Newbie questions around flipping and Hard Money

[Gregg Congrove]

Hey all,

Been a lurker on here for a while. I listen to a lot of the BP podcasts and I've read several books.  BP helped me turn my primary into a long-term rental.  I've run that rental for over a year and I'm ready to expand.  I'm looking to start my first flip this December and I have a few questions that I'm hoping you guys can help me with.

1. If I use a wholesaler to find a deal, does my realtor need to be involved in the acquisition?

2. An HML says they help finance the purchase and rehab costs. Then they mention they can lend 70% of the ARV. Does that 70% go towards purchase and rehab, or is there a separate loan for rehab?

3. I see a lot of deals (from wholesalers, FB groups etc) where the seller lists the purchase price, rehab cost, and ARV. How accurate are those rehab and ARV costs? I know this is really situation-dependent, and that I should verify those numbers myself. Is this where my realtor would come in to run comps and confirm the ARV? Should I be able to do this myself?
4. in the same above scenario I assume I should have my GC verify the rehab costs? Is this something I should be able to do after i get more experience?

5. Does anyone have any recommendations for a trusted HML that services TX? I've reached out to a few that were advertised on this site. But always feel more comfortable using a trusted source that someone has used.

Please take it easy on me, some of these may be "dumb" questions.  I'll probably have some follow-up questions as this develops. 

Thanks!

[Jay Hurst]

Quote from @Gregg Congrove:

Hey all,

Been a lurker on here for a while. I listen to a lot of the BP podcasts and I've read several books.  BP helped me turn my primary into a long-term rental.  I've run that rental for over a year and I'm ready to expand.  I'm looking to start my first flip this December and I have a few questions that I'm hoping you guys can help me with.

1. If I use a wholesaler to find a deal, does my realtor need to be involved in the acquisition?

2. An HML says they help finance the purchase and rehab costs. Then they mention they can lend 70% of the ARV. Does that 70% go towards purchase and rehab, or is there a separate loan for rehab?

3. I see a lot of deals (from wholesalers, FB groups etc) where the seller lists the purchase price, rehab cost, and ARV. How accurate are those rehab and ARV costs? I know this is really situation-dependent, and that I should verify those numbers myself. Is this where my realtor would come in to run comps and confirm the ARV? Should I be able to do this myself?
4. in the same above scenario I assume I should have my GC verify the rehab costs? Is this something I should be able to do after i get more experience?

5. Does anyone have any recommendations for a trusted HML that services TX? I've reached out to a few that were advertised on this site. But always feel more comfortable using a trusted source that someone has used.

Please take it easy on me, some of these may be "dumb" questions.  I'll probably have some follow-up questions as this develops. 

Thanks!

 @Gregg Congrove 1. This might offend some here, but NEVER trust a wholesaler's numbers for anything including as is value, rehab budget or ARV. of course their motivation is to make the numbers look as good as possible. You have to do your own due diligence.

2. The way we do it any way is lend up to 75% ARV. So, if the house is 200k, need 30k in rehab and ARV is 300k we would lend 225k. So, you would 200k to buy the house and 25k for the rehab budget.

3. see number 1. 

4. 100% have a contractor give you a scope of work with costs. 

5. Love to compete for your business.