How to Flip Houses With No Money

| Read Time: 11 minutes
Share This Post

You might think that you need hundreds of thousands of dollars in the bank to start flipping houses — at least, that's the way house flipping TV shows make it look. The truth is that there are plenty of ways to finance a house flip without having to put up any of your own money. In fact, one of the main benefits of investing in real estate — particularly house flips — is that you can use leverage. If approached correctly, you can reap large rewards by risking only a small amount of your own money — or, in some instances, none of your own money. However, if you’re interested in making money flipping houses, you’ll still need access to capital, even if it’s someone else’s. To finance the transaction, you might have to partner with other house flipping investors, use a private lender or learn how to get a loan to flip a house . These types of partnerships are critical if you’re looking to flip a house with no money — but which one is best for you? There’s no better place to get expert advice than from actual industry participants. To help out, Seek Business Capital consulted some qualified investors in the field to get first-hand expert tips for house flippers in regards to funding options for those who want to flip homes with no capital. Once you learn all of the options available, you’ll have a good understanding of how to flip houses with no money down.

How to Flip a House With No Money

There are several ways to start flipping houses with no capital of your own. Compare these different options to determine the best option for your unique situation. Here are seven ways to flip a house with no money: Read: Best Small Business Loans

1. Form a Partnership

Working with a partner is one of the easiest ways to raise capital for a house flip — and a good way for any inexperienced house flipper to get exposed to the business. Of course, you’re going to have to hold up your end of the partnership. If you don’t have any money to contribute to the flip, you’ll have to contribute with sweat equity. This means that you may be asked to do some or all of the repairs on the property if you’re able to do so. You’ll probably also have to be the one to find a suitable property in the first place. If you want to convince a partner to risk their own capital for your house flip, you should expect to be the one filing all the paperwork, presenting the deal and doing the math on how you’re all going to make money. The more potential profit you can unearth in a deal, the more likely you are to find a partner who is willing to jump onboard. Think of it this way — if someone came to you with a “great house flip deal” that required you to be the one to bear all of the financial risks, what would you say? Unless the project seemed like a pretty sure thing, you probably wouldn’t be interested. If you’re trying to work with a financial partner on your house flip and you’re unwilling or unable to contribute any capital at all, you’ll have to find a great deal to make that partnership work. If you choose to go the partnership route, there are a few caveats to be aware of. The first one is if your partner is a friend or relative. Many first-time flippers turn towards people they know for financing because it’s usually easier to obtain. The problem with this is if the house flip deal turns sour, you may strain or even ruin your relationships. The second warning is if you work with a completely unknown partner. Although you may want many investors fighting over your deal so you can choose the best terms, if too many unknown investors are interested, it may be a sign that your deal is too good, and that you could be taken advantage of by more experienced investors. As long as you have your numbers and contracts in order, this shouldn’t be a concern, but you should be aware of it the risks involved in dealing with unknown third-parties. On a more positive note, partnering with experienced house flippers can be invaluable in terms of the knowledge you’ll acquire. “Forming a real estate partnership is the best way to finance a fix and flip deal for beginner investors," said Daniela Andreevska, marketing director at Mashvisor, a real estate data analytics company. "In this way, you get not only access to financing but also access to the knowledge and expertise of more experienced house flippers. Real estate partnerships can take many different forms, which makes them a great strategy. However, before you start any work, make sure to prepare and sign an agreement which outlines the rights and responsibilities of each partner and specifies the measures to be taken in case of default on anyone’s behalf. Also include an exit strategy in it.”

2. Crowdfunding

Crowdfunding uses the power of social media to draw investors into various projects. Originally, crowdfunding was often used to raise money for new companies developing original products. Nowadays, investors can pour their money into house flipping projects as well. A crowdfunding investor can often earn between 8 to 12 percent on a house flip investment, according to Los Angeles Magazine. From the borrower’s side, crowdfunding is most akin to a hard money loan. In other words, your financing is likely to be expensive. Individual crowdfund investors will not have access to your credit report, so they won’t be investing based on your credit score. Rather, the potential for profit in your deal, along with the equity in the house you’re buying, are what investors will look at. You can expect to pay anywhere between 5 and 25 percent or more if use crowdfunding for your house flip. You’ll also face fees, including closing costs, interest charges and additional points. Another drawback of crowdfunding is that some sites won’t work with inexperienced flippers, as the risk is just too great. It may also be hard to get 100 percent financing via a crowdfunding site.

3. Hard Money Lenders

Hard money lenders are one of the go-to sources of financing for house flippers, particularly for those with bad credit. Hard money loans are asset-based, so the private money lenders that issue them don’t care as much about your credit score as they do about the potential equity in your house flip. “Hard money lenders provide capital for real estate investors," said Tanner Ellis, a real estate investor at Equal Realty LLC. "An investor would traditionally use a hard money lender to fund a flip. Unlike a traditional bank, they do not look at a borrower’s personal credit when making lending decisions. Rather, hard money lenders look at the profitability of the deal. It is possible to find hard money lenders that will loan an investor 100 percent of the purchase price plus the funds needed to rehab the property. This allows an investor to enter the deal with no cash of their own. However, hard money is expensive. The interest rates charged are much higher than using a traditional bank, and oftentimes points are charged when the property is sold.” Earl White, co-founder of House Heroes LLC, states that hard money loans are the usual way to finance a home flip,” but warns that interest rates are high, in the range of 8 to 15 percent. According to White, however, that amount “ the cost of doing business for the home flipper since conventional mortgages are not available.” Since hard money lenders are more interested in the particulars of a house flip deal than a borrower’s credit score, this can be a good avenue for first-time flippers or those with a spotty credit history. Experienced flippers with top-tier credit, however, can undoubtedly find better loan terms from other sources.

