Using hard money and personal loans

[Sally Hanan]

As a first-time flipper of a SFH with a goal of making at least 10k on the project, would you recommend financing everything with hard money (10.6% and 3 points, loan for $189k, interest $1,717/month) and a personal loan that covers the cash to close and hard money interest ($993/month)? I have a good contractor to work with.

I'd much rather present the contractor's portfolio to private investors and pay them the principle and interest back at the end, but I'm trying to come up with alternatives if that doesn't work out.

Purchase from a great wholesaler: 150k

Closing costs: $7,605

Cosmetic rehab: $30k

ARV: $225k

___________

120 day in and out average in Austin, interest $10,840, another 4,427 if sale is slow

[Jason Hirko]

Originally posted by @Sally Hanan:

I'd much rather present the contractor's portfolio to private investors and pay them the principle and interest back at the end, but I'm trying to come up with alternatives if that doesn't work out.

Since this point didn't get much response, I'll jump in here... as a first time flipper with no track record, you won't find a private investor to do the deal you proposed, outside of generous friends and family. If you were to find a private investor willing to go in on the deal with you, they would more than likely expect you to get the hard money loan and they cover the down payment and interest in exchange for 50% of the profits. You are probably being unrealistic with your ask.

Also, there's hardly any cosmetic flips in Austin anymore. Prices have been climbing so fast for so long, everyone has equity in their house and there are no more distressed sellers. Unless you got one of those rare probate deals where the heirs just want their money yesterday, we are seeing light rehabs like this going for right below retail. Flippers in Austin are having to get more and more creative.