Fixing and Flipping – or the process of real estate investing through buying properties in need of renovations and repairs, doing the work, and then selling the rejuvenated home to a thankful buyer, remains a profitable and rewarding endeavor for many people.
However, many people, especially just learning about real estate investing, ask if you can flip houses with no money in pocket, or without the cash to afford the purchase and renovation costs on a first flip! This obstacle is all too common as real estate values continue to climb and many everyday Americans looking to get into real estate struggle to pay bills and keep up with prices through persistent inflation, let alone save up the funds for a large real estate purchase!
How to Flip Houses with No Money
Well, is there a magic solution to get started flipping houses with no money in hand? Sadly, like all things that sound too good to be true, it is very unlikely you will be able to get rolling in fixing and flipping if you have no money to start. When capital providers, such as investors and lenders, provide the money for flips they almost always want to see whats generally referred to as “skin in the game.” This means that the person pursuing the flip should have at least something invested in the project money-wise.
With zero “skin in the game,” its all to easy for an aspiring flipper to walk away and give up when things get tough (and newsflash, fix and flip projects almost always will have challenges and obstacles to overcome). Without any personal losses on the line if things go sideways, and the ability to “walk away” with no costs incurred, financing 100% of the project is rarely done by legitimate lenders or investors.
Word to the Wise – while sometimes, 100% financing for a fix and flip projects will be offered, even for a novice, be very very weary, as this could indicate a dishonest deal (i.e. scam) or predatory terms to compensate for the lender’s risk (such as excessively high rates and fees).
Sources Of Funds for Flips
Investor Partners
A classic way to start flipping houses with little or no money is to partner with an investor. Typically, one party provides the money (the investor), and the other handles the work. The flipper finds the deal, manages renovations, and handles the sale.
In these cases, a simple LLC or other legal agreement can be created that sets the terms of how much is invested and how the profits (or any losses) are split. The investor is able to get a return on the funds through a share of the flipping profits, and the flipper is able to get a share of profits on the project without having to have invested money.
Hard Money Loans
Hard Money Loans for fix and flips are loans provided by a private lender to fund these projects. Hard money lenders charge interest and fees instead of requiring a partnership agreement or ownership share. This approach increases project costs with upfront fees and monthly interest payments. However, many investors prefer it since they retain full ownership of their projects. They don’t have to split profits unfairly at the end!
However, like investors, reputable hard money lenders are also likely to want flippers to have “skin in the game,” as well, and require at least some money invested. So, it can be hard to find hard money to flip houses with “no money,” but the good news is that hard money lenders will generally lend up to 90% of the cost of the project – referred to as “LTC Ratio” or “Loan To Cost.” Having to come up with 10% down payment for a fix and flip project can still be challenging, however, far easier that forking over 100% of all the costs or giving up half of more of your profits to a far-away capital provider!
Other Options
Partner Investors and Hard Money Lenders are generally the main two options for investors looking to flip without much cash, however there are other options.
Sometimes flippers look to “private money,” which basically means individuals acting as a hard money lender in their personal capacity. These options can be good, but they add another layer of risk, mainly the risk of scammers or misleaders. Vetting an individual is harder than evaluating a legitimate lender with strong reviews and a proven track record.
Bank and conventional lenders also offer loans for rehab projects. However, they tend to be more conservative and harder to qualify for. This is especially true for borrowers with little or no money to contribute to the flip.
Easy Street Capital – Great Options for Fix And Flip Loans!
Easy Street’s EasyFix loan program offers hard money loans for flippers with up to 90% LTC. The program includes competitive interest rates and no junk fees. It’s ideal for aspiring flippers looking to invest without needing large savings. Although these loans aren’t for investors with “no money”, we’ve helped thousands succeed in flipping. Most of their financing comes from our loans.
Interested in learning more? Click below to book an intro call with a hard money loan specialist. You can learn more about our loan program and get answers to your questions. Have a project that needs financing now? Click the “Apply Now” button to get going immediately!
Disclaimer: The information provided in this article is not intended as financial or legal advice of any kind. Regulations regarding short-term rentals are subject to change and all investments are subject to risk. Information included in this article may contain information that has not been verified by licensed attorneys and should be subject to independent verification. Readers are advised to consult with qualified legal or financial professionals prior to investing in real estate investment properties.
About the Author
- DSCR Loan Cash-Out Refinance Guide - December 19, 2024
- Best Cities for Fix and Flips in 2025 - December 17, 2024
- Best Cities for BRRRR Strategy Investing in 2025 - November 25, 2024
Stay in the Loop
Subscribe to our newsletter