4. Wholesaling

Wholesaling is a way for investors to “flip” a house without ever actually owning the property. Essentially, a wholesaler acts as a middleman between a home seller and a home buyer. Rather than buying a property outright, injecting more money for renovations, and then selling it on the open market, a wholesaler finds properties that are up for sale, locates buyers willing to pay a higher price, then pockets the difference. “Wholesaling real estate is the process where the wholesaler finds a deal, signs a contract with a seller, then finds another investor who will actually own or rehab the property," Ellis said. "The wholesaler charges the investor an assignment fee, which is basically a finder’s fee for finding the deal, closing it, and bringing it to the investor. The wholesaler brings none of their own money to the table. The second investor is the one who actually purchases the property. While it is possible to wholesale without any money, it helps to have money for marketing and finding deals. The less marketing you utilize, the more time one will need to invest and find deals. Completing a few wholesale deals is a great way for new investors to build up capital to fund more deals and grow their business.” Eric Nerhood from Premier Property Buyers agrees, noting that “wholesaling can enable investors to make a lot of money in a short amount of time, making it a great vehicle for flipping houses.” As successful wholesaling requires a good marketing plan and a network of potential investors, it’s usually not feasible for first-time house flippers. However, for those with a bit of industry seasoning, wholesaling can be a great way to “flip” houses without ever having to risk investment capital. As Ellis points out, the more wholesaling deals you can close, the more capital you can build up to have additional flexibility for future house flipping projects.

5. Personal Loans

Personal loans can be a great financing option for house flipping investors due to their flexibility. Personal loans are generally unsecured, meaning you don’t have to put up any collateral. Additionally, personal loans can be used for virtually any purpose whatsoever, so you won’t have to worry about providing your loan-to-value ratio or any of the particulars of your house flip to qualify for a personal loan. Some lenders might ask what you intend to do with the money, but as long as you have a legitimate need, you typically won’t have to get any more specific. In this era of online banking, personal loans can be extremely easy to get. In many instances, a few simple clicks of a mouse are all it takes to get approved and funded online within a matter of days. Rates for personal loans are generally higher than you can get with a standard mortgage since lenders take on more risk by funding unsecured loans. However, you should be able to snag a rate much better than if you went the hard money route, as long as you have decent credit. Top-tier credit can get you a personal loan around the 5.99 percent range, although rates for those with bad credit can be extremely high. If you’ve got spotless credit and high cash reserves, you might be able to find a lender willing to offer you a loan for $500,000 or more. However, even a first-time house flipper with a more moderate credit history may qualify for a loan amount of $100,000 or more. The key is to demonstrate to your lender that you’re able to pay your loan back. Seek on Forbes: Can You Flip a House With Credit Cards?

6. Alternative Lenders

If you’re seeking to finance a house flip, one of the first things you’ll learn is that you can’t really get a standard mortgage for your property. House flippers only need capital for a matter of months, weeks or even days, so taking out a traditional 15- or 30-year mortgage doesn’t make sense. Since most traditional banks prefer to make long-term loans to established borrowers, trying to get financed as a new house flipper can be difficult. Fortunately, there are a number of alternative lenders that specialize in making loans for these types of borrowers. For a first-timer, trying to get funding from an alternative funding source like Seek Business Capital, which offers fix and flip financing options, is generally more fruitful than going to a large, international bank. Seek offers loans from $5,000 to $500,000, with no financial documents or tax returns required, and in many cases you can get funding approval within 24 hours.


If you have equity in your own home — or if you intend to fix and flip your own property — a home equity line of credit, or HELOC, could be a good option for you. A HELOC essentially operates like a credit card. Your HELOC will come with a borrowing limit, but you’re not required to borrow any specific amount — or any amount at all. When you need to draw down your line of credit, you’ll begin incurring interest charges. You can continue to make interest-only payments for a specified period of time, known as the draw-down period. After that, you’ll have to begin paying back the principal you borrowed as well. The equity in your house serves as collateral for your HELOC. Brady Hanna from Mill Creek Home Buyers notes that “typical HELOC rates are 4 to 6 percent, which are some of the best rates you can get for funding your rehabs, and you can pull funds on demand. When the home is rehabbed and sold, you can pay off the balance on your HELOC and rinse and repeat. This is a great way to get started flipping homes.” Although a HELOC can be a flexible option for tapping house-flipping funds, they do have risks. “HELOCs have a draw period that is typically limited from five to 10 years, and the borrower in question is only required to pay interest," said Chris Baumann, Loans & Investments Team Leader of Socotra Capital. "Repayment may be more of an issue later down the line, since these terms can be highly variable depending on the HELOC. They also involve exposure to interest rate risks, and any changes in rates are likely to be felt by the borrower much sooner.” Read This: 10 Incorporation Documents You Need to Form an LLC or Corporation

The Bottom Line

House flipping of any sort requires money — but this doesn’t mean that you need to be the one to supply it. There are plenty of investors and lenders willing to finance house flipping projects, even with a partner or borrower who doesn’t contribute a single cent to the process. Just because you aren’t contributing any of your own money doesn’t mean that you aren’t taking any risk with your house flip, however. Depending on the amount of money you borrow or the types of contracts you sign with your partners, you could still be on the hook financially at the end of your house flip. “However you get around to funding the purchase of the home, you’re on the clock and under the gun," Baumann said. "If the home you’ve selected for this flip fails to sell for the value you need it to, you could take a pretty serious financial hit.” However, if you do your research, pick a home that’s below market value and rehab it affordably to above-market standards, you should have no problem successfully flipping houses with no money and paying back any money that you may owe. More From Seek

Business Loan Resources

Photo credit: Doucefleur/

Did You Know?
We've funded over $400 million for small business owners since 2015