Just starting out, asking wife's boss in invest

[Seth Dillon]

So here's the deal, I have been interested in flipping real estate and possibly owning rental property as a business for some time now but have never dedicated the time to learning where to start or had the funds to do so. A few months ago my wife got a new job being a nanny for a family and the family has a few rental properties. My wife and I are newly wed and in our 20's and have bought our first home last year so naturally, we don't have much money and need and investor or some kind. So my question, should I ask the husband of the family my wife nannies for (btw my wife is an awesome nanny and they love her!) to invest in us to make a flip? Could that damage the relationship between my wife and them? Any advise would be appreciated!

[Darrell Shepherd]

Gotta start somewhere, but believe me, you're gonna screw up your first deal 100+ ways.  Save some money and do a small one to start.  I agree that you should ask for advice and not ask for money and see where it takes you.  

I'm a firm believer that if the deal is right, the money is always there.  Get the right deal and call me, I'll fund it if it makes sense and there's money to be made.  90% of rehabbing is buying right.  I've done well over 100 and still screw them up on the regular.  I'm $12k over on one and $7k on another as I type this.  Lost money on one last year.  Second time ever.

When I got back in after getting knocked in the dirt, I bought a house for $14k, put $20k in it and sold it for $54k. Borrowed the buy from my dad and the rehab from my roommate because I was broke. Next deal was $165k buy, $8k cleanout, $295k sale. That'll right the ship pretty quick. Man, do I miss 2012. Got all of the money to do that deal from my (rather wealthy) roommate, because I borrowed $20k and gave it back with interest. He still funds most of my stuff. Moral of the story is you gotta perform, then that stuff will snowball. My real estate agent actually asked me if she could loan me money because she saw me borrow and pay back my roommate so many times. She took out a HELOC and gave it to me to do deals with.

I'd actually suggest borrowing the money from a hard money lender on your first one.  That's not a plug, the lender will actually keep you from doing anything stupid.  Borrowing from friends or relatives sometimes lets the optimism (and fake TV shows) paint too rosy a picture.