The Science of Flipping - How To Flip Your First Property With No Money

Episode Date: February 24, 2021

How To Flip Your First Property With No Money

What's up guys welcome back to this video I am Justin Colby and on this video I'm going to talk about how to get your very first flip in 2021 without any of your own money. Check it out. What's up guys welcome back to this channel I am Justin Kolbe and on this video I'm going to talk about how you can get your very first rehab flip with none of your own money now if that interests you what I'd like is for you to smash this like button and to hit the subscribe button if you so like now let's talk about this I have been wholesaling and rehab flipping now for over 13 years. And there's a way that I can help you get your very first rehab flip going in 2021. If you're not trying to get your first because you're an experienced investor, this strategy also works

to help you scale your business. I went from doing one to two to six rehabs a year all the way up to 96 rehabs a year using most of my flips was using this one strategy. And here's the strategy. Partner with other individuals that have capital, but they don't have the time or any other of the resources to be in the real estate investing game. Now, I know that doesn't sound like a huge secret to many of you guys, but let me tell you a little bit how to structure that so that you can go out and find, buy, and rehab, flip your own deal,

again, with none of your own money. Now, here's the reason why you want to do it so that it can make sense on why you structure it this way. Most of these individuals that have the money but don't have the time or resources really want to have some level of rate of return on their money. Now they want to be in the game too. They like it. They watch the TV shows that this is fun and you can make a lot of money. I get that. But ultimately, because they're not going to go all the way into this space like you are, they're really just looking for an ROI, a rate of return on their investment. Now, with that said, if you offer up

a 50-50 split to start just for that person to feel comfortable with you, you should, if you buy right, have great returns for that capital partner. Now, that's where I want you to take notes. This is a capital partner. They are not a lender. Be very clear here. I myself have gotten in trouble over the years where there was a discrepancy of whether someone was a partner or a lender and you want to be clear. You want your paperwork to be clear and as a matter of fact, you really would like, I would advise having an attorney draft up the documents about your relationship with one another so it can be very clear and there's no uncertainty on what is going on in the relationship. With that said, if you do bring in a capital partner, they effectively are just giving

you the money to go buy rehab and flip the property. Do they need to give you all the money is the question you might be asking yourself and the answer is no there are into there are businesses called hard money lenders who have a lot of the money and most times will fund anywhere from 80 to 90 percent of the purchase price which means you really need this capital partner to be a bridge lender and that really means we're coming in to bridge the gap between the loan for your purchase price and ultimately your purchase price so if there's a 20 gap or a 10 gap they would come in with that money now there's also the subject of rehab cost

now that obviously can vary depending upon the home you buy, but that capital partner should come in to fund the rehab costs as well. Not only that, the way I would structure this is for them to also come in with any and all holding costs up to six months or longer, or it could be up to the sale of the property as a capital partner should. Now, why is that important? Because ultimately, there is going to be debt servicing with a hard money company. And what does debt servicing mean? Well, just like a mortgage, there's an interest rate owed and they are set to get paid every single month. I would have the capital partner bring the capital for that. I would have the capital partner pay for any of the utilities that need to be turned on for said remodel. I would have the capital partner pay for any of the utilities that need to be turned on

for said remodel. I would have the capital partner pay for the insurance and any other cost, including the cost of rehab that might go in to you guys buying, remodeling, and then reselling that property. Now, where might you be able to get the property? Where might you be able to find the construction crews? And where do you find the agent? Well, that's the part that's going to take a little digging. So the capital partner gets 50% for their capital. You get 50% as the equity partner. You're now the equity partner who is doing all the work, all the digging, all the hard stuff, the sweat equity, they might want to call it, that you are actually managing and running this whole thing. And for that is why you get 50%. Now that also could be a really good payday because depending upon what level of income

you currently have, you might be able to exit this property in let's call it 90 days. So you bought it, you remodeled it and you sold it and you collected a check in 90 days or maybe 120 depending upon the length of escrow and you might be splitting $50,000 now the capital partner would get 25 and you would get 25 and why that's important I don't know how many people are making $25,000 in three or four months. To some, that might be not much. To others, that might be life changing. Now, here's the thing that I started with. By the way, do me a favor. Smash the like button if you like that. Hit the

subscribe button. And obviously, if you have any questions below, please mention them or make any comments that you would like. Also, if you really are heavily into real estate investing, please mention them or make any comments that you would like. Also, if you really are heavily into real estate investing, please check out my podcast called The Science of Flipping over on iTunes and Spotify. In fact, it's on all the different platforms. So if you like that, hit the like button. I'd love for you to do that. Anyways, that being said, the key here is that's just one property and you now have a capital partner I made 25 grand you made 25 grand well what if you're not looking for your first deal what if you're someone like myself that might be doing many deals every single month well now you have an ability to scale you

have a partner that not only could do one but might even be able to do two. And like I said, as long as it's laid out, preferably by a lawyer, about the relationship and about what is split when times are good and money is being made and what happens if, God forsake it, something doesn't go right and maybe a little money is lost because you need to be prepared for both. As long as that is laid out, then you have someone that can go and help you scale and you can do it twice in the same month or maybe even three times it allows you to have the ability to go do three or four rehabs at the same time and if we take the exact same numbers that i just used for the first rehab fifty thousand dollar profit split 25 to lender 25 to you if you did

four of those that would be a hundred thousand dollars in four months now again if that is not a lot of money to you well then how many more can you possibly do how can you scale that or are you taking on bigger projects and if that is a ton of money for you hit the like button that's what i want from you hit the like button because that's how simple it is I get questions all the time the reason why I'm recording this video for you guys because I get questions all the time how do I do my first fix and flip I understand wholesaling I've done some wholesaling but I don't have the money to flip yet this is how you get into that space by the way once you start to

make your own money let's just say you make a hundred thousand you might have enough money to do your own flip without a capital partner. The capital partner is no longer in this flip and you collect all of the proceeds. Now, like I mentioned, what you are in charge of is finding the property, buying the property, finding the contractors, remodeling it,

managing the contractors, making sure payments are on time, and making sure it gets listed and sold in a reasonable amount of time That is why you are making 50% and honestly That's what took us from doing six rehabs in a given year to doing 20 to 46 and then 96 rehabs in one Single year is we leveraged capital partners. They came in with all the capital We came in with all the sweat equity and it was a brilliant way to do that. So again, if you like this, smash the like button, hit the subscribe button, check out my podcast, The Science of Flipping. I drop podcasts each and every day

for you guys, all about real estate investing. Hopefully this finds you well, and this is how you can go crush it in 2021. I look forward to seeing you guys on the next video. Peace.