Flipping Houses With No Money: 3 ACTUAL Case Studies

by | BiggerPockets.com

OK, so you want to start flipping houses with no money?

You can if you THINK you can. You think you can?

So far so good if you do. Thinking that you can do it is nearly 90% of the battle.

When it comes right down to it, money is everywhere. Yes, I mean EVERYWHERE. You just have to go out and get it.

The other 10% is ACTUALLY doing it.

So let’s get into it.

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Who to Get the Money From

To flip houses with no money, you have to get the money from somewhere and there are really three sources we use all the time to get money from. If I haven’t said it before, I haven’t flipped a house with my own money in over two years.

Yes, two years.

Why? It’s because I’d rather use other people’s money and save my money for other things – in my case, college tuition and other cash intensive expenses.

So here are the three sources we use:

1. Private Money Lenders

These are ordinary people with money who have IRAs, 401ks, mutual funds, home equity lines of credit or CDs.

The best part is that you set the guidelines and rates not the lender.

Related: Private Money Lenders: Who They Are & How to Find Them

They are all around you. Just look for them. They could be:

  • Doctors
  • Dentists
  • Lawyers
  • Business Owners
  • Your Internet Marketing Guy…

They are anywhere and everywhere. Just tell people what you do and they will come to you. Don’t sell them on “giving you money” – just tell them what you do and they will come to you.

2. Hard Money Lenders

A hard money lender is a business who lends at higher interest rates. The interest rates are usually 12-18% and 2-6 points. Expensive but it’s OK, don’t get scared.

The advantage is they close really quickly so you can wrap up good deals fast while your competitions still stumbling around in the dark.

Most hard money lenders will require you to have “skin” in the game, so you may need to combine hard money with your own resources, private money or even partners.

Let’s say you need $100,000 to fund a flip. The hard money guy will lend you $80,000 and he says he needs you to get the other 20%. What do you do?

Get the $20,000 from your self-directed IRA, CD, cash, HELOC or a private money person or friends and family. Deal done.

Related: The BiggerPockets Hard Money Lender Directory

3. Partners

Don’t form partnerships, just get a partner to do a single deal on. When partnering with someone with money, you may need to do the flip and they provide the cash. You then take 50% or even 40% of the profits.

These partners could be:

  • Business Partner
  • Friend
  • Co-Worker
  • Relative
  • Investor
  • Contractor
  • Realtor
  • Real estate attorney
  • Money guy

Do it all on a deal by deal basis and although the 50 – 50 deal is the most popular kind, work it out so it works for both of you.

Flipping Houses With No Money – 3 ACTUAL Case Studies

Here we show you how in three case studies of actually doing it. These are actual flips we did in the past six months and we did them all with absolutely no money of my own.

Case Study #1 – 100% Private Money

Where: Taunton, MA

Terms: $135,000 loan for acquisition and renovation

Type: 100% financing from the private money lender from a self-directed IRA, 10% APR with no points

Loan: Simple 12 month Promissory Note w/ 1st position

Payoff: principal and interest upon sale

Actual payoff: $140,215

Lender profit: $5,215 in less than 5 months

Sold: three days on the market

Example #2 – 100% Hard Money

Where: Whitman, MA

Terms: $200,000 for acquisition and repair

Type: 100% financing 10% APR with 1 point paid at closing

Loan: 12 month promissory note w/ 1st position

Interest paid: monthly at $1,667.00

Lender profit: $7,700 less than 5 months

Sold: within two weeks on the market

Case Study #3 – Private Money Partnership Hybrid

Where: Dartmouth, MA

Loan type: $205,000 for acquisition and repairs

Terms: 100% financing at 8% APR from a self-directed IRA

Equity Split: 60/40% on net profit

Note: 12 month promissory note with first position

Payoff: principal and interest upon sale

Sold: three days on the market

Flipping Houses With No Money Conclusion

Can you start flipping houses with no money of your own? Yes you can.

We do it all the time…and so can you. We don’t have any magic formula but we do a fair amount of analysis to make sure all the numbers work out right and the exit strategies are firmly in place.

Can you do the very same? YES.


And if you’ve made it this far, please leave a comment below if you have any questions on how it’s done or how I can help you to do it as well leave a comment, I’d love to hear from you. Have you flipped houses with no money? If so how? If you haven’t that’s cool too, leave a comment and ask how!


About Author

Mike LaCava

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".


  1. Great article Michael! The idea that thinking you can is 90 percent igniter right on. Not necessarily thinking about the actual deal or terms and how to do it. Ou need to believe you can do it and be excited about it and the ways and means will come to you.

    I started out with my father and he provided all the money and financing for ten years, technically I never paid a dime of unowned money, but I don’t make a very high percentage either. Now that I bought the business there was enough cash in place to cover multiple flips and I have financing as well from a local bank.

