Flipping in Florida !

[Robert Iskhakov]

Hi BP members !!! My name is Robert Iskhakov. I am a new member to BP. After doing lots of research on different branches of real estate, i came to a conclusion that i want to rehab and flip properties. I recently moved to  Aventura, Florida and i wanted to get an advise about flipping properties in Tempa or Orlando area since real estate in my area is so expensive :-( I never did one before and i know that reading about it and listening to podcasts is not the same as actually getting out there and do one live. Can you please give me a suggestion of who i can connect with to do my first deal? Anyone flipping in those areas that i can partner up with? Do you recommend flipping in those areas ? Thank you so much !

[Shawn McCormick]

@Chris Fore. Anytime you lend money, you are going to want collateral. In Real Estate, that comes in the form of have a promissory note from the flipper. 

Just think of yourself as a bank/mortgage broker. When you purchase a home, they make you sign a note and a mortgage. The note specifies the interest rate and length of time to repay. The mortgage gives the bank/lender the right to foreclose if you don't repay. So for investors, you want to be in 'first position', meaning that if the flipper fails, you at least get the house and can resell or finish the project to recoup your money. 

What you want to be careful of is not being in first position. So just like a '2nd mortgage, HELOC or similar, those loans only get paid if the first mortgage holder gets paid and there is money left to pay the 2nd, 3rd etc. Some flippers use their own money to buy the house, but need private money to fund the rehab. So as long as the house is paid for (no mortgage) you can lend money to them and be in first position.

Hope that helps.