Why are Investor Needed in this situation??

[Craig Conte]

I often wonder why people would need investors if they have the money.

If a successful flipper who makes anywhere from 70K - 150K a flip and who does like 4-5 a year, then why would they need outside investors? Wouldn't they have the capital to fund the flip themselves?  Why would they go out of their way to get Hard Money or Partner with others on a Joint Venture?

[Mike Flora]

Example

I have 100K in the bank

A flip deal house costs 100K and I buy it using my 100K I got one house. I complete my flip and make 30K profit and this took 4 months to do. That's great.

NOW

I have the same deal on a house and involve a hard money lender at 10% down payment at 10% interest only for 12 months.
10K down payment
4 months of $900 a month payment
Maybe 2 points as well equals 2K
Total profit after 4 months $24,400

So in first example I can only do one deal in 4 months and I made 30K.

So let's say the points and monthly payments involved takes away some of the left over money you have, so let's keep it safe and only do 5 more deals with the left over money over the 4 months.

Instead of 30K profit I have 122K profit. Use other peoples money to make you more money. Leverage at its finest!!!