    • Thats a great position Mark and I am sure you will continue to grow and expand your business revenues. At some point you may start to leverage other peoples money if your own resources get strained and you will have no problem obviously with your history.

  2. Whenever Michael Lacava writes something, I pay attention.

    Prohibited Transactions in IRAs and what is a disqualified person us discussed here on the IRS website. http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics—Prohibited-Transactions, which is important in getting private money.

    JV Partners with No Time, Plenty of Lazy Money Professionals takes work, but networking saves legwork. Networking with CPAs and Financial Planners that have clients that wish for SECURED BY REAL ESTATE investments instead of Mr Merrill Lynch’s fancy plans.

    Lastly, what is your elevator speech getting private funds for your deals?

    Here is mine. What do you do?
    “I have an Awesome job: I help people get 6 – 10 % on their money with local real estate investments. Would you know anyone that needs 6 – 10% for their retirement?”

    • I can say Brian and I have talked a little bit about the benefits of Joint Ventures, whether its with a money lender, or even with a homeowner. Your only limited by your creativity and the needs of the people your working with.

        • Here’s a unique approach, found a major rehab project. $360k ARV, owes $150k to bank, about $80-$100k in rehab, more than I want to get into. Owner is elderly and just lost job. Looking for a solution. Talked to other investor who likes these kind of deals and has a lease option with good numbers and 2.5 years left to execute on. Doesn’t do lease options anymore and this is the last one in their portfolio. So made offer of instead of finder fee, lets swap contracts. No money out of either of our pockets and we both get what we want and the homeowner gets the help they need! Lease option cash flows a little but the equity will be nice in a year or two.

      • So true Roy. It certainly is about being creative and making sure you satisfy the needs of the seller, the lender, the buyer and involved in the transaction. I think too many only think about their needs selfishly. We all want to maximize the profits out of every deal but you MUST think of other involved.

        • That is awesome, Roy, like a 1031 Exchange, swapping something for another, and it can be anything of value.

          When talking to a Seller, it is all about “what do you need the money for” and I might be able to provide a cash solution or “perhaps another solution”.

          The “perhaps another solution” may be taking over some debt obligation, like a stack of hospital bills owed.

          So you might call the hospital billing dept and arrange a payment schedule and “assume the debt”.

          To get this done, it usually entails a 1 on 1 with the seller, and “Be the Doctor” with the seller. Agents resist this usually.

          See https://www.biggerpockets.com/blogs/3/blog_posts/17-be-the-doctor-to-home-sellers-problems

          This is the BIGGEST TIP I can give any REI, new or seasoned.

        • Thats awesome Roy and certainly a win-win-win.
          Brian you truly are an expert when it comes to creativity in putting deals together. Keep up the great work. It is all about solving their pain points and you nailed it.

    • Thanks Brian for sharing the link as it is important. I like your elevator pitch because we you get the obvious answer back probably most of the time. I usually say a high or nice rate of return on their money. Someone or I read it one time or another you can’t mention interest rates the first time you meet someone. 3 touches and 30 days for strangers unless friend, family or business associate. You probably can clarify this for me better than anyone so thanks for your response in advance. It hasn’t been a problem for me but good to know to share.

  3. Hi Michael,

    I get the cautious nature of the rate “quote” verbally.

    But my approach is getting the Prospective Lender to talk and showing them a sample deal with personal info blacked out. This includes loan agreements and FAQ Private Lender Info Sheet.

    That and a generic cover letter with Private Lender disclaimers usually does the trick to whet their appetite.

    • Thanks Brian. That’s a good approach you use for credibility purposes and makes perfect sense. My question was more is it legal or does the IRS prohibit mentioning rates in a conversation with someone you meet the first time. I have heard different answers and not 100% sure myself.

  4. Shannon Johnson on

    Ahhhhh…great blog entry! The timing couldn’t have been better. I’m not sure how many times I wake up during the night and have debates with myself over how I should fund my first deal. Frankly, I feel like I do some of my best thinking and problem solving while half asleep. Not sure that’s a good thing, but I digress…

    Three weeks ago, I was having a conversation with a friend/loan officer who had been in the office LATE trying to push a loan through for an investor who borrowed hard money, got delayed in their project and was now 24 hours from defaulting. I recall having a very “tisk tisk tisk…oh nooooooo…hard money…that’s bad…very bad” opinion of the situation.

    Well, after 3 or 4 half-asleep internal debates last night, hard money is looking like the new Plan A for getting my first rehab done. I read somewhere that a woman is entitled to change her mind. (it’s official)

    • Absolutely Shannon. If the numbers work than hard money is fine. Just make sure you understand the terms in the promissory note and make sure you get a at least a 12 month note. BUT don’t wait until the last month when it is due . Have a solid exits strategy so you don’t yourself like that person at the bank scrambling so he didn’t default especially if you are not bankable.

      Best of luck.
      Go Get Em!

