Need help finding someone who will loan small amounts.

[Mariah Sanchez]

Hello!

I found a property that needs about $20,000 worth of work and seller is willing to go for my offer of $4,000. ARV lies between $40-$50,000. This will be my first deal. I am having a hard time finding a lender that will loan less than $50,000 and that is okay with the fact that I only have about $5,000 of liquid assets available to use for investing purposes. I was in contact with a couple private lenders, all of which wanted to see $15,000 of my own cash in the bank. This is just so I can start the ball rolling. In all honesty after everyone is paid, I am okay with a $3,000 gain. I am not looking for some jackpot. I just want to slowly start building my way up into better and better deals once I can get some successful flips or rentals on the market. Family is very poor, so I couldn't ask for a loan from them to meet the requirements. Credit score is 730, no other loans other than a car loan that is managed extremely well. The low liquid assets is what is killing me. Any advice on where to look next? Thanks!

[Andy Mirza]

@Mariah Sanchez One of your options is to get a personal loan or line of credit from your bank, which it sound like you looked into. I believe "you have to do what you have to do" to get ahead and that requires risk taking. However, I worry that starting out with a fix and flip out of state may be too risky for you and your finances. When starting out, it's easy to get caught up in your own projections because you want them to work out and that can lead to biases that cause you to overlook or underestimate some of the associated risks. 

A couple of points on this deal: 1) If a wholesaler bought it for $3500 and couldn't make money with it, what is different about you and how you would profit when he could not?, 2) Do you have an effective team or partner with boots on the ground in Little Rock? No one will care about an asset like an owner does. Real estate agents, property managers, attorneys, etc don't have the skin in the game like an owner does. Do you have enough money to fly out to Little Rock to handle issues with your rehab, if something goes wrong with your team?, 3) I'm glad you backed out on the deal but more because of reasons 2 and 3. Foundation issues can be expensive and/or deal killers but most of the time, people over estimate the extent of the problems and costs to fix out of fear and ignorance rather than reality.

I would suggest that you start going to local meetups and real estate clubs, if you are not doing so already. Network and build relationships with other investors. Find someone to partner up with who has the things you lack and vice versa. IMHO, it's much better to share the profit and reduce your risk than to go it alone and lose money you can't afford to lose.