Going To Make The Leap: Funds Struck Help

[Rick Turman]

It looks like our HELOC option has fallen apart,

To our successful past experienced investors:

What are the other options you have used? I know we are pretty much up against LOC's and or Mortgages at this point. Hard Money Lending may take too long, and I do not have a portfolio for that just yet. If I were to apply for a mortgage, can I use the mortgage to cover the home, and the cost of the repairs affiliated with it? From what I'm reading, others mention that the lender of the mortgage may do an appraisal on the home so that the full value of the home is what determines the price of the mortgage. Please confirm all statements above, and help guide me in the right direction as I am hoping to make the leap into the first deal next week! Thanks so much, and hope to hear from everyone soon!

P.s. At what point do you need to incorporate if you are a flipper. Do you need to at all? If not, how do you account for services and 1099's? Or is it always safe in an LLC or bigger when that time comes?

Thanks!

[Rick Turman]

Thanks guys! 

@Mindy Jensen & @Steven Gesis,

The HELOC decision was on my father in law as he was all for our en-devours until the what-if's struck. In laments terms, he stated show me 2 or 3 successful flips, and I will invest. Very disappointing, however I completely understand.

There has not been any offers yet, Just trying to have my team and my financing together in case I strike a good one.  

I have an awesome Agent who has found great properties and he actually found me our prize winning Contractor this week.  He is licensed and insured and was working at my agent's neighbors house on a kitchen remodel.  My agent new I was looking for another team mate and exchanged contact info, and the rest is history, well so far :-)

He came from the Fresno CA area managing over 1000+ rehab homes for a company and recently moved here about 3 years ago.  While living here in my area, he has increased a rehab company's profit margins from 20 to 47% while working there.  Now he has his own practice and is bringing the Building code to our area as a guideline as our area has no code!

Now for the fun stuff.  I read about 203K in J. Scott's books.  From what I understand, with this type of loan is I believe you need to live in the home post renovations, and they will provide the additional funds for the renovations included into your Loan.  This is a huge benefit to those that are looking at Multi-family homes.  Buy the house, Reno then Rent out, or Rent out 2/4 units, move into 1, while you move tenants around to renovate the others etc.

In our situation, I am trying to have a nest of funds available so I can start.  I am walking 5 properties next Tuesday, which a few just hit the market Yesterday.  If I like what I see, I want to take the leap.  

I think what I need to do at this point, is go to the local Banks and just listen to what they have to offer in my situation. I may head there here in a few to gain more knowledge. Is there anything I should refrain from asking? Do they need to know the LOC's will be towards Investment properties or could I tell them i'm using it to start a used make-up collection business (That was the first thing that came to my mind for some reason not that I would ever go in business for that haha.)

Long story Long, thanks again for all your input.  I have come a long way with everyone's knowledge and help!