Oct. 16, 2019

How People Flip Houses Without Their Own Money

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One of the most common excuses or reasons I'm given when I ask someone what's holding them back from their first successful house flip is: "I don't have any money."

If you don't know how to navigate this whole house flipping thing without using your own cash, this episode is for you. I share with you the exact strategies you can use to finance deals without your own cash, however, you have to go take action with this information in mind. Armed with this knowledge, you can't use "I don't have lots of money" as an excuse anymore!

In this episode, you will learn:

  • Why lack of money isn't the real issue
  • What the real issues are 
  • How you can buy houses with little to none of your own money
  • Creative buying strategies requiring little to none of your own money

...and much more!


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2. Learn more about Debbie DeBerry | The Flipstress

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Hey you guys, what is going on? I'm so glad that you have chosen to spend some time with me. So what I want to do on this podcast episode is I want to talk about why a lack of money isn't really something that should hold you back. And I'm going to give you actionable steps that you can take and strategies that you can use to go get started. All right, stay tuned.

You're listening to the flip houses like a girl podcast where we educate, empower, and celebrate everyday women who are facing their fears, juggling family and business, embracing their awesomeness and wholeheartedly chasing their dream of flipping houses. Each episode delivers honest to goodness tools, tips and strategies you can implement today to get closer to your first or next successful house flip. Here's your spiky-haired to breakfast, taco loving host house flipping coach, Debbie DeBerry.

Debbie DeBerry: All right, I hope that whatever you're up to today that it's fun and light and enjoyable. Okay, so let's get into this notion of I haven't flipped a house yet because I don't have any money and why that holds people back. And I think there are three things at play here. One, there's a lack of knowledge issue. You don't know what you don't know too . You aren't thinking creatively, and that comes back to lack of knowledge, just not knowing that these creative buying strategies exist or the strategies to get money exist. Okay? So I'm going to tell you exactly how to fund your projects and you don't have to have a ton of money to do it, all right? The third thing that's typically at play is it's a fear thing. It's a big, big fear thing. And so what we do when fear is the thing that's underlying our lack of progress or lack of accomplishment, what we do is we find other things to blame. Heck, we'll even find other people to blame, right? This is one of the biggest reasons I get one of the common reasons I hear for why somebody hasn't flipped a house yet, even though they have this burning passion, this burning desire to do so. Lack of money is one of the most common reasons I hear now. Some of you,

Debbie DeBerry: okay, really need to hear this and now some of you really need to hear this and you need to learn these strategies that I'm about to share with you and some of you will take action and others of you won't because you'll be stuck in, I don't have any money, I can't do this. And that is easier for you than getting out of your comfort zone and doing things you haven't done before and asking people for money. When you're a brand new investor, you're brand new to this house flipping thing and you feel like a total impostor going and talking to people about potentially investing in a property with you. I know you feel that way. I know a lot of you feel that way. The majority of you feel that way because we don't like not knowing what we're talking about. Right? And when we're new at something, oftentimes we don't really know what we're talking about. Here's a little secret though. Nobody really knows what they're talking about. We're all kind of fumbling our way through life. We're fumbling our way through these adventures. We go on. But the only way you're going to make progress most of the time is by getting super uncomfortable and feeling really vulnerable and potentially looking like a fool, but would you rather risk looking like a fool sounding foolish, feeling uncomfortable, then staying stuck exactly where you are for yet another year for yet another five years for yet another decade. I know people who have been putting this off for decades because they aren't willing to get uncomfortable. Now I'm going to share with you some really great strategies and you've probably heard me say some of these things before and that's okay. You'll hear me say them again because repetition is really important for people to really get something. There is an abundance of private money out there. There is an abundance of hard money out there and there are multiple creative buying strategies that you can use as well. If you've been struggling for a while with this notion of lack of money is holding you back, I strongly encourage you to look at that as a mindset issue and here's why. Your thoughts create certain feelings, right? Your feelings create certain actions. Those actions create certain results, those results. Then go back and feed your thoughts. Okay, so here's an example. This is what I mean. If I'm going around saying to myself and out loud, I don't have any money. I can't flip houses, and that's all I'm saying. I don't have any money, I can't flip houses. How do you think that thought is going to make me feel? Well, I'm going to feel defeated. I'm going to feel like there's nothing I can do to change my situation. I'm going to feel powerless. If I'm feeling powerless. What kinds of actions do you think I'm going to be taking? Quite possibly none, right? And if I'm not taking any actions, I am most certainly not getting any results or I'm not getting the results I want. The results I'm getting are big fat zeros, and then what if I'm not getting any results or I'm not getting the results that I want? I then say to myself, see, I told you I can't flip houses because I don't have money. It is a mindset issue and some of you are going to find that some that you don't want to hear, that you think mindset stuff is hokey. That's fine. Are you where you want to be? I mean, honestly, I don't know anybody who is super successful who doesn't work on their mindset often, if not daily. It is a practice. Our minds can totally mess with us. Even people who work on their mindset still get hung up on things. It's just normal. It's totally natural. But here's the thing, I'm just going to say this. If you haven't reached the results that you want, would it hurt to take a different angle? Would it hurt to try some of what I'm sharing with you on for a little bit? Would that hurt? I don't think so. Remember again, your thoughts create feelings which create actions which create results and those results go back to feed your thoughts. Okay, so let's start talking about some specific strategies you can use.

