How to Flip a House with Only $10,000
Getting started as a real estate investor can be challenging if you have limited funds. The cost for house flipping varies depending on property type, location, and the scope of renovation work to be done.
House flipping costs vary from project to project. Can you use $10,000 to flip a house? It can be challenging to handle a flip with little money since it is a capital-intensive process. If you are creative and willing to partner with an outside investor, you can flip a house for only $10,000.
Best ways to flip a house with only $10,000
Flipping a house is feasible on almost any budget. If you have only $10,000 to invest in a house flip, you need to be creative and find a partner to whom you can add value to. Some of the ways to flip a house with limited funds are.
#1 Find a partner to flip with
One of the available options for flipping a house with limited funds is partnering with house flipping investors. If you are bringing little to no funds to the partnership, you must add value to the partnership in other ways. You can bring the right contacts or agree to give a bigger percentage of the profit to your partner with the capital.
Agree on how you will make money after flipping the house. Will you sell or rent the flipped property? Or a combination of both? These are some of the details you will need to figure out.
#2 Hard money Lenders
Hard money lenders are companies or individuals that offer short-term real estate-backed loans. The property being flipped is used as collateral for the loan. This loan can be used to purchase the property and flip it.
Hard money loans are ideal for investors who are experienced and have at least one existing property. This loan has a high-interest rate and can only finance a certain percentage of the rehab – usually 70%.
Getting a hard money loan as a first-time investor with no capital can be difficult. This is because hard money lenders mainly focus on generating profit and minimizing risk. The lenders are likely to be skeptical about giving a large sum of money to a first-time house flipper.
There are no universal hard-money lender guidelines. Each lender has a unique set of criteria. Once you get a hard-money loan, ensure they give you ample time to rehab and sell the house.
#3 Wholesaling real estate with only $10,000
Wholesaling is where an individual gets a contract from a property seller and assigns the contract to an end buyer. Doing this will enable an investor to generate money in a short time and save some for future flips.
For wholesaling to be profitable, you need to have a network of real estate investors looking for fix-and-flip deals. Wholesaling allows you to flip a house without ever owning it. Wholesalers make between 5% and 10% of the final sale price.
If you decide to invest in wholesale real estate, you must find a good deal that will enable you to flip the house to another investor and still make a profit from it.
#4 Live in flip
Time is very crucial in flipping houses. The faster you flip the house, the greater the profit. A live-in house flip is where an investor lives in the house they intend to flip.
Another option is the slow flip. This is where a property seller gives the buyer a period to pay off the purchase price of the property. The buyer pays off by selling the property or through a mortgage.
The forms of financing used in the live-in flip strategy are FHA and conventional loans to buy and move into a run-down property that requires cosmetics fixes and upgrades using the $10,000 or even less as a down payment.
You move into the house and fix up and update it while living there. After upgrading it, you then sell it for a profit. This process could take years. You can also take a traditional loan to facilitate the house flipping.
Residing in the house you are flipping for at least two of the five years taken to flip it will free you off paying any capital gains tax on the benefits you generate up to $250,000 if filing individually or $500,000 if filing jointly.
Best ways to provide value in a real estate flip after capital
Some of the best ways to provide value in a real state flip that might make an investor desire to partner with you on a flip are:
#1 Sweat equity
Sweat equity is a person’s contribution to a company, investment, or business where an investor gives their time, effort, and knowledge rather than money. In real estate, sweat equity can be provided in form of the majority of all the labor for the flip.
An investor with capital can partner with an individual who has the time and skill to rehab a house. This is great value addition in a real estate deal and is worth a substantial portion of the profits once the flip is successful.
#2 Find the deal
One of the most challenging aspects of house flipping is finding a good deal that will generate profit. You should network with contractors and real estate agents, checking around, checking on the listings on MLS and public records, and searching online.
If you get a good deal, you can cut into it and give value by presenting a good deal on a property to a real estate investor with money to invest.
#3 Manage the flip
Another way of adding value to the flip is managing the flip as well as the site. Many real estate investors don’t have time or aspirations to manage a flip. Partnering with them in managing the flip as well as dealing with the contractors and the job site will be beneficial beyond just giving money.
Can you flip a house with no money?
There is little distinction between flipping a house with only $10,000 and doing a flip with no money. Both require you to either take out a loan or partner with someone who can fund the flip.
Flipping a house with little to no money can be challenging because getting a loan is difficult, and you must prove valuable to partners. If you decide to venture into house flipping with no money, you need to be ready to face obstacles and hurdles that come with lack of funds.
Safeguarding yourself when flipping a house with no money
When flipping a house, it is important to have a written contract whether you have the money or not. Doing this will protect you against any losses.
Have everything clarified from the onset to protect yourself and your interests. Know how the flipping is to be structured as well as how the profit will be shared.
Overall, ensure you do not make any losses when flipping a house. House flipping takes money, but it is possible to get started with only $10,000.
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