  5. I would like to know if you can help me with my deal in New Britain, CT.
    I am having a hard time funding full funding or GAP funding for this deal. This is my first deal and I would appreciate it if you can come to the rescue here. The following are a brief detail on this deal:

    ARV $218,000
    Purc. Price $90,000
    repair cost 45,338
    Profit potential estimated at $63,862. I am willing to joint venture and split profit 60/40 or 50/50

    closing date is set for 11/30/13 but could be extended to 12/6/13 or I will lose the deal.

    The property is 5 bedrooms, 2 full bath;2,309 sq ft living space. Built in 1914.

    My phone #301-335-1682.

    • Hi Annie – This is going to be tough. I will try to reach out to you and talk to you about this. Thanksgiving week is a short week for me so I will try and call you tomorrow or tuesday.

      You will need to email me first more details of the deal that support your comps and repairs.

        • Hi Annie
          I did reply to you and never received any information from you. It is not my area so most likely I personally won’t. If your numbers all hold true this is a great deal and not sure why you’re having a problem with funding this? or finding a partner with numbers like that. Did your attorney do a title review and guaranteed marketable title because with 3 days to close that is not enough time. Hopefully your deposit is not at risk.
          If you send me what I asked for then I might be able to send it out to other investors for you but will need all the #’s ……..
          Hope it works out for you.

  6. Hey Mike,

    This is cool, I LOVE the real case study stuff! It’s nice to read that these options really do work. I currently have 2 different guys I work with who are leaning towards partnering on deals with me. Now I just need to find the right ones 🙂

  7. If anyone is reading this and considering using this information as fuel for “No Money” real-estate deals, DON’T. I don’t know the motivation is from the author of this article but let met tell you from my own experience and research that Hard/Private money is like looking for a very small needle in a giant haystack. The author’s list of “Who to Get the Money From” is the same in all 3 points, and # 2 clearly is just a 20% down loan with an insultingly high APR. I’ve read ALL the books on No Money real-estate deals and have been party to plenty of deal negotiations that have come close to them, but the fact is such deals are extremely rare and talking about them as if they are obtainable without going through Hollywood level drama sets people up for failure and heartache. The average investor (without pre-existing connections to people with money) that wants to get into investment properties just needs to get on top of their expenses to where they can afford to save up a down payment. It may take a few years, but if you’re the type of person who can’t manage your finances properly maybe you shouldn’t be investing in speculative investments anyway. Instant cash-flow deals would be best once you have the capital, like buying a small occupied house or duplex. Let your tenants be your source of investment capital over the years.

    • The best part about Bigger Pockets is that there are a variety of viewpoints and approach to real estate. The person who says their viewpoint/method is the only correct way do handle real estate borders on being narrow minded.
      I don’t care if others do it or not. I have and will continue to not use banks who say your interest rate is only 4%, yet when you calculate the interest over the life of the loan, you will find you are paying way more through the expert structuring of compounded interest. Don’t believe me, take your mortgage payment in the first 7 years of a mortgage, typically for those financed 20 years or more. See how much of your payment is interest each month and add that up. You’ll see you could have paid that traditional loan off much faster. And we don’t even have to step into the arena of fractional lending where the bank can actually lend on a 6 to 1 or 10 to 1 ratio. Meaning for every dollar the bank keeps in reserve, they can lend up to their ratio back out as loans which earn interest on money that doesn’t really exist. Learn how money in the system works before you start criticizing how others handle theirs.
      I now pass the soap box to the next in line.

      • Great points Roy and so true. Sometimes I think banks are more of the problem than the solution but not all banks of course. But it seems like it gets harder and harder with your local banks with all the regulations…….I know because they tell me how the paperwork and regulations…..just make it tough to do business these days and puts a strain on their bottom line.
        Thanks for sharing

    • Hi David,

      If you think 20% down bank financing for investment property is the ONLY WAY to get involved with real estate you are sorely mistaken.

      Sub2, Lease Options, Wrap around mortgages, and Private First Mortgages (paper) on free and clear houses are PROVEN ways to acquire or control property.

      The new laws coming in Jan 10 will make it MORE DIFFICULT for home buyers, making home buyers, home sellers and agents’ lives difficult. See http://financialservices.house.gov/news/documentsingle.aspx?DocumentID=334810

      And I plan to offer an alternative to home sellers: Sell on Terms.

      This lending climate is similar to to the mid 80’s (I have salt and pepper hair and proud of it) when rates for mortgages were over 12%, forcing agents to be schooled in CREATIVE FINANCING.

      You are either trained or untrained. If you think property can not be purchased this way, you are simply and clearly mistaken.

      • Never said it “can’t” just pointed out how you’re fanning the flames of hope on deals that probably make up less than 1% of yearly deals in this country. Don’t try to cut me down because I expose your biased views for the sugar coted pipe-dreams they are. As I said before, “no money” deals do exist, but they are a HELL of a lot harder than you make them seem. This is a fact, if this fact hurts your business, sell something else because I for one ain’t buying and I WILL give my point of view as an investor. No reply needed.

