My first real estate investment partner was my grandmother. She put up the money, and I did the rest. We made a deal — every time I sold a house, I had to take her out for lunch. We measured our success in how frequently we had lunch together.

Partnering with friends or family members can be one of the most fulfilling experiences, but when it comes to money, friends and family can be more brutal than bankers, especially if your flip flops. In most cases, I generally discourage investors from taking on a partner, especially family members, but with Granny and me, the partnership turned out to be a rewarding experience for both of us.

Lots of people have money to invest and are disenchanted with interest rates offered by banks and even the returns on their stocks and bonds. Convince them of your ability to turn a profit from flipping properties, and they just may loan you the capital you need to get started.

Loans from private lenders are often referred to as hard money loans — high-interest loans that typically require an upfront payment and scheduled balloon (lump sum) payments. The property and any future improvements function as collateral for the loan.