Flipping a house can be done with no money down. Veteran real estate investors have been doing this kind of investing for years, and they are raking in huge profits. But how exactly do they it?
Its quite simple really, and investors who are new to the business should master this form of investing early on. The main thing to remember when
flipping a house with no money down is that you need the help of a
hard money lender. Theres no way you can pull this off with bank financing and if you use your own money, then its not no money down investing anymore since you used personal money.
Hard money lenders are individuals, or small companies, who provide loans to investors and entrepreneurs. When planned properly, you can secure a hard money loan that is big enough to cover all your expenses when rehabbing a house. Hard money lenders generally provide around 65% of a propertys after repaired value (ARV), or the price the property would sell for in good condition.
So if you can purchase a property that is way below 65% of the propertys ARV, you can use the money you borrowed from a hard money lender to pay for the repair and closing costs. For example, you can secure a hard money loan worth $65,000 if youre flipping a house that has a market value of $100,000 in good condition. If you purchased the house for $45,000, you can use the remaining $20,000 you borrowed from the lender to pay for the repair and closing expenses. This is what investors call no money down investing since you did not spend a single dollar in the transaction.
Flipping a house with no money down can also be done when wholesaling houses. When wholesaling properties, all you need is a small amount of money that you need to pay to the seller to make the contract legally binding. This amount is called an earnest money deposit, and savvy investors usually pay between $1 (yes, a dollar) and $100 as deposit. This is all the money you need to spend out of your pocket when wholesaling houses since youre only buying the assignment contract in this form of real estate investing.
Investors will have more chances of succeeding in the real estate business if they master the art of flipping a house with no money down early on in their careers. Learn the nuts and bolts of this form of real estate investing by visiting
www.REIWired.com.
