Flipping Houses 101: How to Do It With Little Money

Investing in real estate can be extremely expensive. The down payment alone can set you back tens of thousands of dollars, not to mention closing costs, repair costs, and a host of other unavoidable costs. So, what’s an investor to do if he doesn’t have at least $100,000 collecting dust in his bank account for such an investment opportunity? 

Find a Partner With The Money

If you don’t have the money it takes to invest in a property, find someone who does – preferably someone with experience in the industry to help you avoid making costly mistakes. 

If you don’t bring money or experience to the table, look for ways you can contribute to the partnership. You can volunteer to take on all the grunt work like running errands, seeing that the contractors are doing their jobs, and scouting out the next big opportunity. 

Live In The Property While Making Repairs

You can save yourself a lot of money upfront by living in the home while you fix it up rather than obtaining an investment mortgage that will require at least a 20-percent down payment. An owner-occupied mortgage can be obtained with as little as zero down if you qualify for certain loans. Of course, these mortgages come with stipulations that require you to live in the home for at least a year. If you can fathom living in the property for at least a year while you make repairs and upgrades, this is a great way to flip houses without needing much money upfront. 

Use Your Home Equity

There are a few different ways to use your home equity to buy an investment property without needing money down.

  • You can offer your home equity to fund the down payment. The lender places a lien against both properties and forecloses on both if you default on the loan. 
  • You can take out a home equity line of credit that functions similarly to a credit card, but unlike credit cards, if you default on the monthly payments, the lender takes your home. 
  • You can take out a home equity loan, also called a second mortgage. This mortgage is just like the first one, requiring closing costs upfront. 

Flip Land Rather than Houses

Flipping raw land can often net you as much as 5 times the price you paid for it. Since you can buy raw land for as little as $100, and there’s no need for repairs or upkeep, you can usually buy it and then turn around and sell it rather quickly. In many cases, land makes a better investment than homes, according to some investors. 

At the end of the day, there’s no doubt that real estate is a great way to turn a profit and prepare for retirement. With that said, it can be quite expensive to make the initial investments, if you aren’t creative. Rather than go about flipping homes the traditional way, consider trying the suggestions above to flip houses with little to no money down.