Flipping Houses with Little to None of Your Own Money

Without a doubt, flipping houses is expensive. You need to buy the house, make the necessary repairs and upgrades, pay the carrying costs, and then sell it to recoup (and hopefully make a profit) the monies you put into it. It may sound impossible to do this without a substantial amount of money, but it is possible to flip houses using very little, if any, of your own money. Here are five ways to do that.

1. Portfolio Lenders

A portfolio lender is a local bank who keeps their loans in-house. This means they have their own, more flexible terms. In some instances, you can get a portfolio lender to foot the bill for the entire flip – including repairs. While this is rare, it does make it possible to flip a house with no money.

2. Line of Credit

If the property you live in has equity, you can get a line of credit that will give you instant access to the money you need to flip a house. Lines of credit are nice since you don’t pay interest on the money until you use it. It’s often impossible to get a line of credit on an investment property, so refinancing may be a better option to get money out of an investment property you already own.

3. Hard Money Lenders

Hard money lenders are companies who borrow cash from investors at a low rate and then borrow it to other investors at a higher rate. Hard money lenders typically lend a high percentage of the purchase price (based on the after-repaired-value of the property) and all the repair costs. However, the higher the percentage they loan out, the higher the fees and interest will be.

4. Private Money

Private money usually comes from people you know like family, friends, other investors, etc. Trust is a big factor when it comes to borrowing from a private lender. While it may seem like a good idea to borrow from someone close to you, it often creates a rift that’s hard to cross should a flip go south. When borrowing from a private lender, the amount you can borrow, and the terms of repayment vary greatly.

5. Partnership

By far, this is the easiest way to flip houses using none of your own money. In a traditional house-flipping partnership, one person does all the work while the other person provides all the money. The problem with a partnership is that you have to share the profits with your partner.

Flipping houses is a great way to make money, but it takes money to do it. Whether that money comes from you or not depends on how you do it. Using the five methods mentioned above, you can flip houses using little to no money of your own.