Do you want to invest in real estate or flip properties but lack capital? If YES, here are 11 sure ways to buy & sell houses for profit with no money down. Real estate has always been known as a money spinner, and a good many real estate investors have led quite a comfortable existence from buying and flipping homes for sale.
A lot of people have harbored plans of how to invest in real estate but they have been held back by cash constraints, which is a very tenable reason because investing in real estate is a very costly venture. But one thing they have not yet understood is that it is possible to invest in real estate without having any cash of your own.
Why Start a Property Flipping Business?
The process involved in buying and selling a house which is also known as house flipping involves huge capital. This is because of the responsibilities of buying the house, fixing damages in the house, selling the house etc. The good news in real estate investment is the absence of your own capital.
Also, the process of borrowing finance for real estate investment has different easy methods. Therefore, you can buy, sell and fix a house without using your personal money. Although, in real estate, the more money invested gives you more profit and vice versa, but there is still profit to be gained, with or without you investing.
Requirements for House Flipping
There are a great number of good deals in real estate investment. For instance, there are over 1.2 million houses that are foreclosed and put up for sale. The Wall Street Journal states that another 7.5 million U.S. house owners are in the process of foreclosure for lagging behind in payments.
To get into house flipping, you will need a huge sum of finance due to the tight lending procedure and a depressed buying market. For example, you may decide to buy a house for sixty thousand dollars and renovate for an extra fifteen thousand dollars, without getting a customer to buy the house from you. This may lead you into maintaining the house mortgage or rent and your own personal house, in addition to extra insurance, property tax and utilities.
How do you begin the process of buying and selling a house?
- The first step is to get a reliable credit store
If you will need a huge sum of loan for a high-risk house flip, you have to bear it in mind that money lenders have become strict in giving out home loans.
- Money is important
You need the money to settle a down payment in order to escape paying for the private mortgage insurance in your next property. In cases where you want to acquire a cheap house with a real estate function and you qualify, you can make use of the home line of credit (HELOC). Another point to consider is your savings. With your savings, you may be lucky to get a cheap house. You may also remove a line of credit or a small loan to cover fees from realtors, closing costs and renovation fees.
- Knowledge of the real estate market is necessary
The desire to acquire a house in a wonderful location, renovate it and sell to make a profit is a good investment. You must also consider the location of the house to get fast sales. This is because the more time the house spends in your care, extra finance will be used up to settle insurance, mortgage, property tax and utilities.
Is It Possible to Buy and Sell Properties With No Money?
While it is very possible for you to buy and sell houses for profit without money, but you must not negate the fact that investing in real estate needs cash, and a lot of them. One investor said that if you want to invest in real estate, you must have liquid capital of not less than $100,000. So, how do these two arguments marry each other? Very simple, Other People’s Money.
The secret of how you can buy and sell houses for profit with no money of your own is to use other people’s money, and they are various ways you can do this. The first step really is get a general understanding of how one can actually buy and sell houses without using their money or credit because knowledge is one of your strongest assets when it comes to this business.
Other ways you can get to buy and sell houses with no money include;
10 Sure Ways to Buy & Sell Houses for Profit With No Money Down
- Lease Options
Here, you get to lease a house from a seller with an option to buy it at some predetermined price and term. The objective of this option is to install another tenant buyer in the property, sublease it for a higher price, a higher monthly payment and collect a non-refundable option deposit from the buyer.
This deposit never gets returned to the buyer if they do not close. It does however, get applied to their down payment, but if they move out of the house and don’t close on it they lose the deposit. This arrangement should be made very clear up-front and since all transactions are supposed to be closed with an attorney.
A partnership refers to the process in which two people combine forces to tackle a housing project. One of the partners will pay for the initial costs of the home and any improvements that are to be made before the property is resold. The other partner will be in charge of the rest of the logistical responsibilities of flipping the house like hiring contractors to do renovations, or doing them by him or herself.
