The idea of “flipping houses” is often assumed to involve a large amount of money play.
However, in reality, it doesn’t have to be! To be honest, even those with a tight budget you can make things happen as long as you have the right approach. But here we want to deal with all those wannabe investors who thought about it and want to try their hands at dealing with it with a limited budget. The best things to do are listed below:
Finding an Investment Partner, they could be;
- A family friend
- A colleague
- Maybe your Doctor
- Or your Neighbor
- Your college Professor
- Or simply, anyone with extra cash or money in hand!
Having an investment partner is a wonderful starting point because you are able to leverage using their money and limit your risks.
But before that, you have to answer this question, why should they invest with you? Why not they go about it on their own? These are valid questions and need answers before moving forward. This is where you have to demonstrate your “added value” whether it has to do with the negotiation part, or the contractual details itself, or on the renovations part of it, or it may be a combination of everything above. You have to make it an integral part and as “hands-off” as much as possible for them. In this case, the partnership becomes more equal even if one person or investor is financing the whole deal. They have to see your value or your contribution to the whole deal or this won’t work.
So when it comes to the flipping of the property, you can always split the profits equally or at a percentage and call it a day without any bad feelings.
Or if possible, you can continue with the same partnership arrangements and continue to flip more properties without ever spending a dime! This would be ideal for those looking to make extra money with the strength of their skills. Plus, your partner isn’t going to mind getting into another deal if the first one worked out and they profited from it!
While searching for an ideal investment partner, you have to take the time to avoid any formal partnerships. Remember, the goal is to keep things simple and go one at a time and making a profit. By doing it this way, it becomes much easier to leverage on the “advantage position” and make sure both parties are on the same page. Over time, you may start getting into a formal partnership but there is a lot of work to be done before getting to that stage or point. Instead, you may want to leverage your skills (i.e. renovations, negotiations) as a way to secure their trust and understanding.
Private Money
In some cases, you may not be able to find a legitimate investment partner and that is quite normal in most cases.
In such situations, you can always start to look at dealing with a private banker or money lender. Normally, this is a lender with loads of disposable cash or money that he wants to invest without having to actively participate in the day-to-day dealings of flipping houses. This means they want their cash to do the work for them and that is where you come into play. By lending you these funds, they can cash in on the interest rate and let you worry about using the money but with limited risks. Normally money lenders and most investors just want that, as a hassle-free deal to make more money while sitting still.
Most of the times, these lenders are going to be regular people and will not be backed by large firms or institutions. Therefore, it’s important to showcase your viability and why you are the ideal choice for their needs.
A lot of the times, these lenders are going to tap into their bank account, 401(k)s, mutual funds, or IRAs to fund the investment. As a result, you can have a lot to work with and bring in bigger returns over a shorter period. While dealing with them, you are going to want to set a fair interest rate and work on meaningful terms as soon as possible. Remember, in most cases, private money lenders are more than happy to work on competitive terms in comparison to larger firms.
Of course, you have to be smart and remain fair throughout the process. You need to find a balance between a good interest rate and how much money will come through after the house is flipped. If you’re not making money then it’s not a good deal!
Hard Money Lenders
The final option is to go with a hard money lender. These lenders are people looking to purposely set high-interest rate loans.
If you are looking to quickly buy and sell a property, this can be a good way to get your hands on the right amount of cash. As a result, you will not have to pay a large amount in interest. However, you have to remember, this is going to end up coming with an interest rate more or less above 15% and that may even head higher into the 20+% range. But this normally varies from lender to lender but it’s important to keep this option as a last resort in mind as you go about doing this.
When things start to drag, the interest rate is going to skyrocket up and that’s something to pay attention to on a daily basis just to be sure.
Hard money lenders are often the “last resort” as mentioned above when it comes to flipping houses. If all other options have been exhausted and this can be a way to flip houses and still make a decent profit, then do it.
Here is a video on house flipping for your viewing pleasure;
Alway, keep these details in mind and you will be well on your way to a positive investment. While investing with your money is a lot easier with investment homes like the Spanish Villas Belgravia Green, which you can target. But this doesn’t mean that the investors have nothing to spend are out of luck but on the contrary, you will be surprised if you tried! With the right mindset and a good loan, anything is possible.