        • I am not sure if this comment from David Fields was for me because it appears to be a follow up comment to something I said but I just commented a few minutes ago so can’t be.

        • I think David’s just upset because he feels like he can’t do this on his own. What he really needs to get out, network and meet the hundreds of private investors and hard money lenders that are available to fund his transactions. The reason these methods work is because so few traditional home buyers use them. But investors who follow this advice and do it their own way will find that finding private money or hard money is simple to do – as long as you follow the 70% rule, get realistic ARVs , don’t exceed your max allowed offer and renovate responsibly within set budgets. If you can do that, private money investors like me or hard money guys will jump at the opportunity to do business with you.

      • Thanks Brian. I have been referring to you as a true transaction engineer and your knowledge on creative financing is incredible and when I hit a roadblock You will be the one I call for some ideas. Thanks for providing great content where we all can learn from.
        This new lending laws coming are certainly going to change things and will be interesting on how it all plays out. I am sure you will be busy on this one.

    • Sorry it took a few days to respond David but honestly I was busy doing what I do best by investing in real estate full time. YOU know what the best part of that was I raised $700,000 for a deal with an investor I never did business with. Now I could fund the rest needed which is only $50,000 but I have another smaller lender just waiting for me to put his $70,000 back into play so to make him happy that is what I would do. Of course I have history and experience and I wouldn’t say you are going to get this on your first rodeo but the fact is the numbers are the numbers and that is more important to a private money lender than if you are a nice guy. But of course I am a nice guy. Honestly I didn’t think this was possible either until I actually learned from someone doing it and started to put it in place myself. BTW I do work with banks as well as another source but not everyone has that option right away so this is just another option. I have no problem with comments but your accusations and assumptions are completely uncalled for. “You don’t know my motivation” statement is accusatory of me doing something wrong and where you don’t know me I do take offense to that. I have been writing for BP for a while now and I am pretty sure they think I am a credible source and provide quality content to their members because it is very important to their CEO that provide the best quality content they can. I could go on and on but I will end with your suggesting to save for 2 years to buy cash flow properties. Not that there is anything wrong with that and I buy and hold many properties but that is not the only option. This will limit someone in their approach if they only use the method you suggested. I am a full time investor and I built my business with very little cash when I started and juggled 2 careers and worked my butt off to be successful and now I can show others how to do it and also show others what not to do from the mistakes I made. I never claim it is easy but the reality is you can do it and like any business it takes time and persistence. You are right many won’t put the effort in and they will get discouraged but that doesn’t mean I will stop sharing what I do because other’s will take action and make it happen and that is just life my friend. Now let’s just keep the comments civilised because I love to hear from others and how they do it because we all never stop learning.

      • Thanks for the constructive response Michael. As you can tell I’m a bit jaded by the hard money pushers that sell regular small-time investors like me on “no money” deals, and I’m just trying to be the voice of reason, however negative that voice my come across. The vast majority of the deals I’ve tried to do the “no money” plans on have gone down in flames. I have no family/friends/connections to people with money so anytime I tried the “no money” scheme it always came down to me putting down some skin of my own…. Always. Also, one thing I noticed in the “case studies” (which are laughably ambiguous when it comes to particulars) is that the properties sold after only being on the market for a few days/2 weeks. I’m willing to bet the rest of the country isn’t selling homes that quickly, making these case studies more the exception than the rule. In my city the average is 6-9 months on market. That’s a long time to be carrying hard money. I look forward to your eventual response when you get a minute between making half-million dollar+ deals.

        • David I get your frustrated and you want to try and find flaws or reasons to continue to bash my post. You have points that have merit and I don’t intend to trick or suggest to anyone one size fits all and it is the same everywhere in the country. I to have had properties 9-12 months and that is the cost of business it just so happens our market has heated up recently and we are able to enjoy the benefits of quick sales. The examples are not meant to deceive or mislead they are real examples not cherry picked but used to show some examples not all examples. you started off nice but went into a small tirade at the end so ty for improving your tone and I hope you can continue to improve respectful dialogue even if we have a difference of opinion. Your mind set has a lot to do with what you attract and I hope for you that you continue move forward and make meaningful gains in your pursuit of your real estate goals. BTW that big deal I raised the money for I lost to a higher bidder but that is how it goes. The one good thing for sure is I gained another cash lender with very deep pockets to fund future deals. All the best.

  8. Shannon Johnson on

    Well…I’m not a fan of the soapbox unless I can be the first one to jump on it. However, it appears as though Roy was loud and proud on the soapbox while I was sitting over here collecting my thoughts.

    I don’t feel the author was trying to suggest these deals are easy to come by. I think he was just saying–the resources are out there…so BE RESOURCEFUL. Don’t hamstring yourself by seeing conventional financing or all cash deals as the only way.