Debbie DeBerry: Now listen, you can't start any business with zero money. You have to have some dollars in order to start a business because you actually have to form a business entity for legal and liability asset protection. Like you have to form a business that takes money. So if you have big goose egg $0, then yeah, you're going to have a hard time starting any business. Now what most people mean though is that they don't have hundreds of thousands of dollars to pay cash for a house and then also pay for the renovations on top of that. Or if they know that they can finance the purchase, maybe they don't have tens of thousands of dollars to throw at renovations because they can get pretty pricey. Most of the flip side do require around 80 grand worth of work up to a hundred grand. But that's usually because people don't understand that there are ways to finance deals and also buy properties with little very little to no money down. Okay, so let's talk about, let's talk about some of these. So, but before you assume to know everything I'm about to say, I'm just going to ask that you be open minded and curious. That is in fact the shared trait of super successful people is that they're curious and they're always willing to learn. All right, so we'll talk about some things that I'm sure you definitely heard of and I'm pretty sure I'm going to talk about some stuff that you haven't considered or even you didn't even know was possible. Okay. All right, so let's talk about first some financing options. Now obviously there's the traditional bank that's not really a very realistic for real estate investors and that's because the banks typically can't close fast enough. So when we're talking about buying distressed properties, it's typically a quick closing, seven to maybe 14 days. It's typically pretty quick. And traditional banks cannot fund those that quickly. So we have , um , options like hard money. All right, so with hard money lenders and you definitely have to reach out to them and interview them and know exactly what their terms are, but it depends on where you are and all of that jazz and who you end up using. But for example, my hard money lenders lend me 100% of the purchase and the renovation costs up to 70% of what the house will be worth when I sell it. So if the house will be worth 400 grand when I'm done with it, I put it on the market it's worth 400 grand, they will lend me up to $280,000 so if I can get the purchase and the renovation and the carrying costs all to stay under that, then I have financed the entire purchase and renovation. Okay. Now there's a lot more that we could talk about with hard money, but that's not the point of this. I just want to tell , tell you that there are options for buying houses and financing houses. Okay? Another thing, private money. There are so many private investors around you that you have no clue are there . All right ? And maybe they don't even know that they're an investor. Maybe they haven't even thought about it. So find individuals who have cash sitting there, not doing anything for them because investing in your projects will give them an incredible return. Okay? So that's an easy sell. The hard part for people is to ask for the money. what you have to do I think ,what's worked for me is instead of making it about you, so I don't approach somebody and think, Oh my gosh, I really want to make this $70,000 profit on this property. I'm going to ask Susie to invest so that I can make 70 grand. No, it's not about me. It's about what can I do for Susie ? Okay? So have that kind of mindset and know you're offering people a really great return on their investment. Okay? That's private money. And again, there are private money investors everywhere. You just have to have the courage to sell yourself. And the competence to sell yourself crowdfunding sites is another way to finance these deals. Now they're usually going to require some sort of skin in the game from the borrower. So you're just gonna have to research that. But it's not going to be a zero down thing with the crowd funding site, but you can always then get a private investor to fund the difference. Okay? So you've just got to get crafty at putting deals together. Now you may have hidden equity that's just sitting there doing nothing for you. So if you do, it's really common to do a he lock . So a home equity line of credit. If you've got equity in your house that's just sitting there and not making money for you, pull it out and put it to work. Uh, if you have rental properties, you could do a cash out refi. So if you've got some hidden equity in properties, you could totally tap into that. Now I want to talk about three ways that you can actually creatively buy houses. Now it's not about getting a loan from a hard money lender or asking a private money investor for a loan . This is how you deal directly with a seller. Okay? So one way that most people have heard of is owner financing. All right? So you know, I bought a duplex years ago with a 2% down payment, okay? The beauty of it is all the terms are negotiable. So you guys can negotiate what works