Have you always wanted to get into the house flipping business but had no idea where to start without any money? In today’s post we’ll take a look at a few different ways you can get started flipping houses in Chicago with limited capital.
There are investors all over the country that started with nothing and now operate multi-million dollar real estate business’s. The key to being successful in real estate is in the execution of your strategy and your perseverance when things don’t go according to plan.
4 Ways to Flip Houses With No Money in IL
You might think this sounds impossible, but people do it every day. If you want to flip houses with no money, you will need to do your homework and educate yourself on the process and what methods of funding are going to be the best option for YOU!
You should create a business plan outlining exactly how you intend your house flipping venture to work.
Find Some Partners
Think about who you know who may want to invest. Even think about people you don’t know, but could pitch your investment idea to. This could be a friend, family member, business associate or possibly another real estate investor who would be willing to partner with you.
Having a good network of private financial partners is going to be absolutely critical to getting started with minimal investment and scaling your business down the road. Make sure you take good care of your early investors as they will end up being your best connections for finding new private money in the future.
Loans – Hard Money & Private
Getting a loan, whether hard money or through a private lender can be a great strategy for securing the cash you need to make a property investment. A private money loan is a great method as there are many people out there, with money just sitting in their bank accounts, waiting to invest with you.
They just don’t know it yet. If you can present a tangible plan and reasons why they should invest with you, you will be able to find a private money lender who is ready to invest with you.
A hard money loan is also a great way to get the cash you need fast. However, the thing with hard money loans is that they often come with a high-interest rate as well as points. Because of the high-interest rates, hard money loans are great for a property you know you can flip fast.
They allow you to get the money you need quickly, just ensure you pay it back as soon as possible.
Use What You Got
Even if you don’t have an abundance of cash at your disposal, you might have other assets you can use to secure the financing you need.
You can use a home you own, your IRA or retirement accounts and even your 401k to help get a line of credit. If you tap into any of these accounts for a down-payment, beware of the associated risks, and tax penalties for pulling out money early.
Mix & Match
Even if you can’t get all of the funding you need using the methods above, you can mix and match the methods to achieve your goals.
For example, maybe a family member will help you with some of the money to purchase your next deal but they don’t have enough money to cover the total development cost. It may make sense to get a hard money loan for the remaining amount of cash needed to complete the deal and subordinate the loan from your family into second position.
However, you decide to invest, do your research and keep in mind all of the potential streams of credit that might be available to you!