    As a newbie, I will admit to a lack of first hand experience, however I can tell you that even though I have the resources to make a down payment…I can’t clearly see the advantage to doing so. I literally spot what looks like a deal in the morning and within 24 hours it’s under contract. How would I expect to compete with a cash offer while I’m over here at the bank jumping through hoops and hanging myself with red tape? Seems to me, by understanding and investigating creative ways to fund your deals…it gives you competitive edge. When you can close quickly…you’ll have a better chance of getting the deal.

    Same thing happened just now with my soapbox. While I was over here collecting my thoughts and making notes (aka at the bank jumping through hoops)…Roy took quick action and in doing so, he stole my my soapbox (aka real estate deal) right from under my nose.

  9. Great article! This gives me a little extra insight on how these types of loans work. I just found a private investor a couple days ago, who happens to be a co-worker, for my first deal. I’m looking for a 1-2 bed condo in the Northwest suburbs of Chicago, and I just contacted my mentor, also my real estate broker, on what my next steps are as far as showing proof of the private financing so I can go in with an all cash offer. I can’t wait to get started!!

    • That’s how you take your first steps. Hopefully everything goes smoothly, but as most of us know, something always comes up. Just don’t give up easily. The reward for making that first deal happen, not to mention what you’d do differently on the next one, is immense! Just make sure you left enough room for the worst case scenario.

      • Great advice Roy for Jeff especially for his first one. I had my first few deals fall apart and I won’t bore you with all the reasons but you just don’t quit. You learn why and improve or get smarter than the investor that you lost it from.

  10. David – I met 2 hard money lenders last week at a Meetup. I’m a private money lender and investor. Google hard money lenders (your town). Get out there and network to meet these people. Take out a bank loan if you can and I you have the 20% then great, you may be bankable. You’re probably looking in the wrong places it would seem.

    How many deals have you actually done, Roy? Mike does 3-4/month making 5 figure profits. Read his 60+ articles here on Bigger Pockets. Stop reading and just get out there and start doing it.

  11. Hi Ralph,
    Thanks for the feedback. I wasn’t criticizing how Mike uses money. This is my first year, since April, that I’ve actually handled property using creative financing. I’ve done 5 deals so far, with another 3 in the pipeline to be under control by years end if it all works out. So far I’ve only used about $1000 of my own money. I love OPM!

      • Thanks Michael. i have a lot more respect for people who have done this for a while from the ground up than i did when i first jumped in as a wide open eyed newby! lol! The standard 3bd, 2bath up to 4 bed, 2 bath ranges from about $220k to $350k. With $250k to $280 being pretty normal. It does take time to build, especially if you weren’t even in the industry to start with. But it isn’t impossible, just requires more effort to start the boulder rolling.

  12. Roy – I actually meant to say “David” at the end of that comment. Sorry about that! I thought your comments were very thoughtful and well said. The first five deals I ever did as an investor where completely through financing from banks. We just so happen to have capital to invest but many people either are not bankable and this environment or don’t have the cash. The private money/Hardmoney route is a great way for people to get involved. And although there’s good with the bad – many hard money lenders really do want you to succeed And as a private money investor now, I’m even more of a proponent that I ever was of funding deals without the involvement of banks. Thanks for your comments Roy.

    • Ralph – properties here are pretty expensive to begin with and I didn’t have the capital to jump into properties in the tradional method so I had to find alternative, legal, ways to do it. I’ll be honest. Took me the longest time to retrain my thinking of how NOT to use banks. I think it’s great if you can use leverage. But I had made some poor choices in life and was rebuilding my credit and with the lending restrictions the banks wouldn’t even look at me. In the past two years of retraining my brain, learning real estate, and building my credit things have really turned around. I’ve raised my credit rating over 130 points and constantly get offers to borrow more money. However now I’m more knowledgable and understand that I don’t need to jump through the lending hoops like I use to when I thought banks were the only way. I work with people who are looking to make their money work for them more efficiently than traditional investments. There is so much information I didn’t know, and still don’t, but doesn’t mean it’s not out there and we can learn to make it work for all of us with some work and networking.

      • I think whatever helps fund the deal and makes you money in the end is a good form of financing. We just are partial to private money but you can use it in any combination with hard money or bank financing. If it still make financial sense, do it!

        • Exactly Ralph – If it makes financial sense is the key. If the numbers work the numbers work. No eraser math in this business. It just gets you in trouble.

      • Well said Roy. Retrain your thinking. We get so caught up and grow up being programmed about many things as being the way to do things. Kind of like how you save for retirement and put all your money in the stock market. Yes its riding high now but what is your average over the last 10 years. Now I am not bashing the stock market but my point is it is not the only way to save or invest its just the majority way of thinking. Anyone heard of Self directed IRA- What a concept and why not diversify. Just have to retrain your thinking. I like that.

