First House Flip

[Gilbert Ross Jr]

I am a licensed realtor and recent investor. I am working on my first flip and I need help. I don't have the credit score to get the money from a bank but I have a solid deal. I don't have cash to put upfront at this time so I would need to do joint venture I think. I would like to discuss this with someone that can give me some advice. What is the best way to do your first fix and flip? Financing is difficult because this is my first fix and flip. 

[Brian Gibbons]

Originally posted by @Gilbert Ross Jr:

I am a licensed realtor and recent investor. I am working on my first flip and I need help. I don't have the credit score to get the money from a bank but I have a solid deal. I don't have cash to put upfront at this time so I would need to do joint venture I think. I would like to discuss this with someone that can give me some advice. What is the best way to do your first fix and flip? Financing is difficult because this is my first fix and flip. 

 If you're a  realtor 

post three comps on the ARV after repair value.

You probably don't know how to price a rehab if you're  a realtor unless you have construction experience

Existing financing is important as far as what the balances are, what the payment is PITI and what kind loan it is, conventional, government-backed FHA, etc.

A joint venture with the money partner might be an idea or 

a hard money lender might be an idea

If it's a minor rehab I do joint ventures with the seller directly, where I'll give them a note for their equity, a vacant house, then I buy it  subject to the existing financing, and give them a note of their equity.

At the time I buy it subject to there's a joint venture agreement

I usually use private lender money for the rehab, and you can start going REIA meetings and asking for private lenders and also ask all your friends and family.

Here's an example

Hundred thousand dollar house ARV

needing 10,000 in rehab

If it's 65% of ARV minus rehab costs that's 55,000 for the seller

What seller in their right mind would take 55,000 for a 100k house that needs 10,000 work?

What I do is give them a note for their equity 

and I work backwards to figure out how much that note is going to be for their equity

$100,000 house minus costs to sell which is commissions and other costs say $10,000

Now you're at 90,000

Private lending money for rehab 10,000, with $1000 interest, now you're at 79,000

What's I want to make $8,000

Now you're at 71,000

How does that compare with the Wholesaling offer?

Hmmm

71,000 versus 55,000, 

16,000 more for the seller

This doesn't work on every wholesaling deal, only minor rehabs with a vacant house, and a home seller that's willing to wait for their money for four months

I even try to get a moratorium of payments for four months so I have no out-of-pocket cost on the note

Important thing in real estate is to think outside the box, 

and it helps to have some kind of mastermind group with people of a great amount of experience like 20 to 30 years

It's amazing to me that realtors arent better at this :)

@Bill Gulley