You’ve been on Facebook, Instagram, or YouTube and have seen these snake oil slick salesmen’s ads“Learn how to flip properties no money, no credit”. So what was your reaction? Did you actually believe that you could flip real estate, a $100,000 house, with no money whatsoever? If you did, you wouldn’t have been the first to fall for this trick.
This has become the #1 sales gimmick to get people to sign up for these Reality TV stars, or these self-proclaimed real estate guru mentoring programs. I mean it sounds good, they are going to teach you how to make millions in real estate without any money.
Can You Enter the Real Estate Investing World Without Any Credit?
Everyone wanted to get into real estate investing when the market crashed and every other property was in foreclosure. So it was easier to take advantage of people’s desire to get into real estate investing, then just telling them the truth. Not only does it take money to flip properties, it takes hard work!
People like Scott Yancey from Flipping Vegas, or Armando Montelongo from Flip This House, and others like Tai Lopez and Sean Terry of the Flip To Freedom program have all taken advantage of this false advertising. That is for one reason and one reason only. They all want the same thing; Your Money!!
Ask yourself this question, if anyone could flip properties with no money or credit, why wouldn’t everyone do it? Why would there be hard money lenders? Because the true answer is that while these jokers all combined may have done a few of these kinds of deals, they are so rare, you wouldn’t be able to pay the bills if you were only going to concentrate on them.
“Assignment of Contract” is a way to flip a property without having to actually buy it, but that doesn’t mean it doesn’t take any money to get the property in contract. In order for a contract to be valid, there has to be some type of consideration. This is called the Earnest Money Deposit. This is the money put into escrow with your title company to show the seller you are a real buyer and the contract that you are putting on the property is valid. In the South Florida markets of Miami and Fort Lauderdale, the average EMD is about $1000. Which means you would have to put up $1000 for each and every property you put in contract.
Assignments of Contract are a good way to be able to structure a deal in case there are not enough profits to cover the closing costs from doing a “double” or “simultaneous” closing. However, try telling the seller and your buyer that you are adding $30,000 to your purchase price when you assign the contract without both of them backing out. Because, the seller and buyer will know the exact amount of profits you are making when you assign the contract. That is why for successful real estate investors flipping properties use Double Closings so that no one knows what types of profits were made until after the deal is done.
If you think it sounds too good to be true, then it is! In this case, it is definitely too good to be true.