For a person who wants to buy and sell a house without money, this is a very good option. You can find someone who is willing to invest in the business, while you will in turn provide the labour or manpower.
At the end, each partner will receive fifty percent of the end profit of the business. Because you will be giving up half of your final profit, this perhaps should be considered as a last resort option if you cannot find another type of investor.
- Private Investors
A private investor is typically a person who is not associated with any particular bank or business, willing to invest in your project. Private investors may not necessarily be unknown people that carry around a lot of cash. They can easily be your family members and friends, co-workers or members of your local chamber of commerce etc. They are essentially people with disposable incoming looking to make a good return on their investments.
You can convince them to invest their spare cash in your real estate business and reap their profits at the end of the deal.
- Hard Money Lenders
Hard money lenders are people are in the business of lending out cash for profit. Like banks, hard money lenders will loan you out a sum of money expecting you to later repay the amount plus interest. Unlike banks however, these lenders do not typically regard things like the borrower’s assets, income or credit score. This means that if you do not have collateral and your credit score is poor, hard money lenders will still be eager to loan you money.
In addition to the interest they charge you, they will also charge you what are called points. One point equals one percent of the loan they gave you. Typically, hard money lenders will charge you somewhere between five and six points on each loan, thus making it a bit expensive.
While the interest rate money from the points might seem costly, if you calculate these numbers into your business plan, you will know whether or not it is worthwhile. If you subtract the original price of the property, the expense of the expected repairs, and the money you will owe the hard money lenders from the expected value of the property after the repairs, and you’re still in the positive, then the loan should be worthwhile.
Real estate wholesaling occurs when a party (the “wholesaler”) contracts with a home seller, markets the home to potential buyers, and then assigns the contract to one of them. The wholesaler gets to make profit from the difference between the contracted price with the seller and the amount paid by the buyer. The primary goal in real estate wholesaling is to sell the home before the contract with the original homeowner closes.
This method is similar to flipping, except that the time frame is much shorter and no repairs are made to the home.
Basically, co-wholesaling is working with another investor to do a joint-venture wholesale deal. It is participating on one side of a traditional wholesaling transaction in order to profit. Co-wholesaling is great when you don’t have all the resources you need to go into buying and selling of houses. With co-wholesaling properties, the process goes faster because you can tap into another wholesaler’s buyers list.
- Buying as an owner occupant
If you want to flip houses or buy rentals, the best way to do it with no money (assuming you cannot find private money) is to buy as an owner occupant. You get to live in the house for a year or two, and then sell the house or rent it out. It takes some money to buy a house as an owner occupant, but very little compared to investor loans.
In conclusion, we have seen that it is possible to buy and sell houses for profit but without having any money of your own, but that is just part of the story. The full tale is that you must of necessity find funding from somewhere in order to ensure that you make headway in this business.
8. Hard Money
This is the process of using equity loan at an approximate ratio of 65% Loan to Value Ratio (LTV), which is dependent on the equity of the property. Also, credit is not considered.
- Hard Money/Seller Carry-Back: The seller may carry back the second and do the refinance from the start, this will provide the seller with income. Variations can be done to aid this process.
9. Subprime Financing
The financing by national money lenders will give seventy percent (70%) without verifying money and poor credit returns.
- Subprime/Seller Carry Back: Rather than provide the seller with the burden of financing on his/her own pocket, it may give money to the seller.
10. Crowd Fund
This is the modern means of borrowing income. Online platforms are used by multiple investors who put money and invest in a flip project. This has a conjunction with the rates gotten through a loan by hard money.
11. Local Independent Portfolio Lenders
They are mortgage companies that lend money and it is advisable to get their help. Examples of national lenders are Finance, Associates, General, Beneficial, American, etc.
Many people think that without credit, they may not find investors who are willing to invest in their project. This is not the case anymore because with a proper business strategy, you can borrow money without issues, make a profit for yourself and pay back your loan comfortably.