How to get funding for a rehab when first starting out?

[Wayne Woodson]

I am just getting started in the world of rehabs and would like to know how others got funding to do their rehabs when they first got started. I know everyone has to start somewhere so I am just looking for advice as how to get started.

[Derek T.]

I got started with HML and needed to bring close to 10% to the table and front the rehabs as well. So for me starting off, a good working capital to start with was $35-40k. Bring $15k or so to the table, front $10k-$15k to front the job for each phase and have some for reserves is kind of how I looked at it. I would venture to say rehabbing in my area would be hard to do without $30k or so in reserves if you take my route. Could be different for 203k or a partnership but for HML that would be about the lowest you could start with and most want to see reserves more than that.

Rehabbing is going to be tough without much money because not only do you need money to get into the deal (skin in the game) but you need money to front the rehab and keep it going. I know this wasn't your direct question, but the best way to do a rehab with no money out of your own pocket is to find a great deal and partner with somone. A great deal will probably be a non-MLS deal so you would have to spend some money marketing to find that great deal or know someone with a problem house. As much as people say you can rehab with little money out of your own pocket, it isn't true in my experience. You will need some money and cash reserves for the average deal and the money will have to come from somewhere (could be you, family, friends, or a partner).