Setting Up Shop in a New State

[Diane J.]

Advice please! I suppose it's easier to start your business if you're working in your own town but what about starting up in another state?

1. Past experience is in rehabbing averaging 20K in profit per project. Haven't done it awhile but it's like riding a bike.

2. Found an REO and will use J Scott's flip formula but want to live in the house. Even though I've moved a lot, I'm not really a nomad. OK, 4 years in this house is probably a record.

3. Using my own cash and rehabbing will eat up most of my savings. Just finished reading The Richest Man in Babylon and one of the rules is don't risk your principal.

4. Don't think financing is an option because currently have mortgage in CO, low income reporting due to self employment (unrelated to REI) making DTI too high to qualify. I do have great credit and LOC on various credit cards equaling more than my savings. Because I don't carry balances I can get 0% cash advances with a 4% transaction fee for terms of 6-9 months. Good for rehab loan but for buying additional properties most likely can't be used as POF.

5. I am comfortable with the risk of using my savings even though I may not be able to get a HELOC to pull it back out or get a loan after the rehab and new appraisal. Owning a home F&C isn't such a bad thing and I'm pretty low maintenance.

6. Once rehab is complete then I can focus on wholesaling to earn income. I don't have wholesaling experience but from what I've read on BP it doesn't look that difficult. Hard work but not rocket science. Also, I'll probably find a REI club, network with other BPers in the area to learn the contracts and such.

So, what do you think about this plan? Got a better strategy? The Mister (with prior banking experience) thinks I should not risk my cash or that I should buy a house solely for flipping and not to live in long term. The one I'm considering is on a nice lot where I'd actually want to live, not just any old SFH. Current residence has lost nearly 40K and if we sold today would not have to bring money to the table. However, his children live here and he wants to wait out the market.

I'd love to hear your ideas on how I can get this show on the road from my long distance perch.