Starting a House Flip with an Immediate 1%, 2% or 3% Cash Infusion

House flipping can be extremely lucrative and rewarding. However, It is a risky endeavor that usually requires a good chunk of capital to properly renovate and flip. Many investors/flippers overlook the fact that they might be able to start off most of their projects with a quick 1% 2 or 3% cash infusion. By getting their real estate license or teaming up with a knowledgeable real estate agent that is willing and able to offer them a substantial rebate of their commission paid by the seller, many flippers would be able to receive thousands of dollars before they even start any renovations.

If you listen to some of the BP podcasts or look at some of the forum threads, the question of whether or not to become a licensed real estate agent is often brought up. The serious flipper that does not mind spending the time and money to get such a license will be able to capture most of the buyers' agent's commission. On a $300,000 property with a 3% sellers and 3% buyers commission, that is an extra $9,000 that you would receive. There are many additional pros and cons when deciding whether or not to become a licensed agent as an investor/flipper/buyer, but the ability to quickly generate thousands of much needed dollars is definitely a strong argument.

Becoming a real estate agent is not easy and often times you will be required to pay annual fees, attend continuing education, and abide by a high standard of professional responsibility. If you do not have the time, money, ability, or the desire to become one yourself, then there might be another option. If you are able to find a knowledgeable and experienced agent that is open to the possibility and able to rebate a percentage of their designated buyers agent commission, then you could get the best of both worlds. You would still be able to benefit by being represented by a talented and hard working licensed professional while also receiving thousands of dollars before a hammer is ever swung.

For example, if that same commission split is given by the seller (3% / 3%), the agent might be open to rebating two-thirds of their commission directly to you. Which means you will get a check for $6,000 after purchasing that $300,000 house. Of course whether or not the agent is that generous depends on a number of factors. The first factor is that sometimes it is not financially feasible for an agent to give back such a high rebate. Real estate agents often have a lot of overhead and operating expenses. Especially if real estate salespeople have to share a split with their broker as well. Not to mention all of the expenses that add up while searching for the buyer's property, throughout negotiations and facilitating the closing. But sometimes you can find a broker that can afford to rebate a majority of their commission to you and is open to doing so. Obviosuly, if a strong working relationship is built between the buyer and agent over many transactions, one would think the realtor would probably be more inclined to rebate a large percentage.

It is important to note that this possibility is not necessarily allowed in every state. But I can tell you that the action is allowed in Massachusetts under the right circumstances.

Whether or not you decide to get your real estate license, or if you are lucky enough to find a talented agent that is willing and able to rebate a percentage of their earned commission, it is important to realize that you might be able to start your project off with extra thousands or even tens of thousands of dollars that you would have otherwise left in someone else's pocket. And of course this same strategy can also be applied to purchases for buy and hold properties and income producing properties as well.

Knowledgeable and talented buyer's agents can be worth their weight in gold. If you can find one that will generously work with you or if you become one yourself, you may have just found a quick additional 1%, 2% or 3% cash infusion right after your purchase to get your project underway.