalized partner in the business.  When you are first starting house flipping, you’ll soon find that although there are a lot of great house flipping partnerships, there are also a lot of bad ones as well – and you don’t want to be tied to any one in particular.

You can simply ask the partner for the money to finance the house flip. Explain to your partner how you’ll do everything else but the two of you will split the profits 50-50. In this way, your partner reaps the rewards while only contributing the cash and not the effort. This kind of house flipping arrangement ends up being a good deal for the both of you.

Some would say that this kind of no money arrangement really only benefits the partner because all he has at stake is the cash itself. I disagree. When you are first starting, getting 50% of something in a flip is far better than getting 100% of nothing. If you don’t partner, you may never do the deal.

If you follow the formulas for structuring house flips here on BiggerPockets, you’ll have good-sized profits usually in excess of $20,000 depending on your market. And when you’re first flipping houses, a 50% split on that kind of money, though not enormous, can certainly set you on a course to even greater profits in the future.

  • Contractor Partners

Another great kind of partnership is to form one with your general contractor.hammer-icon With this kind of structure, I have done some of my best house flips. The idea is that you raise the money to purchase the flip and assemble the entire project while the general contractor does the work at cost. The money you would have to raise for the rehab is now not needed as the contractor foots that bill. The contractor in essence becomes a source of cash for the rehab part of the flip.

There are hundreds of potential variations on that basic agreement as well. When you partner with an established contractor, talk to him about funding the whole flip as well. Perhaps he has a bank credit line or maybe access to funds of his own – or even good relationships with banks. Perhaps he has credit lines with his suppliers so he doesn’t need to invest much cash as well. Maybe he knows other investors or money guys.

The possibilities are endless – and it’s worth it to explore all angles here. When your structure a flip like this, it makes for an extremely motivated general contractor who is eager to get the job done and get it done right.

  • Investor Partners

As stated before, getting out there and enlarging your social networks with face to face networking is very helpful when finding investors. But some of these investors and money people could also be partners for you as well.

If you meet an investor at one of your networking meetings, keep your mind open to the possibility that not only could they lend you money, but they also could lend you expertise as well as a partner for that particular house flip. Before you do anything with them, you’ll then need to work out a solid contract for the deal.

If the investor buys in cash, this is ideal. That way you won’t have to go through a bank or a lender for a loan. If they need to qualify for a loan, then this may slow down the whole house flip.

In these kinds of arrangements, you can even weave in his real estate investing connections to get the house renovated using his contacts. In many cases, his contacts can even help you to find potential buyers as well. Because the investor is so vested in the deal, he may be able to lend additional money to reap even greater profits. These additional monies, if use wisely, may be able to improve the property even more and earn you and him an even greater profit. So instead of selling the house for just $220,000 you might end up selling it for $240,000 instead.

If the investor is fairly experienced, you may need to give up more of your profit percentage. But if it helps you get your first flip under your belt, gains you some momentum and makes you a chunk of cash, it’s all worth it. Just be careful not to give up too much control and profit percent, as you do want to get paid fairly for the work you do.

When Flipping Houses with No Money…Be Creative

These methods will help you to jump-start your thought process on how to flip houses with no money. Even so, there are many other ways you can squeeze out cash or defer payment until the house is sold. Deferring payment of debts sometimes is just as good as borrowing.

Think creatively, be open to suggestion and use these ideas as launching pads for other ways to find money so you can start your real estate investing career flipping houses, while doing it with very little if any of your own working capital.

Raising money is certainly one of the biggest sticking points people experience when first starting to flip houses. But the good thing is that the ways to structure a deal in real estate are literally infinite. So be open at all time to new ideas, no matter how crazy they may seem initially.

There’s really no such thing as a bad idea when brainstorming new and creative ways to fund your flips. Talk to people, bounce ideas off people, and when you do this, you’ll be amazed at how many new creative ways you can come up with to flip houses with no money on your own. Use this guide as a starting point and then let your creativity come through.

Remember: money is everywhere…you just have to go out and get it!

