Five Unconventional Ways To Flip A House When You Are Broke
It seems impossible but you might be able to be a real estate investor even if you’ve got no cash.
If you’ve watched flipping house shows on TV with envy, when you’re worried about getting back into your apartment because your rent is late, you’re not alone. Many people who watch TV renovation shows need to renovate their bank balances before they can contemplate such a mighty undertaking. But, if you’re financially stable but do not have the hundreds of thousands of dollars at your disposal to fund a flip, there are some unconventional ways to start your journey to becoming a property tycoon.
1. Hit Up Family Members.
Don’t go to your family with the begging bowl, pleading for cash. Approach them with a structured business proposition. Ask them if they would like to make 12-15 percent (depending on how generous you feel) on their money over the space of 1 year, or 1 percent a month to fund a purchase and renovation of a house. Explain that their money will be collateralized by a property and that they will have the first lien position. Of course, this will only work in a market where you can buy a house for cash and don’t have to qualify for a mortgage. Also, agree to sign a deed-in-lieu of foreclosure beforehand so that, if for any reason the property doesn’t sell at the number you want after a certain period of time, they can simply take the property and sell it to recoup their investment.
2. “Subject To’s” and “Lease-To-Owns”
Both of these techniques basically mean that you will continue to make monthly payments to the owner with an equity stake in the property while you renovate it. A Lease-To-Own is quite simple. You have a fixed price that you agree to give the owner in order to buy the property. Once your rehab is complete and you’ve found a buyer, set up a double closing and collect a check.
3. Buy A House With A Credit Card or your HELOC
Not a move I’d recommend unless the house is cheap and you have an immediate exit strategy. In certain markets in the Midwest and down south, some houses do cost only a few thousand dollars to buy. With a little sweat equity or cash to pay for a rehab you might be in and out before your first payment is due.
4. Partner Up With Someone With Money
Whether you choose for form a company with your partner or not is up to you and the type of relationship you have. If you have no cash you can offer to find the house, oversee the rehab and the sale for 50-50 split. It’s a great way to get started.
5. Send Out Postcards
Believe it or not, this technique works, particularly if you are targeting out of state owners who don’t want to be bothered with an abandoned or beat up property. Every owner’s address can usually be found on a county website. Look up the info for out of state owners who have owned a property for ten years or more. You may even want to drive by a property first to see the kind of shape it’s in. Once you’ve sent your postcard and the seller calls you back, you know they’re desperate to get rid of it. If it’s vacant, there might be a chance that back taxes and liens are owed. Get this checked out first. If the owner says, “I’m just looking for someone to take it off my hands. It’s a big headache,” you’re in a position to buy a house for the cost of lunch. But the renovation is on you.
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