  13. I’ve not found any hard money lenders willing to do 100% lending here in Atlanta / GA.
    I’ve been asking family, friends and folks on BP to participate in my RE deals and no takers. I admit I’m not good at the elevator speech or the close, so I agree in practice with the ney sayer above. It’s remote until you do it but hear plenty of Atlanta folks say they have a long list of private lenders…

    I’ve read about a 100% hard money lenders though: will lend 100% but you must have a track record, they take 50% JV interest and you have to have the property sold in 6 months or they take your 50% and you’ve worked for free. So this really isn’t a newbie route in my view.

    Any tips on other 100% lenders?

    A thought is substitution of collateral. I haven’t asked if the local HM lenders would take a lien on a wholly owned property I have in lou of my 20% skin?

    • Hey Curt I hear you loud can clear but you know what is great is that you have put yourself out there and taking action. Although no results you must continue to ask why and continue to improve your process. Take notes and learn the real reasons. Just ask people why they are not interested in investing with you. Just ask them to be honest with you. Most likely it may be your lack of experience or your pitch like you said. Practice some role playing with a friend or family member. I did this in the beginning with a friend and you know what is funny he actually ended up investing with me and is still to this day. You see they wont’ feel intimidated because you aren’t selling them anything and at the same time you are educating them on what you do which will give you more credibility. Just an idea for you. I don’t like those JV deals you mentioned because I believe it could be a disaster for failure and like you said if you don’t close it out in 6 months which is very likely then you get nothing. One other idea is if you get a ok on a hard money loan and yo have to come up with a deposit you don’t’ have then consider partnering with someone that can provide the money for what HM skin is.
      For example if you need $100k to do a deal and the HM will cover $80 k then now you only need to raise $20k which is a lot easier than raising $100k privately. You see where I am going with this. Be creative and stop at nothing and don’t let anyone tell you you can’t do it. You can if you want to. No one said it is going to be easy but heck if it is easy then everyone one would be doing it. All the Best!

        • Hey Mark – Typically 20% profit and 10% soft costs but this is a guide for quick projections as the time on money and your interest rate will change this guide to a lower percent. Always run P&L’s on all your deals to analyze and to make improvements that effect your bottom line.

        • Typically yes. That # will be higher in most cases if you go over 6 months. Also note when using the 70% formula depending on the situation and competition you may be able to deduct closing costs….from you MAO. The idea is to buy as low as you can but not lose the property because you went to low and your competition got it.
          Hope that helps

  14. Brandon Turner

    Hey Mike,

    I appreciate the post quite a bit, because pretty much everything I’ve ever done has been without any money of my own. It’s all about being creative.

    I read through the arguments above in the comments and wanted to add my opinion. Yes, as bloggers we talk about success and how this can be done. And yes, most people won’t do it. But for the naysayers out there: what percentage of people who buy fitness books or read a blog post on getting six pack abs actually end up with the results talked about? I’d bet it’s less than 5%. So is it wrong to talk about the exercises needed to get a six pack abs?

    Using the logic from some people, because it’s not easy, it shouldn’t be taught. So let’s get rid of all fitness advice too.

    And why not just do-away with Math and science also, cause that’s hard and most of us never end up being mathematicians or scientists. And the same with personal finance, cause most people will still struggle with debt.

    Anyways, keep helping people reach their goals Mike. I think these posts are great. 🙂

    • Well said Brandon. As Tony Robbins unfortunately says (not a direct quote but pretty close): “unfortunately I know that 90% of the people who buy my stuff won’t take the cellophane off the box when they get my program”.

      The thing is that “no one but you can do your push-ups for you” I think Jim Rohn said that one.

    • Great analogy Brandon. Tony Robbins also says and I got this from Bill today
      What happens if you try something and it doesn’t work? Try again!
      and if you try again and it doesn’t work. What do you do? Try again!
      and if you try again and it doesn’t work. What do you do? Try again!

      And like Ralph says most won’t even open it up. Does that make what Tony teaches wrong? Of course not.

      Thanks for your supported comments as it makes perfect sense and hopefully sheds some light to others.

      Happy Thanksgiving my friend!

  15. I love that quote from Jim Rohn. He also said “The few who do are the envy of the many who only watch.” Very applicable to some comments here to keep some people people motivated on what you can do – when you believe you can in fact do it.

  16. Michael, I do love that quote ” “no one but you can do your pushups for you”. Tomorrow morning, yes Thanksgiving morning while I’m at the gym I’ll see how many people are doing push ups for someone else LOL. There are so many quotes to recite daily if that’s what helps someone stay laser focused but none more fitting than If at first you don’t succeed try try again. @David please change your focal point. You said “The vast majority of the deals I’ve tried to do the “no money” plans on have gone down in flames.” if you try something and it goes down in flames, try something else, if that goes down in flames, try something else, if that goes down in flames, try something else. The only way to fail is to quit. I have heard many people say “I’ve tried everything and still nothing works”, Well I say, if you’ve tried EVERYTHING you would have your answers. I have done many deals with none of my own money and continue to do so. I wish you the best of luck and remember there are no excuses to not getting what you truly desire. “The world will give you what you ask of it”

  17. Well for no money down deals in Oklahoma there are several banks that will do the deals weather you are an investor or owner occupant.

