Money First vs. Deal First

[Alex Jackman]

Question: Should I network to find a partner and hard money lender BEFORE or AFTER finding a deal?

Background: I am new to the investing world with only 1 renovated 3-flat in Chicago and 15k in savings. In order to finance my next deal (fix & flip), I need outside, non-traditional financing (equity partner and hard money). Here's the problem... 

1) I can not offer on publicly listed properties without proof of funds

2) I do not want to promise a homeowner of an off market property the world and not be able to follow through

3) I have had challenges finding a partner willing to take a risk on me (someone with little experience, some knowledge, & a lot of drive) without a deal

I feel like in order to attract an equity investor with my level of experience, I need a deal with so much margin they would be crazy to say no. However, to find a deal I would need to enter into a contract that I might not be able to perform on.

My Options: 

1) Do I contract a property without guaranteed funds and then market it?

2) Do continue networking and wait to find a great deal until I find someone to financially back me?

3) Is there another strategy or option I am missing?

[Canesha Edwards]

@Alex Jackman

Hey Alex-

Here’s my 2 cents. I say you actively do both, network and look for properties. I would say your best bet is off-market. If you have $15k saved, you have enough funds to lock up a property. Potential partners will take you serious if you come to them with a property under contract. You should be able to lock something up for a $1k or so. Once you have a signed contract start it’s easier looking for partners.

Or have you thought about seller financing or partnering with the seller? You could offer seller’s equity in the deal in lieu of buying the property.

Even with properties that are listed, you could still ask the agent if their client would be interested in seller financing.