Flipping a house basically means buying a house, usually at a bargain price (requiring maintenance, repairs, renovation etc), working on it to considerably improve its market value and then selling it for a profit. Quite obviously, finances are very important when it comes to house flipping. You will need to bear all the costs associated with repairing and improving the house before you can sell it. Moreover, since your profit is dependent on the sale, there is always a risk associated with such an investment. If you incorrectly assess the market value of your improvements, you might even end up losing money. Nevertheless, if you have the skill and experience, house flipping can be very lucrative. Keep reading to find out ways you can finance your flipping project without having any money on yourself.
Find a partner
If you have the experience and know-how, you can ask a friend or a family member to invest his/her money in your project. You can give all the details of your plan, and if the partner is satisfied, you will be able to secure the required finances. While you will be doing all the hard-work and giving the house a makeover, your partner will get his/her cut of the proceeds without having to lift a finger.
Get a hard money loan
If you are fairly confident that your flipping project will be completed in a short amount of time, you can contact hard money lenders. These lenders will allow you to borrow the required amount, but at very high interest rates. If you can pay back the loan in a couple of months, you are good to go. However, if you get delayed due to any reason, the interest costs can add up to a lot.
Find private lenders
There are always people who have money sitting idle but don’t know how and where to invest it. If you have a good professional network, you can talk to your contacts and pitch your idea. Your investor could be anyone, from your doctor to your lawyer, as long as you can sell your plan and convince them to invest in you. However, if you do secure finances using this method, it is imperative that you live up to your plan and not spoil your professional relationship with a flop project. If you fail to deliver, it is likely that word will spread and your reputation will be tainted.