Other Peoples Money To Flip A House: 4 Proven Strategies

Most people think you need a pile of cash to flip a house. You don’t. I’ve been funding real estate deals since 2007 and have seen over 4,000 loans close. The investors who scale fastest are the ones who figured out early how to use other peoples money to flip a house instead of bleeding their own savings on every deal. If you want to understand the real mechanics, including what works, what costs you, and what to avoid, check out our real estate investing resource hub for house flippers alongside this guide.

Key Takeaways

• Hard money loans are the most common OPM tool for flippers, with rates typically running 9.5% to 13% and terms of 6 to 24 months.
• A HELOC on your primary residence can fund the down payment on a hard money deal, lowering your blended cost of capital.
• Private money is flexible but requires strong relationships and careful regulatory awareness under the SAFE Act.
• Joint ventures let you bring the deal and the expertise while a capital partner brings the cash, typically splitting net profits 50/50.
• With gross flip margins near historic lows right now, your cost of capital is no longer a footnote. It’s a primary deal-killer.

In This Article

• Why Other Peoples Money To Flip A House Matters More Now
• Strategy 1: Hard Money Loans
• Strategy 2: The HELOC and Hard Money Hybrid
• Strategy 3: Private Money
• Strategy 4: Partnerships and Joint Ventures
• What NOT to Use: The SBA Myth
• Maryland-Specific Costs to Factor In
• Frequently Asked Questions

Why Other Peoples Money To Flip A House Matters More Now

Margins on house flips have compressed to levels not seen since 2008. According to ATTOM’s 2025 year-end report, the typical flipped home generated a gross ROI of just 25.5% for the full year, and by Q4 it dropped further to 23.6%. That’s the lowest level since Q3 2007.

Here’s the thing most newer investors miss. That gross number doesn’t account for renovation costs, holding costs, or the cost of borrowed money. When you’re borrowing at 10% to 13% on a hard money loan, that interest isn’t separate from your profit. It IS your profit walking out the door every month the deal drags on.

And yet, more investors are using financing, not fewer. ATTOM found 37.7% of flips were financed in 2025, up slightly from the prior year. Smart investors aren’t abandoning OPM. They’re getting smarter about how they structure it.

Each tool for using Other Peoples Money To Flip A House has a different cost, a different risk profile, and a different use case. Let me walk you through all of them.

Strategy 1: Hard Money Loans (The Workhorse of OPM)

Hard money is where most active flippers start, and for good reason. It’s designed exactly for this. Asset-based underwriting means the lender focuses on the property and its projected after-repair value, not your W2 or tax returns. Understanding how Maryland hard money lenders underwrite fix and flip deals will save you a lot of time on your first application.

What Hard Money Actually Costs

In 2026, you’re looking at interest rates in the 8% to 15% range, with most borrowers landing between 9.5% and 13% depending on experience, credit, and the deal itself. On top of that, expect 1.5 to 3 origination points. On a $300,000 loan at 2 points, that’s $6,000 out of pocket at closing.

Terms typically run 6 to 24 months. That shorter clock is by design. Hard money is a bridge, not a permanent solution. You borrow, you renovate, you sell or refinance, you repay.

How Loan Size Is Calculated

Lenders size hard money loans against ARV, the after-repair value of the property. Here’s a simple example. Say you’re buying a distressed property for $180,000, budgeting $70,000 for renovation, and estimating an ARV of $350,000. A hard money lender might offer up to 75% of ARV, which is $262,500. That covers the purchase and the full renovation budget, meaning your out-of-pocket requirement is significantly reduced.

But you still need to come in with something. Most lenders require 15% to 25% down based on purchase price, plus cash reserves. That’s where your other OPM tools come in.

Knowing exactly how much cash you need to flip a house in Maryland before you start is critical. Experience matters too. New investors pay higher rates and face tighter LTV caps. After a handful of successful deals, both of those numbers improve.

For a deeper look at getting approved, read through the how the hard money loan approval process works.

Strategy 2: The HELOC and Hard Money Hybrid

This is one of the smarter capital structures I see experienced flippers use. And it’s genuinely underutilized by newer investors who don’t know it’s available.

Here’s how it works. You draw from a HELOC on your primary residence to cover the 10% to 30% down payment the hard money lender requires. The hard money loan then funds the acquisition and 100% of the renovation. You go into the deal with zero of your own liquid cash deployed.

Why the Math Works

As of mid-2026, Bankrate data shows 7.47% as the national average HELOC rate. That’s meaningfully cheaper than your hard money rate. Blending a 7.47% HELOC draw with a 10% to 13% hard money loan brings your overall cost of capital down.

