How to Structure a Single House Flipping

[Chan K.]

Hi BP House Flipping Community,

Today I would like to discuss and brainstorm how to structure a single house flipping.

First, I will lay down what I know so far.

Then, I would like to hear other members fail/success's story and other methods they use to structure their flip, while maximize leveraging.

I have been spending a lot of time educating myself in the residential multifamily space, but I lack a single house flipping.

I also understand that getting into REO single family from Homepath is cheaper than multifamily.

REO home for investing only required 10% down payment and 15% down payment with up to $35k renovation money - ping me if you need a reference the lender who gave me this information.

The Structure:

1) Find a single house with a deal (MLS, wholesaler (or agent), marketing ...). This house needs renovation. positive_profit = The 75% ARV is > (purchase price + renovation cost + agent fee + holding cost)

2) Find a contractor to estimate the cost to renovate or you can get down dirty on your own

3) Call up private lender / hard money lend and bank (talk to them ahead of time in case you need to refinance youself out)

4) Write a business plan proposal to private lender

5) Get term and rate from private lender. Maybe, 1 year term @ 11% interest only. Ask them if they allow to refinance for another one year incase the renovation takes longer than 1 year

Question:

- Does private lender required me to put down payment and how much (percentage)?

- Does private lender offers the renovation cost in addition to the purchase price?

6) Start the renovation

7) Line up real estate agent to prepare for the listing

8) Exit strategy. a) Sell the house for profit (positive) or b) hold and rent, then refinance cash out

Question:

Let say the single house is 3 beds / 2 bath @ 1500 sq. Need some work for the heat, plumbing, electric, bath, floor, wall, siding, roof.

Let say the purchase price is $130k

- What would be the average cost ($$$$)?

- What would be the average time it (month)?

Let's hear your failure and success story

Let's hear your other creative idea and finance you have used

Do you flip anything else beside single family??

[Brian Gibbons]

I thought I would assist here, @Ned Carey

1. Deal Types Residential

• 1a. wholesaling, option flip or double close
• 1b. retailing - rehabbing, hard money or private money
• 1c. seller financing - sub2, wraps-aitds, installment sale, lease w option
• 1d. buy retail w bank financing
• 1e. private lender financing, they are bank, you buy it and pay PITI
• 1f. jv financing - their credit and money, you do work, you split net profit

New Financing Needed

1b) retailing, 1d) buy retail with banks, 1e) private lender financing, 1f) jv partner financing

Use existing financing

1c) seller financing, no credit needed, low downpayment, dodd frank issues maybe, maybe not

No Financing Needed

1a) wholesaling, 1c) seller financing

Plusses and Minuses

1a. wholesaling, option flip or double close - needle in a haystack, 1 out of 100 motivated sellers, hard to negotiate a 50% of appraisal deal, need to know your Cash Buyers rules and be patient with your marketing, takes 4 - 7 months to get traction, many wholesalers - rehabbers throw 2 - 4 thouseand a month in direct mail to get deal flow, not all leads are good, you need patience.

1b. retailing - rehabbing, hard money or private money - Biggest profits, needs to be organized, needs to know construction, manage builders, deal

1c. seller financing - sub2, wraps-aitds, installment sale, lease w option; with no equity deals, you can buy on terms and flip the contract; free and clear houses you can buy on owner financing and rent out. Dodd Frank may be a factor, straight lease and pure option no rent credits, no Dodd Frank.

1d. buy retail w bank financing - need down payment and job, theres a max you can do unless you get a portfolio lender

1e. private lender financing, they are bank, you buy it and pay PITI; Private lenders want medium term, so 2 - 5 years, exit to a refi or lease option tenant.

1f. jv financing - their credit and money, you do work, you split net profit; the challenge here is you need a track record, you are un supervised, and responsible for EVERYTHING: acquisition, builders hiring and supervision, realtor, etc.