Flipping woes of a Real Estate Rookie... send help! SOS!

[Hannah Simpson]

Hi, I am new to REI and BP, so please bear with me as I try and learn! I've been reading all the books and listening to all the podcasts, but something is just not lining up for me, and I don't quite understand what I am missing.

I am trying to flip a house. However, the bank is requesting total loan amount (purchase price of home + rehab cost). As we all know, good deals in real estate move fast. So, how can one manage to get several GC's out to the house you are looking to flip, and get the rehab cost quickly, in order to get that info to the bank- all the while then having to wait to get approved. 

I don't understand how the house would not be taken by the time all that happens. Especially if it is a good deal and will move fast. And then what happens if it does sell to someone else in the meantime...? Then you have to start over with new purchase price because the home you were looking at is now off the market. What am I missing? 

Also, one thing to note that might be part of my trouble is that I am investing out of state in a small town in Oklahoma where there appears to be NO GC's. It's wild. It seems like I will have to go to a bigger city (about an hour away) to even find a GC. This further complicates my situation and I just don't understand how all the pieces fall together. If I can't even get the loan without rehab estimate, but can't get any GC's out to the home then.....?

Thanks for any help/feedback!

[Stephanie Heron Weeber]

Hannah - I agree with the "start a little closer to home" sentiment. I am at my projects almost every day to see what's going on and I know and trust my contractors as I have been doing this for 12 years. You won't believe the "mistakes" that can happen even when you miss a couple of days. Un-doing stuff is expensive. The mega-flippers here will say that you should leave it to the GC (not in OK apparently) and be spending your time looking for the next deal. I understand that but I think you will have your hands full with your first one. Managing from a distance can come later. My 2c.

[Nicholas L.]

Just to take a step back and not focus on the financing - how and why did you pick this market?  And if you don't know any contractors and don't have funding approval, how would you even offer?  Happy to help just not sure where in the process you are.

[Hannah Simpson]

Quote from @Stephanie Heron Weeber:

Hannah - I agree with the "start a little closer to home" sentiment. I am at my projects almost every day to see what's going on and I know and trust my contractors as I have been doing this for 12 years. You won't believe the "mistakes" that can happen even when you miss a couple of days. Un-doing stuff is expensive. The mega-flippers here will say that you should leave it to the GC (not in OK apparently) and be spending your time looking for the next deal. I understand that but I think you will have your hands full with your first one. Managing from a distance can come later. My 2c.

Hi Stephanie! Thanks for your comment! I appreciate your insight and it sounds like you have an amazing portfolio. Great job! As for investing close to home, I would of course take this route if it were an option. But it simply is not. For me, it's either invest out-of-state or not at all. And, "not at all" is quite frankly not an option. For many, starting close to home is attainable, but not for everyone. My path will be opposite of this. I will be starting further away, and then potentially down the road, when I have more capital, I can move closer to home.

[Hannah Simpson]

Quote from @Nicholas L.:

Just to take a step back and not focus on the financing - how and why did you pick this market?  And if you don't know any contractors and don't have funding approval, how would you even offer?  Happy to help just not sure where in the process you are.

Hi Nicholas! Thanks for your comment. I picked this market because I have family there and so I am familiar with it. Also, the money I do have will go about 10x further than where I live. There is also a shortage of nicer housing there- thus the flip- and a market of buyers looking for those flips. 

As far as the funding, I think there has been some misunderstanding about the question. I will try and explain. Basically I could not even really start to get funding without providing the bank what they needed, aka purchase price of home + rehab cost. And I could not figure out the rehab cost without a GC. That left me in what felt like an unending dilemma, ie: "How can I get funding when don't know how much to ask for?" and "I don't know how much to ask for since there are no GC's."

Long story short, I found a way (won't get into details here- too many and very circumstantial) and have finally been able to determine how much I needed to ask the bank for. At this point I have pre-approval for what I need (yay), and a team set up in place to start on the flip once I find the right house (even bigger yay).

Wish me luck!