If you’ve made it this far, please leave a comment below and let me know what you think! I would love to hear any other strategies you’ve used to flip houses or invest in real estate with no money…leave a comment and give up the goods! :-)

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About Author

Michael LaCava is a full time real estate investor, house flipping coach and the President of Hold Em Realty located in Wareham, MA. He runs the website House Flipping School to teach new real estate investors how to flip houses and is the author of "How to Flip a House in 5 Simple Steps".

63 Comments

  1. Michael,

    Bravo! excellent article full of real life issues.
    Real Estate Gurus who practice what they preach
    know the different tricks of the trade too.
    You have written this article which can be
    extremely appealing for newbies.
    But there is always room to add more.
    May be you will be writing more about acquisition
    of real great deal for easy flips where there is lot of meat.

    I thoroughly enjoy reading this article which kept me
    going and have definitely great value.
    I want to thank you on behalf of all readers for sharing.
    To your success!
    Navtaj Chandhoke

  2. Great Article!!! I’ve been a Real Estate Agent for many years now and just Started my investment Company, “Canis Major Investment Capital LLC,.” I’m Trying to Acquire funding for my First deal and this has been really Helpfull!!! Thank You and “BiggerPockets.com,” for All Your Information!!! Please, keep it up!!! I’ll be Posting my FIRST DEAL and how it Goes, Soon!!! Greatfull Investor-Owner!!!
    Carlos De Jesus (CANI.)

  3. Michael:
    I had a new investor come to my office Friday for help with finding buyers “if” she found deals. Her next concern was her own lack of cash to purchase. I advised her to find and negotiate some great deals, and buyers would be no problem.

    That evening, she emailed a deal asking if any of our investors would be interested. Within a matter of minutes, we had a contract to purchase from her. We are scheduling a double closing where we’ll bring the cash, she won’t need to show up with any, and she will walk away with a profit.

    Double closings are another great way to buy/sell real estate with no money of your own.

    To your success!

  4. Great post Mat!! Feet on the ground!! What do I mean by that? Find a mentor that you can meet with often and will get in the car and drive – in your target area!! I spent several months with a group and mentor and we hit the road. We identified our target market, we called real estate agents, we called for sale by owners, we knocked on doors etc. AND network – tell everyone you know what you are looking for, create your power team and make your story about the other person!!

  5. I have a question & I apologize if this is the wrong place for it….

    I am attempting to flip my 1st property. It is a shell, that will need close to $200,000.00 in rennovations.
    My difficulty so far is with the different contractors I’ve been meeting with to get their qoutes on General Contracting the project. So far none feel obilgied to give me a cost break down…I keep getting a similar response of “give me the money & I will deliver you a $400,000.00 home.”. They want design control, no input and the finsishes (tile, flooring) will be up to them.

    Obviously I know I’m not meeting with the right guys…What I’m unclear about is exactly what I do want. I want a price range of tile, flooring, kitchen cabinentry and the ability to choose to save a fireplace, but give up something else. Any thoughts of a better approach?

    • Hello Joe,
      It is not you but your approach may need to be changed. I have experienced this as well. Many GC don’t want to give that up as they feel you will use their quote against them to get a lower price. I understand there position as well. You must explain to them you will not share their hard work to provide you the quote with anyone else. You can provide a detailed scope of work for them in the fashion you want it to be broken down and give it to all contractors quoting for the job. I Make it clear you want the breakdown or they will not qualify for the job. For $200,000 you might want to consider hiring an architect to create the spec for you.You will pay for this service but it can save you money as well. You MUST have a detailed contract in hand with time line for completion before moving forward with any contractor. Hope this helps and feel free to ask me anymore questions.

  6. Great primer Mike.

    Like Brandon, I wish I had read this article years ago when I was just starting out. Very valuable information. And like Karen Rittenhouse, I believe folks that have a great deal will always find a buyer, but you have to network where the buyers are. I too love double closings. Anyone just getting started needs to learn this strategy quickly.

