subject: House Flipping Without Using Personal Credit [print this page] House Flipping Without Using Personal Credit
House flipping is the term usually used to mean rehabbing or wholesaling houses. While the two businesses are different, both of them can be done without using one's personal credit. The secret lies with understanding how the business works. You also need to know who can help you close a deal.
In the case of wholesaling houses, you can buy and sell houses without actually purchasing the investment property. In the field of real estate investing, this technique is called assignments. Wholesalers do this most of the time because there is less risk involved and also less, if not zero money involved. If you want to start flipping houses through this method, you must understand that you will need to find two parties to make things work: a seller and a buyer.
Your seller must own a property that's somehow in a rundown condition. This will lessen the value of the property and increase the seller's motivation to dispose of the property at a discounted price. When looking for a buyer, don't search for private home buyers. They don't want the ugly house you're selling. Look for investors who want to own a rental or a rehab property in that area. Then, place the house under an assignable contract a move that will cost you an earnest money deposit. Some sellers agree to a $1 deposit as formality. Assign that contract to the buyer and take an assignment fee, which often plays around $10,000. That's house flipping without personal credit involved.
Another method of flipping houses is called rehabbing. In this business you will need money to buy a cheap property and give it improvements to raise its value. If can't borrow from banks because you have a bad credit score no thanks to credit card bills there's still a way you can proceed with a rehab project. You can try house flipping with the help of a hard money lender. Basically, this private, non-traditional creditor will look at the real estate deal you want to make. If he thinks it is profitable and therefore worth financing he will release the money you need.
When using hard money lending, it doesn't matter if you're personal credit is not in top shape. What matters is you look for an investment that's perfect for rehabbing. Do your due diligence, set up an exit strategy, and then present your plan to the lender. It's that easy.
Still think flippers are risking their personal credit when they do deals? Go to Rehab-Real-Estate.com right now and be ready for a change of heart.
