How I Made $55k without Investing Any of My Own Money [Case Study]

Can you flip a house without money of your own?

Yes, you can.

And if you do it right, you can make a huge profit out of it.

My students and I do it over and over and over.

You see, real estate investing does not have to be tough if you stick to a few formulas and guidelines.

So you’re probably asking, well how do you do it?

Let me take you through a case study of how I made $55,000 on a property by utilizing private lender funding.

The Property

1966 Marwell Avenue, Hudson Ohio

1532 sq ft, 3 bedrooms, 2 bathrooms

Chances are that you have received hyped up emails with ‘real estate guru’ tags on them. Whether true or not, most people make an average of $20,000 to $30,000 from a house flip. If you want to make $55k like I did however, let me show you what I did to make sure this investment property would yield a huge profit:

What went right?

Financing

There are a lot of finance choices out there for real estate investing. I almost always use private money lending and I will tell you why:

  1. Credit worthiness is not a must for approval. Many other finance forms require credit scores and other whatnot. Private lenders often lend on the basis of the deal in question.
  2. Approval for private finance takes less time than traditional methods. It is just a matter of a few days.
  3. You have more control of the deal. In other finance sources like banks, it is the lending institution that sets the loan terms. In this case however, you are less restricted.
  4. Private money allows you to close in a matter of days because you can afford to bargain and make all-cash offers on a property.

Sticking to the rules

There are certain factors that I consider defining in house flipping, but the most important is what we call the Automated Offer Formula:

Purchase Price + Repairs = 65% of ARV

ARV is the value on a property after refurbishment, which is determined by comps in the area.

If you estimate these values incorrectly, you will operate on smaller profit margins or worse still, overshoot your costs. I use several rules or formulas to obtain maximum profit from the combination of these three factors.  Here are 3 more big ones:

Finding Discounted Properties

Another rule I play by is finding an undervalued property. There are so many resources to find great deals on real estate, both paid and free, and sometimes you just have to get out there and look.

Getting Properties Bought Quickly

Being quicker than the rest is a first in real estate. Considering that I use someone else’s money, sellers are more inclined to sell to me because I have cash in hand.

Getting Properties Sold Quickly

Myself and my students run what we call our “Property Launch Formula”, its a checklist of things we do to make our launches feel like the new iPhone is about to come out.  The more people at a property launch, the more scarcity your eventual buyer will feel.

What else I did

As I went along refurbishing the property, I altered a few aspects to give it a better impression and value. Such as:

Made everything spacious(open concept)

I had to bring down some walls and remodel most of the interior all over again like the dining room, kitchen, master bathroom, etc.

Improved lighting

I put in new lighting in the kitchen and living room to accentuate the enlarged spaces and enhance the interior of the house.

Flooring

I gave the living room a good finish with a hard wood floor.

So, what did we learn?

It’s easy to make a profit in real estate if you follow a few simple formulas and utilize the resources and talent that are available to you.

Do you want to learn the basic principles of Real Estate Investing, or find out if you are doing it right?

Download our free guide to investing in real estate part time, you can also use it to optimize your existing real estate investing business and get more time and financial freedom.

 

 

Be Daring

Josh

CEO Strategic Real Estate Coach

CEO Freeland Ventures and Freeland Lending

CEO Yellow Jacket Properties

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