Ah, the “No Money Down” real estate trick. Actually, it’s not a trick at all — it’s a wonderful strategy to utilize resources and maximize your ROI. People mistakenly think that you must have money to make money in real estate. Well, truth is just the opposite. It comes down to one word:
What is “leverage“? Leverage is the ability to use an external resource or benefit to your own advantage. In regards to real estate, leverage can mean using someone else’s time, skills, license, geographic location, knowledge or even… you guessed it… MONEY.
Hey, no one ever said it had to be YOUR money, right? What if you had a wealthy relative or friend who was financially knowledgeable and wanted to invest in real estate but didn’t have the expertise or time but still wanted a nice return? If you’re a savvy real estate entrepreneur and can find good deals with tons of upside, might you be able to use their money to finance your house flips? Absolutely!
That’s leverage. Using someone else’s resources — in this case, capital — for an advantage. It’s called “private lending” and the advantage is being able to flip more houses. If you can raise enough private capital, then you can be involved in multiple house flip deals at any given time.
What if you found a house that was worth $200,000 today but after some renovations it would fetch $300,000 on the open market? Now let’s say you can get that house for $125,000 because the sellers are in bankruptcy and really need some cash. Well, your private lender might be willing to finance the whole thing for you if they got a recorded lien for protection, (funding $125,000 on a house worth $200,000 “As Is” is very attractive) while, at the same time, you gave them a nice fixed rate of 12% on their money. It’s safe, collateralized and profitable.
They place the funds in escrow, you close on the deal, complete your renovations and resell it for your $300,000 four months late. Everyone wins! And the real kicker is….
YOU DIDN’T USE ANY OF YOUR OWN MONEY!
Now they won’t all go down this way. You may find lenders who are only willing to lend a fraction of the required resources, so you’ll have to look for other sources from your own bank account to other lenders. But you see how the concept of leverage works in real estate. And let me assure you — this happens ALL the time (as I can tell you firsthand).
Want to know more about how to flip a house with 100% Private Capital and start making money in real estate TODAY? Then see if you qualify to join the nation’s top-rated real estate coaching program — FortuneBuilders Mastery.