    Sharon

  7. Hi to everyone posting on this blogg, first i want to thank Micheal for sharing your knowledge to people that are just starting . My question is how do you write a contract and what does a contract have to have in it? is there a contract example you can share with us. and I guess my next question does the contract need to be notarized . and last who takes care of the transfer of funds from the investor to me to the seller. I am confused about the whole process can you please elaborate more on this process in details thank you so much .

    • Hi Sherry. It depends on many factors but most contracts are written in the form of a promissory note which is basically a promise to pay off the loan by you with all the details of the arrangement between you and the lender. The funds should go to the closing attorney who is handling the transaction for disbursement.

  8. Hey Mike,

    This is a fantastic article! You are one of my favorite writers here and this is one your best if not the best you have done!

    So many good tips for people starting out and also for those of us that have been doing it for a while. Always something to learn and this has given me some new ideas.

    I’ve used most of the financing options laid out here and I am happy to see such a comprehensive list. I also appreciate the fact that you point out the pro and cons of various options.

    The 3 things I have used and really like that you mentioned and are often overlook, misused or under utilized because of them often being bashed are:
    1) HELOC
    2) Credit Lines (Specifically store credit)
    3) Credit Cards

    I LOVE my HELOC, big pool of cheap money. Super low interest (I think I’m paying like 2.75% or something crazy like that) and no transaction costs. Easy access too, I can have money available in my account generally in less than 48 hours.

    I also love my store credit cards at Home Depot, Lowe’s and Sears (Some others but these are the big ones I use for Real Estate). On one of my first deals I was cash poor and put about 85% of my material costs and some of the installation costs between these 3 credit lines and paid no interest for 12-18 months on any of it.
    You do have to be careful since the interest is DEFERRED so if you do not pay the full balance by the end of the promo period you pay all of the usually around 20% interest accumulated over that time.
    I actually have a set of appliances that I bought over a year ago at Home Depot for a house I sold last April that I don’t have to pay off until this coming August!
    (They also happened to be having I think 25% off all appliances with free delivery and haul away, then I got another 10% off using a Lowe’s coupon:) )

    Finally the much maligned Credit Card… Just because there are a lot of idiots out there that think it makes sense to pay 24% interest for a PlayStation doesn’t mean that Credit Cards are bad!
    I have over $50K in available credit on a couple of cards where I get offers CONSTANTLY for 0% interest for 13-14 months for a 4% transaction fee.
    So hard money points with no interest, no closing costs other than the “points”, no lien on the property, no draw inspections, no reason I can’t use the money between multiple properties for general business expenses. Also unlike the store cards this is true 0% interest so if you don’t pay it off by the end of the promo period you only pay the higher rate going forward.

    Overall these resources are the cheapest money I have access to other than my own cash. I wish I had enough available to not need anything else but sadly that isn’t the case.
    However I do have enough to pretty much fund 2 simultaneous flips of lower end properties in our pricey MA market.

    One big takeaway from this I want Newbies to see is that this is only possible because I have good credit. If you have bad credit and mountains of debt you aren’t likely to have as many of these options available.
    If you want to get involved with real estate one of the first things you should do is establish good credit or work on fixing it if you have bad credit. Without over simplifying the process too much the biggest thing to do is be fiscally responsible over a period of time. You do that and you will get results (Hint it does NOT make sense to pay 24% interest on a PlayStation).

    If you don’t have cash or the ability to “Monetize” your credit then you are basically locked into the HML, Private Investor and Equity Partner world. All useful resources and can have there place, but options are limited and as I pointed out above these other resources can be DIRT CHEAP!

    • Thanks Shaun and I appreciate all your comments. Sorry for the delay as I was away on a trip with no email. I might add the same for buying a big screen tv which everyone “must” have. Keep rocking it.

  9. Christopher Clark on

    Great article!! I own a couple of multi-unit properties but fell into being an “investor” accidentally. I’m now thinking about jumping into being a “full-time” flipper and am wondering if it is a viable “job”? I’ve got a great network of tradesmen and my mortgage banker that has transacted my existing properties. Would my next step be to sit down with my banker and figure out how to build a fund for the acquistion/purchase? Thanks for any guidance!

