Discouraged First Time Flipper

[Pete Perez]

Hello BPers,

I have been learning as much as I can from BP for the last 3 months and had started reading about real estate a few months before that. At this point I feel stagnant. 

Over the last week I have been building my team of contacts to begin flipping houses here in Southern California (Inland Empire specifically). I have a investor-friendly realtor lined up who can help me estimate ARV of potential flips, made some wholesale contacts, made a deal analyzer for myself, and went to a real estate meeting for the first time last week. I can't seem to make the financing piece work. I don't have any family that will, or can invest with me, so I have been calling hard money lenders all day. None of them will lend to a first time investor with no money. All of the HML I talked to want 30%-50% liquid reserves (which I respect as they would like to protect themselves from potential loss).

But I read @Brandon Turner 's book on investing with low and no money down, but can't seem to make it work for me. I have a good paying job as an engineer, but just don't have the money saved up to invest on my own. Has anyone experienced this, and if so does anyone have any recommendations? I know its possible, but am just hitting the proverbial wall. 

I really appreciate any feedback from the BP community. I don't want to give up on this, but just not sure how to proceed. 

Thank you

[Andrew Holmes]

Mr. Pete: This is my 2 cents.

If you new have no money, experience, built I up credit and credibility. I would suggest the following steps in the following order. This is not going to be easy but this approach works. It's step by step.

1. Get to know your market. One suburb or one particular area. Every single sale and every property transfer.

Break down the properties in your area by Single Family or 2 to 4 units or what ever. 

You want to get to know the following. Highs in your market the Lows in your market the sweet spot in your market. 

Flipping is about very accurate market data. Not general data. People fail with flips for 2 reason: Over paying on purchase and rehab.

Look in the following places. If you don't have MLS access look at Sold on redfin in the last 30 Then 60 Then 90 and 6 months.

Then I would look at your public record data to establish sales price points in the following

MLS

Auctions

Individual Property Transfer that did not go though the MLS or Auctions.

If you really break down an area you will see that what you think is a good deal is probably an average deal at best. 

Then I would look at a 14 Month data of properties that were sold twice. You will find some name of companies or agent that do a lot of this. Then I would look up their history. Not just a year but the depth to their business. If they have depth and have done for a while I would study their numbers very closely. Go visit there rehabs. Don't say anything just observe and learn. You will see some thing they do well others you can improve on. This is with any business. 

Then one you have done this talk to other investors and present all your research in detail. If they are investors with money they will automatically get excited. A bunch of people will get fired up but very few people will follow through. That is life. Easy way to meet a lot of these people is to go your local real estate meetings or may be here on the BP community. 

I know when you are new the first thing is that I need money for deals. If you first do the due diligence needed and you know what you are talking about you will attract a lot of people. Even amount the experienced folks there are very very rare exceptions that know the real estate in an area like the back of their hands. 

If you do a little research you will find the following will apply off every 100 People. 

95% Do nothing

3% A few may do something have some home run hits and then crash. A few may hold some decent rentals

1.9% will hold rentals with decent results over time. 

Less than 0.1 may be I am being way to generous will have a legitimate real estate business that is worth something. 

I am not trying to be negative. It's just reality. Personally with out a lot of research long term success is impossible. 

Wish you the best.