How to get capital for a first project?

[Brandon Moss]

I want to get into a flip or a BRRRR as my first investment but I have zero to little cash ($5k). I do have about 35% equity in my home, which is worth around $190,000 based on comps. I have considered both a cash out refi, and a straight home equity loan to get capital for a down payment on my first project. There are a few homes in my area I can get for around $50k, fix them up for about $25k, and rent them or sell them. I inquired with my bank on a conventional loan but they would not pre qual me because if I got a home equity loan for a down payment that would put me over the top on debt:income ratio.

A hard money loan seems like the best option for a flip. My question is do hard money loans have the same requirements on debt:income? If I get a home equity loan for the down payment but finance the rest with hard money, will it count against me and put me in the same predicament I have with the bank?

I'm also looking at possibly renting my home and moving to a fixer upper while we fix it, then rent it out and move on to another. This is not ideal since we'd have to move and we need to be close to where we live now, so the options are far fewer. In this case I might do a cash out refi on my existing home, and try to get a conventional loan at about 5% down, using the rest of the cash-out loan to rehab the new property. Any advice?