    • Hi Christopher – My suggestion is don’t quit your current job unless you have a large reserve to carry you through any change you make into a new venture. At least one year’s salary.
      Your banker is fine if you looking to do business with them. Try and have a business plan with details so they know what your plans are.
      Good Luck

  10. LaShanda Daniels on

    Hello Michael
    I am currently an unemployed full-time student, majoring in Psychology. However I have been racking my brain somewhat frustrated trying to find a financial money making outlet so that would make a decent profit. The student loans are steadily increasing and the bank accounts are steadily decreasing bit by bit. I was browsing the web pages and came across your website and immediately my creative brainstorming juices started to flow. Since I have no prior experience flipping houses I will be looking for someone to teach me the ropes and potentially invest. I will follow your advice to the letter. Thanks and I hope to hear from you soon.

    • Hello LaShanda
      BP is a great website for getting so much information on real estate. Myself and many other’s are here to help in anyway we can. Make sure you get the FREE Ultimate Beginners Guide to Real Estate Investing here on BP and Buy the book on Flipping Houses by Jay Scott here on BP also.
      You can also get my free ebook on my website if you haven’t signed up for yet.
      Start out reading all of these.

  11. I’ve been looking into this type of investment for several years. I had a pretty good nest egg saved, then was hit with financial disaster. Now that I’m back on my feet I’m ready to try my hand at this again. Thanks for all the great advice. I’ll let you know how it goes.

    • Hi Laura
      Thanks for your comments. What specifically are you looking to do? Keep me posted and if you have some questions let me know.

  12. Thanks for the advice! I’m just wondering if this is something I can pursue while still working full-time. I’m also a little nervous about asking for money with no real hands on experience. I have a business degree and currently work as a plumber. My experience is more on the rehab side and not the buy and selling part. As I get older though, I’m starting to realize that you can’t be afraid to hustle if you want to make a buck in this country. I think I might start by seeing if I can find a REIA meetings in the area. Cheers!

    • yes it is Steve. Thats how most of us got our start. I worked another career full time and eventually wound that down to go into real estate investing full time. You said it yourself you can’t be afraid. Fear is the number one reason why most don’t take action. Get yourself out there and just be yourself. Continue to educate yourself and ask lots of questions at the REIA events and on BP. Where you from.

      • I’m about 35 minutes outside of philadelphia. There’s a lot of opportunity out this way. Plus, with a background in residential plumbing I’ve had the opportunity to work in virtually every surrounding county, as well as, Philadelphia. With my working experiences I’ve gained a decent grip on building materials, layout, and design, and feel as if my expertice will surely produce high turnover. I don’t mean employee turnover either. Talk is cheap though. It’s time to let the rubber hit the road as you said in your article.

  13. Corey Harrison on

    Plenty of info for a newbiee who has little to no idea ..about flipping properties…keep up the great work!!!

  14. I’ve been reading, reading, reading without posting comments. Each article has me jumping to the next one. This one is one of the best so far. I see more creative ways to think of financing a deal. I am learning so much from this site. Thanks you all for putting so much information out there in what seems to be a great community. I’ll try to get more involved in the discussion. I am very comfortable with rehabbing, it is getting into the deal that scares me.

    • Hello Dria

      FEAR is a big part of why most don’t take action. You have started to conquer that fear by educating yourself here on BP. Like you said this is a great community and you can learn a lot from many of us. Renovating is one the biggest challenges for most and the fear of going way over budget which in reality happens a lot. This is great you have this skill set so it will help you for sure. If you get your ARV right and cost of repairs then you know what your MAO will be so go at with confidence. Love to hear how you make out.

  15. Thanks for the great info.. I have just been afraid to lock them up… I think I ll just go out there and do it… Thanks again..Brook Robles

  16. Wow great article. I have been reading about different aspects of Real Estate Investing and am considering starting out with getting a property under subject to and then flipping it. I have the money to hold it and renovate it. Is this advisable?

      • I want to flip it. I don’t have the money to make the purchase outright, but have enough cash reserves for a few months payments and repairs.