    City National Bank is my favorite. For 12 years I have bought to rehab and retail and buy and hold and have never had to bring any money to the table!

    We own 17 doors and have done 7 rehab and retail deals. I have assisted, as a realtor, in over 35 similarly structured deals this year alone.

    Do your due diligence and visit with your local lenders, banks that don’t sell their paper but keep them in house seem to be able structure much better products for investors. Also, their products change from time to time as well. It pays to keep in touch with multiple lenders every so many months to see what they currently have to offer.

  18. Finding private lenders is not that easy. Half of the ones listed on PrivateMoneyGold.com requires you to send to them $1250 upfront for some insurance and it smells like a scan.

    For those who do not have a family member who is a rich person to sponsor your deals, the notion to do flipping without money is far fetch. Michael may be you should direct some of your reader to private money source and not HML as ass HML now require about 20% down(so called “skin in the game”) and 4-5 points at closing. It is very misleading to make people belief that all you have to do is to find the deal and money will follow. Sounds good in theory but not that easy in reality.

    • Hi Annie,

      Here are some action steps for you:

      1. Read https://www.trustetc.com/real-estate-ira and get a basic understandoing of real estate and self directed iras.

      2. Buy this book – Patrick Rice has over 30 years in the SDIRA arena. You can get it used for 4 buck incl shipping. http://www.amazon.com/gp/offer-listing/0757000940/ref=tmm_pap_used_olp_sr?ie=UTF8&condition=used&sr=&qid=

      3. Get your elevator speech down about private lending marketing. Talk to 20 people a day. Get their name and email and phone #. Start a blog about why people need to have alternatives to CDs and Wall Street Mutual Funds and Stocks and Bonds.

      4. Stop relying on outside websites to get you your private funds, and work your back yard. You sound like you want this “Done For You.” You will fail with that mind set. Go talk to local people. Sell “Invest in main street, not wall street.”

      GOYA = Get Off Your A$$.

      • Good points Brian! This isn’t an easy business, if it was, a lot more people would be doing it. You have to find the way that works for you. Or learn to work within the ways that are out there. I’m currently reading a book called Bank On Yourself by Pamela Yellen. Covers stuff like setting up SEP’s, similar to IRA’s, and utilizing the correct insurance policy to fund your retirement and future deals. This is an area I’ve never gotten into before, but I’m having to learn because there isn’t any room for failure and it depends on me making the effort. Nobody else is going to make my business succeed, unless I can tie it to their success, but that’s someone else’s blog article!

  19. Good article Mike and like the voracity of peoples opinions in the comments.

    Thinking about it I’m not sure I have put ANY of my own money into a Real Estate deal since maybe 2007, when I bought my first few crappy rentals that don’t make any money and did it the “right way”.

    Since then a mix of Credit Card advances, using 0% interest promos on cards for the big box stores, HELCO, private lenders, unsecured credit lines, and HMLs I never really need to tap into my own funds.
    As most I would have used some profits in previous deals to cover some small amounts of miscellaneous costs. Of course I’d need a forensic accountant to figure that out for sure! 🙂
    Seriously though if I say have a big 0% Credit Card advance for 18 months that I use to fund a rehab that I fix and sell in 5 you don’t pay off with 13 months of no interest (and the suck cost of the transaction fee) you ride it on the next one and probably one more after that.
    Aside from a HML the sources of funds are almost never actually directly tied to the property.

    The Wait, Save and Sell your soul to the bank method is a good one for some people and is fairly “safe”. It isn’t the only way or the best way for many, and not always even an option.
    It is a great plan until you save that 20% down payment for 4-5 years then you finally go to buy a place and still get denied by the bank.

    For example I can easily find a fix and flip that I would need >$200K all in for purchase and rehab and holding costs that I could take down with no money or very little of my own (If I wanted to be lazy since I have the little cash that might come up).
    I can’t qualify for a $50K mortgage with a 75% LTV (and my FICO bounces around 750-800 most of the time). BTW this is not conjecture, I tried to refinance the above mentioned crappy rentals earlier this year right before the rates started going up a little. Not trying to cash out, was actually willing to bring money to the table if I needed to get the LTV right. Purely just trying to bring down the interest rate like 1.5% to increase cash flow. Basically didn’t like that I am self employed.
    Banks suck! 🙂

    • Thanks Shaun for sharing this and you summed it up well. It just amazes me people take shots at you rather than engage in offering their opinions or experiences to create meaningful dialogue. I have no problem with constructive criticism by the way. As a matter of fact I welcome it and learn from it. Your just another guy who lies about doing deals with no money of course. 😉

  20. would like to flip my home. but haveno equity its worth 95000 which is what I owe. it was appraised at 135000 before the bottom fell out of the home market. where can I get some one to finance a flip without monthly payments I could only afford to pay them back when I sell. house needs new roofing 5000 dollrs and would like to remodel inside about which wont take to much. quesing about 6000 for interior.

