The first question that most people ask when they explore the possibilities of house flipping is, “How much money do I need to get started?” As the old adage goes, it takes money to make money, and this is certainly true in the world of house flipping. However, you don’t need as much capital as you might think to get started as a house flipper.
While successful house flipping usually requires an upfront cash offer in order to secure a desirable property, no one expects house flippers to have that much cash on hand without any assistance. Even experienced house flippers who have made fortunes from their flipping pursuits rarely make a purchase using only their own money.
Most house flipping funding usually comes from bank loans, investing partners, or private money lenders. Private lenders tend to be the most popular choice because bank loans take too long and come with too many strings, and personal investment partners have a tendency to be unreliable.
So, if you’re getting house flipping loans from a private money lender, does that mean that you can purchase a house to flip without any money down?
The short answer is probably, but you shouldn’t.
If a lender is willing to give you 100% of the purchase price, they are more likely than not a hard money lender, and you are more likely than not getting yourself into a rather unwise situation. Unlike private money lenders who cultivate long-term partnerships, hard money lenders care only about getting the most interest they can, regardless of the outcome.
Private money lenders are more careful about who they lend to. If they are reputable, they will care about the success of your investment. Thus, they will only lend to people who are serious about their investments, and the clearest way to show commitment to a project is to invest one’s own money.
At ZINC, novice investors are expected to put down 20 to 30% of the initial purchase price. More experienced investors who have cultivated a relationship with the firm can put down as little as 10%. Our most trusted investors can take out house flipping loans of up to $1,500,000, leveraging their experience and capital in ways that they would never be able to on their own.
Learn more about our loan programs by giving our office a call today at (888) 552-6637!