During the draw period, HELOCs are interest-only. So while your flip is under renovation, your monthly carrying costs on the HELOC portion stay low.

When the property sells, you repay both the hard money loan and the HELOC balance, restoring your credit line for the next deal.

The Risk You Cannot Ignore

I want to be direct here because I see people gloss over this. When you draw from a HELOC to fund a flip, you are securing speculative investment debt against your HOME. If the deal goes sideways, your primary residence is exposed.

That’s not a reason to avoid the strategy. But it IS a reason to only use it on deals you’ve analyzed carefully and have strong conviction on.

HELOCs also carry variable rates tied to prime, which tracks the Fed funds rate. Fed moves shift HELOC payments. Budget conservatively.

Maryland HELOC Qualification Basics

In Maryland, you’ll generally need to preserve at least 15% to 20% equity in your home after the draw. That caps your combined loan-to-value at 80% to 85%.

A quick example: a home appraised at $600,000 with a $350,000 mortgage, at 85% CLTV, gives you a maximum HELOC of $160,000. That’s a solid down payment fund for multiple deals if you’re disciplined.

Credit score matters here. You need at least 620 to qualify, but you’ll want 720 or better to get competitive rates. Self-employed investors with heavy write-offs can sometimes qualify through bank statement programs using 12 to 24 months of average business deposits instead of traditional returns.

One more nuance for Maryland investors. Hard money lenders are far more flexible on fund seasoning than conventional lenders. A conventional bank wants down payment funds sitting in your account for 60 to 90 days. Most hard money lenders will accept an immediate HELOC draw. That matters a lot when you’re chasing an off-market deal with a two-week close deadline.

Strategy 3: Private Money

Private money comes from individuals, not companies. Friends, family members, high-net-worth acquaintances, local investors who want yield on their capital. The terms are negotiated directly between you and the lender and documented in a promissory note secured by the property.

The rates vary. Some private lenders charge market rates similar to hard money. Others, especially people close to you, may lend at lower rates in exchange for the relationship and a secure, asset-backed return. It’s one of the most flexible tools in the OPM toolkit, but it requires something hard money doesn’t. Trust.

If you want to raise private money effectively, there’s a lot of ground to cover. The must-know tips for raising private money in real estate article goes deeper on building those relationships correctly.

The Regulatory Reality

One thing I always flag when people ask about private money. The federal SAFE Act, enacted in 2008, governs who can originate residential mortgage loans for consumers. Under SAFE Act rules, individuals engaged in the business of residential mortgage origination need to be either state-licensed or federally registered as mortgage loan originators.

Investment property flips generally operate in a different regulatory space than consumer lending. The SAFE Act’s primary focus is protecting consumers on owner-occupied homes, not investment transactions between sophisticated parties. That said, the lines can blur in certain fact patterns, and state laws vary.

Get a real estate attorney to review any private money arrangement before you close. I’m not an attorney and this isn’t legal advice. It’s just something I’ve seen trip people up.

Want to go deeper? The CFPB’s SAFE Act guidance outlines exactly how the licensing framework applies.

For a deeper dive on how private money differs from hard money structurally, the how private money and hard money loans differ for Maryland investors is worth reading.

Strategy 4: Partnerships and Joint Ventures

This is the purest form of using other peoples money to flip a house because there’s no debt at all. You’re not paying interest every month. You’re splitting upside at the end. A capital partner provides the funds. You provide the deal, the management, and the expertise. You split the net profit at the end.

How the Numbers Typically Work

A common structure: the money partner puts in 100% of the capital, and in exchange takes 30% of the net profit. You take 70% for doing all the work. On a deal with $60,000 net profit, that’s $42,000 to you and $18,000 to the partner. For the capital partner, $18,000 on a $100,000 investment is an 18% return. That beats most savings accounts by a wide margin.

What makes this attractive to capital partners is the security. The loan is backed by real property. If everything goes wrong, there’s a hard asset to fall back on. What makes it attractive to you is zero debt service. No monthly interest payments eating into your hold period margins.

Get the Agreement in Writing

Joint ventures go wrong most often when things aren’t documented. Who controls the bank account? Who makes decisions if renovation runs over budget? What happens if the property sits unsold for six months? What if the deal loses money?

These conversations need to happen BEFORE you close on the property. A real estate attorney can put together a JV agreement or an LLC operating agreement that answers all of these questions in advance. Skipping this step to save $500 in legal fees has cost investors far more than that on deals that went sideways.