  17. Thanks a lot for this article Michael! I recently decided to get on board with REI and i’ve been reading reading and reading. I wish i’d known about this site a long time ago!! You guys are amazing and i love how easy to follow your articles are. Im wan to start with “double closings”. Any tips in general? Thanks in advance . Btw u and Bradon are my favs ;-)

    • Thanks Aisha –
      The biggest tip is just start taking action even if it is a little each day. Get out there and start networking and going to REIA meetings. Write your goals and take actions or they will just be dreams.

      All the best and I think I am a little better than Brandon, LOL. Lets see if he finds this comment.

  18. Hi Michael.. great article and information. Thank you for sharing. So I must say that I’ve always wanted to take a shot at flipping houses. I know there is money to be made out there. I’ve watched shows like “Flipping Out” and “Flipping Vegas” and have said to myself, I can do this even though I’m no handyman (computer engineer by trade). Obviously the shows make flipping look easy and I’ve mentally prepared myself for the worse by estimating renovation costs to be 30-40% higher than expected. I’ve never taken the plunge in following through with my dream however because I worked a full-time job – until now.

    I was recently laid off from work with 5 months of severance pay coming to me which will be around $68K before taxes. I now have the time and dedication to put into flipping, but at the same time it’s a scary thought of starting a new chapter of my life with no certainty if this will work, not having medical benefits, etc.

    I have about $30K in car debt. Pay credit card off each month. No other expenses besides mortgage and utilities, etc. I also have excellent credit as well.

    My questions..
    1. Should I pay off my car loan with the severence money before I start to seek a lender for a future deal? My thought process here is to have no debt (besides a mortgage) before trying to obtain a loan which will look better to a lender, but on the other hand, its a scary thought giving up more than half of the severance to do this. Or would it make more sense to preserve the severance for as long as I can, keep the car debt for now, and seek an investor for the loan knowing I could potentially pay for the future deal with my liquid cash? I’m planning to purchase something in the $55K range to start out.

    2. Should I stay focused on finding a job again and put my dreams of flipping on the back burner until I can find permanent work again? I’m worried if I do this, I’ll just get into a rut again or will not have the time or desire to flip in what spare time I may have. I have the time and energy to devote to flipping now, but without a job to prove to the lender I’ll be able to pay the loan back, etc. Should I just take the plunge and go for it?

    Any advice you can offer would be greatly appreciated. Thank you.

    • Hi Eric,
      Lets address #2 first. If you love your career and would be happy doing that for the rest of your working days and can jump back in at a >$150K salary you should probably look for a job again.
      Doesn’t sound like that is the case (at least the parts about being happy) so this is probably the best time to make a go of it. Your fear of getting back in a “rut” is dead on. You are not likely to ever have a better time to see if this is the right path for you.

      As for your first questions I would not pay off the car with your severance if you are going to try to get into flipping. You will need the money to get you through until you close your first deal. Optimistically you want to be able to survive at least 6 months without getting any income, and likely a fair number of business related expenses that will come up.
      One thing about financing flips is that most of the normal stuff isn’t really that important. You will usually be dealing with a Hard Money Lender (especially on early deals), Private lenders or if you do deal with a bank it will be a commercial loan so none of the stuff you think of with getting a mortgage really applies.

    • Hi Eric – I dido everything Shaun says. Never easy to make these decisions but he is right you didn’t have to make the toughest decision and leave your job – It left you and you don’t get too many opportunities like that. Now is the time to find out but you must proceed with caution and careful planning. This is not a get rich quick scheme.

      Best of luck and let us know how you make out. Happy to help!

      • How do I find REIA Events in my area? I am like a lot of them I am scared to try. I work part time but have no extra money so I would need help getting the money to flip houses. I don’t own my home I rent and with a bad marriage not so good credit. I would love to do this with my son.