    • Hi Tracy
      you might consider a short sale for your home
      You will either have to find someone that knows likes
      and trusts you to fund 100% or find hard money lender
      where you will have to put money into the deal. You could
      borrow that money as well and even offer an equity split
      to make it more attractive.

  21. I never thought about the Private money Partnership Hybrid. This is very creative. I remember my first flip back in 2004. A friend of mine in California was moving to Galveston Texas. She needed her house sold asap. It has some deferred maintenance and had a fixed up value of 420k. She said she only need 350k for the house, her loan balance was like 50k. So i put a contract of 350k on the house and sold it to some investor for 370k in 2 week. After a 60 day escrow, she made 300k gross minus fees. The investor got the house for 370k and i made 20k for my efforts. I literally had no money in this deal. Now living in North Carolina I look forward to creating more no money down deals. Great Article!

    • Thanks for sharing Gerald. A lot of us believe there is usually a way to make the deal work as long as people are willing to be creative and see outside the normal way of handling property. I personally think one of the best things about the crash was it increased people’s awareness/receptiveness to solutions that aren’t one size fits all like the typical method of buying and selling property.

    • Thanks Gerald. It can be done and is being done by many contrary to what other’s say.
      Plan the work and work the plan and take action every day. You did it before so you will do it again. Please share your progress!

  22. Mike!

    I love this article, straight to the point, has real examples and right on explanation of deal type, D.O.M etc. I’m also in the MA area but in central Mass.
    My question is, how do you go about selecting these Markets, Taunton, Whitman, Dartmouth that have such short D.O.M?



    • Hey Danny – the markets select us sometime. It’s all about deal flow and your network. We do a lot of direct mail but some markets we don’t hit but get deals in these markets through wholesalers, realtors, word of mouth……

      Great question.

  23. Hey Shaun & Michael,

    Banks seem to be the most risk averse business institutions out there. I hear a lot of investors saying they were denied some type of financing due to them being self employed, despite making great income. Banks seem to love those on w2 income for some reason. You guys may have more knowledge in this than me, but what if you set up your entity/LLC that buys n rehabs houses for profit, could you pay yourself a weekly paycheck? that way you manage the LLC, But you get paid regular consistent income in between flips, say even 650 a week? will that “legitimize” you with banks?

    • I agree with Mike that this is a good question to post in the BP forums.
      However just to get started I have read that if you have a business entity that you can make yourself a W2 employee and that does help with banks.

      Since banks are infinitely wise it makes sense to them that paying yourself a salary on money that is yours anyway, but now ensuring the highest possible tax rates, makes you a safer investment.

      BTW if you do post in the forums make sure to mention where you are so the locals will be sure to see it with their keyword alerts. While banking standards are generally national someone locally may have a bank that they have worked with they can recommend.

  24. Michael,

    I like the way the article is described in simple terms.

    To actually create a partnership deal for getting other person’s money to buy,fix, sell/flip a house ….you need to have a standard contract paper work in place for pre and post agreement terms to get money from someone and then profit distribution after sale.

    There might be some standard contract forms template that one can use or download from.. could you guys recommend any pointers or website for the same..?


    • I don’t use a standard form. It is all subject to the individual or business you structure it with and typically we will have the attorney draft this agreement between parties. Your closing attorney will do this for not much of a a charge if you are doing business with him or her already for the closing and title insurance…….It doesn’t need to be complicated.
      Just ask Brian Gibbons here on BP because he is a transaction engineer that deals with a lot more creative transactions than something like this. Good luck.

  25. Michael you are too kind.

    I like to use a letter of intent to discuss terms. There is a letter of intent here https://app.sugarsync.com/home#cGFnZUlkPWNsb3VkU3ViZm9sZGVyJmlzSXRlbVJlZnJlc2hBbGxvd2VkPXRydWUmY3VycmVudEZvbGRlcklkPTUwOV8xMTQ3MzEyMjQmY3VycmVudE93bmVySWQ9NTk3ODA5MSZ1c2VySWQ9NTk3ODA5MSZ1c2VyTmlja25hbWU9dGVhbTU5JmRldmljZUlkPWFsbEZvbGRlcnMmc2hvd0dyYXZleWFyZD1mYWxzZQ==

    The important part of REI is Seller Negotiation, and it starts with “Be the Doctor with the Home Seller” See https://www.biggerpockets.com/blogs/3/blog_posts/17-be-the-doctor-to-home-sellers-problems

    I hope this helps.

    Michael, pray for the Pats this Sun against the Bills!

    Happy new Year, everyone!

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