“The best joint ventures I’ve seen work long-term aren’t just about the money. They’re about clearly defined roles. The person with the capital does not want to hear from you at 11pm about a contractor problem. Know your role, do your job, and communicate on a schedule.” — Jason Balin

What NOT to Use: The SBA Myth

I get asked about this fairly often. Can you use an SBA loan to flip houses? The short answer is no, and it’s not a gray area.

SBA 7(a) and 504 loans are explicitly prohibited from funding speculative or passive real estate investments under federal regulations. House flipping is categorized as speculative because the business model relies on buying a distressed asset and reselling it quickly for a capital gain. SBA programs are reserved for active operating businesses, not short-term property speculation.

Beyond the speculation issue, SBA commercial real estate loans require the borrowing business to occupy at least 51% of the property being financed. A flip that you’re renovating to resell obviously doesn’t meet that standard.

Save your energy. Hard money, private money, HELOCs, and JVs are the real toolkit for this business. SBA is not on the list.

Maryland-Specific Costs to Factor Into Your OPM Strategy

If you’re flipping in Maryland, your OPM math has to account for recordation taxes, which vary significantly by county. This is an easy cost to underestimate.

Baltimore City charges $5.00 per $500 of secured debt. Montgomery County uses a tiered scale ranging from $4.45 to $11.35 per $500 depending on loan size. Anne Arundel County charges $7.00 per $1,000.

Prince George’s County runs a double tax system with a mortgage recording tax of $5.50 per $1,000 PLUS a separate mortgage tax of 1.40% of the loan amount. That second one catches people off guard every time.

There’s also a refinancing exemption worth knowing about. Under Maryland Tax-Property Article § 12-108(g), when you refinance out of a hard money loan into long-term conventional debt, you only pay recordation tax on the incremental new debt above the existing balance.

So if you’re replacing a $79,000 hard money balance with a $150,000 conventional loan, tax is assessed only on $71,000, not the full $150,000. If you plan to hold a property as a rental after the flip, that exemption matters.

For a full breakdown of real costs to expect on a Maryland flip, the every cost to budget when flipping a house in Maryland article covers carrying costs, transaction fees, and common budget overruns in detail.

Want to learn more about hard money financing options across Maryland? See how Hard Money Bankers structures Maryland hard money loans and what you’d need to get started.

Frequently Asked Questions

Can you really flip a house with none of your own money?

It’s possible to get very close. A hard money loan can cover the purchase price and 100% of renovation costs based on ARV. A HELOC on your primary residence can cover the required down payment. In theory, your cash out of pocket at closing could be minimal. In practice, you should still have cash reserves set aside because cost overruns, extended holding periods, and unexpected expenses happen on almost every project.

What credit score do I need to use other peoples money to flip a house?

For hard money loans, most lenders want at least 620 to 640. To get the best rates and terms, aim for 720 or higher. For a HELOC on your primary residence, the same general thresholds apply. Private money and JV partnerships don’t have formal credit requirements since they’re negotiated directly, but a track record of completed deals matters more as a substitute signal.

How does a joint venture work for house flipping?

In a typical JV, one party brings the capital and the other brings the deal and the project management. Profits are split at the end, commonly 70% to the operator and 30% to the capital partner. The structure should be documented in an LLC operating agreement or a formal JV agreement reviewed by a real estate attorney before closing. Never run a JV on a handshake.

What is the 70% rule and how does it relate to OPM strategies?

The 70% rule says you should pay no more than 70% of the ARV minus repair costs for any flip. That 30% buffer is what absorbs your financing costs, closing fees, holding costs, and profit. When you’re using borrowed money at 10% to 13%, that buffer shrinks fast if your ARV estimate is off. For a detailed breakdown of how this rule applies in the Maryland market specifically, see the 70% rule in Maryland.

Can I use an SBA loan to flip houses?

No. SBA 7(a) and 504 loan programs explicitly prohibit funding speculative real estate investments, and house flipping is classified as speculative under federal regulations. There’s no workaround or gray area here. Hard money, private money, HELOCs, and joint ventures are the appropriate tools for flippers.

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If you’re ready to explore using other peoples money to flip a house with a hard money loan, you can apply online at no cost and with no obligation. Or if you want to run a deal by us first, reach out directly. I’ve been doing this since 2007 and I’m happy to give you a straight answer on whether a deal works.

The information provided here is for educational purposes only and does not constitute financial or investment advice. Always perform your own due diligence and consult with qualified professionals before making investment decisions.