Crowdfunding is among the methods that will help you to flip houses.
Do you want to flip houses? Well, you do need huge payments to flip a house. It is a lucrative business for people and various investors. Nonetheless, flipping houses is a business that requires planning, good knowledge, and business acumen to make it a success. In this blog, we will talk about ways that will help you to flip houses without any money. Yes, it is quite possible. To make this a reality, there is a community of people that are ready to invest in you. Before diving into the method of the process of flipping houses, you should know the meaning of house flipping and how much will it cost.
Definition of House Flipping
It is the procedure where an investor purchases a property, makes all the repairs and upgrades it, and then sells it for a good amount of gain. The strategy behind the concept of house flipping is to sell as soon as possible and not to live in it. It is a good method to make money for real estate investors if they find an undervalued property and buys it below the market value. Then when they resell it at a higher cost, they can bag a good amount of profit.
Cost of House Flipping
The main expense in this process includes renovation money, insurance, and marketing. All the other expenses will depend upon the shape of the property of your purchase. If the house is in bad condition, the expenses will be about renovation and whether you need a contractor or not in the project. Such decisions will depend on the size of the house and the requirements to rebuild it. Apart from this, you have to cover the owner of the house’s insurance cost at the time of purchase of the property. You also need money for house utilities like electricity supply and water supply. After the renovation is over, your expense will also come to an end except for the marketing cost. To sell the renovated property, you need to have a marketing strategy, or you can hire a realtor. It will depend on you how much is your budget; you can spend thousands of dollars, or you can spend hundreds.
To start your venture in this sector, here are some of the methods to help you start your journey.
Ways and Methods to flip house with no finance
The most important part in taking up this venture of flipping Houses is money. Nowhere is it written that you need your money to start the project. There are different options available that will help you kick-start and will fund your deal. You can use other person’s money, such as real estate investors, private lenders, or any other person who wants to make money to help you out. Here are some of the courses of action to help you with the venture.
- Private Lenders
Time and again, private lenders have become your origin of funding as they are entities that will loan you money but are not tied with any union or bank or any kind of traditional lenders. In simpler terms, a private lender is entities or people with some extra dollars to spare and wants to invest and make good money. Such lenders have the liberty to make their rules as such private lenders are not tied with any governmental institution. This gives the money lenders to have their parameters, thus charging a fee of 6 to 12 per cent. The rate of private lenders is quite high when compared to traditional lenders like banks and other financial institutions.
Though there are certain benefits of lending money from private lenders, such as you can easily have access to the money within a short notice of time. People can pay lenders a high rate if it signifies that people can have money in less time. As traditional lenders can get you money in a long time, such as 30 days – 45 days. However, private lenders, before lending any money, require an insurance policy or some promissory note, trust deed, or even mortgage on the property. But all these things are negotiable and will depend on the parties and their mutual consent.
- Hard Money Lenders
They are companies that provide loans to people, but the loans are short-term and real-estate backed. Hard money lenders are not like private lenders in the sense that they are affiliated or tied to a company that gives importance to lending money. Hard money lenders provide short-term loans. Their time is still six months or up to 2 years. On the other hand, transactional lenders offer to loan money for a longer period, like 15 to 30 years.
Apart from the above distinction, they are quite similar to private lenders. Their rate of interest is around 11 to 15 per cent. It is important to know that there is no hard money lender instruction that a person has to follow in the strict sense. Each deal comes with various sets of rules and guidelines. Though such money lenders generally loan a part of the price purchase, i.e., around 70%. In such situations, people have to look for another source of funding, such as private lenders, if people don’t want to pay from their wallets.
- Wholesaling
The process of wholesaling enables people to make a good amount of dollars in less time. This makes wholesaling a good tool for ventures in flipping houses. In this, you find the property for sale, get a contract, and later assign the same contract to the potential buyer. A wholesaler makes money on the basis of percentage on the ground of final sale; generally, the percentage lies between 5 to 10 per cent. This feature of the wholesale procedure makes it good for people to start in the real estate business without much finance as it does not involve buying the property but just having a contract for the potential buyers.
Though in wholesale dealings, a person or an investor has to take up an operative role. The property will not present itself, and neither the buyer. It requires people to keep a minute eye on the market and trying to maintain a good network with potential customers. One skill that comes in handy is good negotiating. All the skills that you accumulate during wholesale will prove beneficial when you flip houses.
- Partnership with other flipping investors
Apart from hard and private money lenders, you can house flip by an additional means of partnering with a person who is established in the business of flipping houses. It could prove a person’s next best possible move in the business. A partner with finance is as good as a private money lender. It will benefit you in the sense that you will have a partner to help you with the work, and you can share your contacts. Though one thing that you need to see is if you are bringing money, make sure you have good skills to compensate for it.
- House Equity
In this method, you can utilize the equity that is built up from property to buy some different property. You can do this by mode of refinancing. The process involves redoing the persons existing mortgage and pocketing the difference between two loans. There is no restriction on how to use the money. Though, a person should have a particular quantity of equity in their possession to take full advantage of this available option.
- Buying Options
This option includes investors buying the property after the property was on the lease. In this case, the renters occupy the space on lease or rent and then decide to buy it. The price of the property will be finalized at the time of signing the original contract. In most situations, the rent act as credit that people give before the last price. Investors find this option viable and easy to use.
- Seller financing
Seller financing allows the real estate people to work face-to-face with the property owners. This is a good option to flip a house without money as it adds more flexibility at the time of discussing loan terms and has simpler terms for approval.
- Crowdfunding
Woman using a laptop to look at a crowdfunding site; image by Rawpixel, via Unsplash.com.
Crowdfunding is among the methods that will help you to flip houses. It is more of a strategy, and in these, different investors invest in your venture, and each investor provides a percentage of your total loan. It is a good way to loan money if you are having trouble getting a loan from financial institutions. The best part about crowdfunding is they are easy to find. You can find them online as well.
Conclusion
Various new investors in the market are not aware of different funding opportunities that are available to such investors. Thus, ends up using their money. With the help of the above findings, we can conclude that a person can start investing today with the help of the above-mentioned people who are more than willing to invest. If you have your money good enough, but if you don’t, it will not stop you from achieving your goal.
Join the conversation!