  19. Charles Coleman on

    Hello, hopefully someone will read this, but I am very very new to the real estate investing world. All I am looking for is guidance, and so I saught it out, and I found myself here… best decision ever. Thank you for writing this article. I have sooo many questions, and I am a mixture of nervous and excited, because I know I can do this, I just need to be pointed in the right direction. Any and all advice would be greatly appreciated.
    Fyi, I have a wholesale property ive identified, found the comps, but I dont know how I could calculate the arv, or how to go about getting the house under contract, but that is as far as I have gotten in the process.

    • Check out all my blogs and you will get all the information you need on ARV.
      Good luck with you first deal possibly. If it is in Massachusetts I would be interested in it ?

  20. Thanks Mike!

    For someone looking to get some insight on this field this was a great website to touch base with. Answered a lot of questions I had and pointed me in a great path. Thanks for all the tips and information!!

  21. Thank you, Michael.
    This article is helping me figure out how to go about flipping houses. I recently was injured and will never be able to continue the job I had. I have bad credit which I am working on repairing and I am going to college for a degree in business admin. I will continue to read, read, read and when I feel confident enough, I intend to start networking. Great article and thanks for the food for thought.

    • Good to hear Fran. Never to early to start networking. Just be yourself and it is ok if your not an expert when you are first starting. Just be excited and talk with enthusiasm with your new found skills and your goals with people. You will never get it perfect. Just get started and opportunity’s will start to appear.

      all the best!

  22. Tyler Lajoie on

    Hello Michael, I am looking into starting a flipping business in my area and I have a couple of questions for you. First off I love the article and it has given me a lot of useful info. Thanks a lot!! I want to be the front man and do most of the stuff on my own. Like the reno and scouting properties, finding lenders, buying reno materials etc. I have little to no money down and reasonable credit. My main question’s are do a lot of people do there own reno and do you think it’s a good idea to invest with really no capital? I would definitely contract out plumbing, electrical and any other work I’m not capable of. I am really looking for some info from you due to your tremendous article. Once again thanks for all the great knowledge and I’m hoping to hear from you.

    • That depends on the individual and their financial situation. If you have plenty of capital you have options on that. If you have no money then you have to work harder and be creative to make it work. It is not a matter if it is a good idea or not. If you are borrowing money for the first time most likely you will have to put some skin in the game with your lender unless maybe you do an equity split. Check out my article on funding with none of your own money. It is ok to do the work yourself as well as long as you provide quality but you won’t grow your business much that way. Your choice on what your plan is. Doesn’t make it right or wrong. You still need to follow the rules to make money.

  23. Hello Michael, I have a question I have two really close people to me that I know and they are willing to put up the capital and all agreed for us to be partners. The problem is since I don’t have any capital to put in how can I contribute? We have a meeting Thursday and they both would like for me to come up with some ideas where I can contribute. I know I can help find houses, but what are some other ways I contribute?? Looking forward to your response. Thanks for all your help with like-minded people interested in this industry

    • Hi Adam,
      That’s great. You did the hardest part. They like, know and trust you enough to invest with you.
      You will do a lot my friend.
      1- find the deals through your networking, building relationships & marketing
      2- Negotiate the deal & put into contract
      3- Manage the rehab process with sub contractors or general contractor
      4- seek out a qualified agent to sell your property
      5- Do everything in your power to make the deal the most profit while doing a quality job

      There are many more layers between but you are the captain of the ship & with out you they wouldn’t have any deals to invest in unless they went elsewhere.

  24. @Michael lacava
    Thank you for another informative post.
    I will be working diligently on building a team, growing a network and completing my first flip.

    Warren

  25. Innocent Azuogu

    Michael,
    I am thrilled with your post. It is quite inspiring and I am rearing to go. I am an Architect by profession and real estate has been my heart bit but I am taking my time to educate myself further hence my registering with BiggerPocket.com. Am still studying your articles and podcast/webinar and they have been enriching and rewarding. Now I want to launch out by acquiring a property for my wife’s use to run her school. Please I want a lead as how to go about it with no or low money, be able to close the deal and pay off the bill within one year. The population of the school is not much, the growth is being hampered because of its present accommodation hence this move. I am a Nigerian, your prompt response will be highly appreciated. Regards. – Innocent.

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