Do you want to try your luck in the Real Estate business? Or you have already made up your mind but are a tad bit clueless on how to start as far as capital is concerned?
Or maybe, you’re thinking of getting something to do without necessarily needing to exert much cost on your part. If that’s the case, I have some handy tips for you.Right off the bat, Real Estate is a lucrative sector. It has gained some crazy momentum over the years. And flipping houses is a great way to start from one to many.
Now, if you’re wondering “How to start flipping a house with no money?”, then I am sorry to burst your bubble. Flipping houses calls for some investment that you will need to consider. Most especially if you intend to be a full-time Flipper.
Even part-time Flippers who consider this as a side hustle generate a generous income. There are examples of business individuals taking over old and worn-out houses, and then transforming them into mere palaces. Most times they use very little finance to cover the costs of flipping depending on the design of the house.
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How To Start Flipping House?
For starters, house flipping is buying properties at a very low market value and reselling them at a high rate to make profits. While considering getting into flipping houses, you need to thoroughly access the kind of property you are about to purchase and its location.
The more rundown the house is, the more material is needed to flip the house, thereby costing you unnecessarily more. So you ought to pick out a strategic location. Also, take into account that your chosen property must ensure a profit once it has been flipped.
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How House Flipping Works?
As I just said, House flipping requires a ton of assessment as well as a lot of research. House Flipping also involves taking into consideration the potentially lucrative areas with dilapidated or rundown houses and purchasing them to renovate.
Considering your intent to make a profit on this house, you will need to keep in mind the basic costs.Now, if the House Flipping is for your personal use, basic costs still need to be considered but not in the profit-making sense.
But in the cost reduction sense where you have some materials and just need little finance to add to what you already have. Purchase a house below the market value in order to flip for a higher value when you want to sell.
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Costs to Consider While Flipping House
So, now you know that the idea of Flipping a House with no money does not mean there are no basic costs you will incur in the course of Flipping.
With that out of the way, let me give you a basic idea of some common costs, which you must take into consideration when intending to get into House Flipping. Keep scrolling to know more…
Purchasing and Closing Costs
You cannot flip a property or house you have not purchased in the first place right? So the cost of acquiring the house is considered in addition to the Closing Costs.
The fees that are required during the transaction settlement of a Real Estate are the Closing Fees. These fees most times include the Title Insurance Fees, Transfer Taxes, as well as Financing Fees.
To put it simply, the fees depend on the type of property or house you intend to buy. Some may have other costs such as custom window treatments, light fixtures, and even appliances. You might buy a house that does not include the land the house is on, like a Condo!
Also, do note that you need to pay at least 5% on Closing Costs while purchasing. So depending on the amount you are buying, you will have to pay an extra 5% of that amount on the Purchase Price.
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Flipping or Renovation Costs
There are a wide array of stuffs one needs to discover in the process of renovating or flipping the house. It is hard to tell scenario while surveying the house to determine every little mess that require a fix. Considering that, your renovation costs will depend on the state of the house, along with the level of surprise costs that you might come across while renovating the property.
These unforeseen expenses could shoot your budget way higher, lower or average depending on what you come across. The age of the building and implementations in the house should be taken special note of when renovating.
This is because the older the house, the more worn out the innovations and electrical wiring, if the innovations were done around the same time the house was completed. This is the most critical and uncertain phase of the Flipping Process. Even the most experienced House Flippers face issues at this stage and for a first-timer, it is even harder.
Now, in case the funds are limited, the Flipping Project may end up to a standstill or may even be derailed. In other cases, you may tend to find out the house was more depreciated than initially thought which might lead to reconstructing some sectors of the house.
You will have to have a design in mind so that when choosing the house it can easily fit the design to flip will make the work much easier.
Labor Costs
While deciding to start flipping houses as a business investment, you might definitely want to keep track of the labour expenses. It’s a no-brainer that some places offer more expensive workers than others.
You might want to find out the costs of labour depending on the location you decide to buy your property or house. For starters, labour could be an Electrician, a Plumber, General Contractor, Painters, and even Landscapers.
Material and Appliance Costs
No matter how not so bad or bad the house or property is, you will always need some building materials. And some houses might need more building materials than others.
Some general building materials might be Lumber, Hardware, Paints, and Cables. As well as some appliances such as a Stove, Refrigerator, HVAC, In-built Ovens, and others.
Sales Costs
Though this is the most fun part of the House Flipping process, it has some basic costs you will want to undertake too. These costs though may seem small, infringes the profits of the Flipped House.
You may have to consider costs such as the Commission for the agent(s) putting the House on the Market, as well as some costs involved in the closing of the deal.
How to House Flip Without Money?
There are a few options you could decide if you intend to get into House Flipping without investment. But nonetheless, you will have to consider returns in the long run in case you use outside sources. We have a few tips you could consider using when considering this House Flipping with no money option.
House Flipping Investors Partnership
While doing your research on houses to flip, you might consider searching for those who are already in the House Flipping real estate business.
Finding someone or a group of individuals already in the business could help you create a partnership. Your skills and resources will make a difference in their investment journey. Or you might have some of the resources but not the House Flipping skills, the Partnership will still be of benefit to both parties.
Wholesale
This is also a great way to do House Flipping without necessarily doing the House Flipping by yourself. Confused? Well, this is done in the form of a contract. It is where you buy a house or property on sale under a contract.
You then assign the contract to a new buyer who will Flip the house and sell it. You get your percentage from the final sale depending on the contract agreement.
Also, this calls for being a good negotiator and business person to get a good contract and buyers as well. This method gets you into the House Flipping real estate business without you needing any finance to start.
Seller Financing
This is a case where you find a home to flip and then pitch the House Flipping idea to other interested investors for Seller Financing. Here, investors can negotiate with the house or property owners directly and get a good loan contract for sellers.
Investors need to be convinced why they need to Finance the project. So your goals for the house or property are what is going to determine whether you keep these investors or not.
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Conclusion
In general, House Flipping is becoming a renowned and popular sector of the Real Estate Business as the years go by. Considering getting into House Flipping is a great idea but all the same, you need to be prepared.
Consider my pointers as this will help you know what to take into consideration especially if you don’t have money to kick things off!