for each of you, all right ? But the beauty is that you can typically do a low down payment and they may or may not check your credit. It just depends. Now, why would a seller want to sell their house via owner financing? Like wouldn't they want to just take out all that cash? Well, here's the deal. They're going to end up making more money if they finance the sale. And what they can then have is a monthly cashflow . So if they've got 2000 bucks coming in a month from you, then that's monthly cashflow, right? Um, but ultimately they end up making more money from you from the sale. All right ? Now this one is one of the most powerful techniques for buying with zero out of pocket. Okay, so it's called subject -to. So you're buying, you would be buying the house subject to the existing finance. Okay, so subject to any existing financing that's in place. All right? What you're doing is you're agreeing to take over the payments in exchange for the deed. Now this can get complicated and it's really, really important that you know your state's laws and you operate within those legal bounds because Texas for example, has some very strict guidelines around it and you do not want to screw that up. That said, it's a really powerful tool that the majority of people don't even know is an option. So if you are taking over payments, then you're not having to put down a huge chunk of money. Okay? And that's, it's, it's really great and you can end up really helping the seller by saving their credit like they're behind or they can't make payments or whatever it is. Okay . So it's definitely a win-win. Okay, so the final one I want to talk about is equity partnering in the, this is a really great strategy to use when you've tried different things with this particular seller and they're just so gung ho on, no, my house is worth whatever. Okay, let's say you're trying to get the house for $100,000 and they are convinced, no, my house is worth $150,000 so you can, you're able to get deals done when other investors can't. When you use this equity partnering strategy, basically you're saying to the seller, look, I'll make the payments going forward. I'll renovate the house and then I'm going to sell it for as much as possible and when I do that, we're going to split the profits. Usually it's 50 50 that too is negotiable, but it's usually 50 50 so look, I'm going to make your payments going forward. I'm going to renovate the hell out of this house and I'm going to sell it for as much as possible. So you think it's worth one 50 great. Hopefully it's worth a lot more than that. And then we're going to split the profit on top of that. So this is an awesome strategy because you have very little risk and usually the loan is for you want to, you want to be using this with a property that has a ton of equity, right? So that means the loan is really low. So you guys will have a very big spread to split. It's an awesome strategy. It really does get deals done when other investors or other strategies that you've tried with the seller don't work. All right? Okay, so, well those are all examples , ways to invest and flip houses with little to none of your own money. All right? You have to be willing to be uncomfortable. You have to be willing to fake knowing what you know, like you're going to feel like a total imposter talking to private money investors. You're going to, you're going to feel like an imposter talking to hard money lenders. But here's the thing, everyone started at, I've never flipped a house before. Everyone did. Okay? So are you going to let that fear and that discomfort keep you at, I've never flipped a house before or are you going to actually get into action and take control? All right, I, it's the latter.

Debbie DeBerry: There are plenty of examples of people who have been wildly successful as house flippers, as real estate investors who started with nothing. I hope that you will take a chance on yourself because that's ultimately what you have to deal . And I believe in you. I 100% know that you can do this, but you have to know that you can do it and you have to be committed to nothing but successful successfully, but successfully flipping houses, you have to be committed. Alright ? I hope that you come away from this podcast episode feeling totally empowered and like, heck yeah, I'm going to go do the thing. If you got anything out of this episode, I would be so grateful if you would leave a rating and review, especially if you listen on iTunes, because apparently that's really the only place that you can do. So what it does is it helps me reach more like-minded women, and if I can instill in one more woman that they absolutely can successfully flip houses. If that's what they want to do, then that's my goal because what happens then is there's a kid watching that woman feel totally empowered and totally inspired and taking action and doing the thing she said she wants to do, and it's all about the ripple effect. It's all about ultimately empowering kids. All right ? You guys go out there, flip houses like a girl, and make it a great day. We'll see you on the next episode.