Working Capital (WCAP) vs. Seed Capital

[Account Closed]

From your experience is it more important to have working capital to pay for renovations or more seed capital to buy better properties. My goal is to flip a house and maximize the profit. I was advised that WCAP financial money is more important since flips typically go over budget.

[Account Closed]

@Account Closed This is a good debate to start. My recommendation is that it is more important to have seed capital for three reasons:

1. Seed Capital allows you to buy more expensive more profitable properties

2. It is harder to get Seed Capital than working capital. Most of the time you can use credit for working capital. However, because of how bank loans work, it is much more valuable to have the seed capital up front to use for the down money than for the construction money.

3. Seed Capital is fungible. This means if you do not use it for the down payment you can use it as working capital. So, seed capital serves two functions.