How difficult to find a willing investor for a fix and flip?

Question

Hello everyone.

Throughout my studies I've discovered that it is possible to perform a fix and flip with no money on your part, as long as you do the work. What this apparently requires is for an individual to approach an investor that is willing to finance the costs, all the way up to 100% of the cost.

I assume that you could find people willing to invest with you through this community, or local Real Estate investment groups. I find this extremely surprising that an investor would be willing to contribute all the way up to 100% of the financing.

Anyone with any experience in these matters? Thank you :)

J Scott · Answer

That's a great way to meet successful investors, but not the best way to build relationships.  Building relationships takes time, and the best way to start doing that is to figure out how you can add value to those who you'd like to build relationships with.  People won't typically spend a lot of time helping a random stranger without any incentive -- so you need to provide that incentive.  Figure out how you can add value to their life/business and they will return the favor.

J Scott · Answer

I've financed a few deals for new rehabbers at 100% financing.  But, in every situation, it was someone I knew and trusted, and I was helping them get through their first deal -- so, I was also helping them analyze the deal and get through the deal (protecting both them and my money).

In other words, this was very much a mentor situation (free mentoring, just to be clear), where as part of mentoring the rehabber, I was also willing to lend the money because I knew they had a good education behind them.  I would never lend 100% to someone new who I didn't know, and I don't know anyone else who would either.

My recommendation is to build relationships with local investors who have been successful, and over time work towards convincing one of them to be your mentor.  If you can do this, that person is likely to be able to direct you to a private lender (and vouch for you), or perhaps even be willing to lend on the deal themselves.

Relationships are key in this business...

Alexander Kostrubiec · Answer

I've picked up The Book on Investing in Real Estate with No (and Low) Money Down, a couple of chapters in, great material. Thanks for the other book recommendation, I'll have to read that one as well.

Robin Wilk · Answer

@Alexander Kostrubiec

Have you read The Book on Flipping Houses by J Scott or The Book on Investing in Real Estate with No (and Low) Money Down by Brandon Turner both of these are fantastic resources to get you started. I'm currently reading both of them simultaneously and they are providing me with a wealth of information. Check them out if you've got the time.

Alexander Kostrubiec · Answer

I'm aware that there are many options in terms of investor financing. From what I've studied, I see that 2+ investors are more common. This post is however regarding a single investor financing a fix and flip.I'm not particularly looking for 100% financing, I'm just asking questions regarding the investor financing process. The 100% investor financing seems the most simple to me because the profits between you and the investor are split 50/50. Though, it is true that there would probably have to be a prior established relationship between you and the investor for such a large amount of capital.

Zarak Sharwani · Answer

great advice from @J Scott. Your priority should be relationships & ensuring that your investor's money is protected at all times!  They have worked hard for their money & you have to respect that.  Unfortunately many younger guys don't see this right away!

In order for an investor to give you 100% of financing, you have to have experience with solid track record.  Otherwise, its likely that you will have to have some skin in the game.  best of luck!!

Alexander Kostrubiec · Answer

Again, thank you so much. As a young person/21 years old who really doesn't have that much experience in these matters, I feel that the best I could offer at this point would be my services as an MLO, or any capital for other investment ventures. I feel like I should gain a little more experience before I even attempt to do such a thing.Because of my parents I have sort of an established relationship with some pretty successful people. A president of a brokerage firm, the former vice president of a brokerage firm, and a lot of agents/loan officers. I guess it's time to start reaching out lol.

Alexander Kostrubiec · Answer

That's some really great advice, thank you so much. I know a couple of people who would most likely consider doing investor financing (Maybe not 100% investor financing) with me, people who would respect me based on what I have achieved so far in the field. If you would answer this question, is the best way to build relationships with locals through investor/real estate meetups in your city? I'd love to go at some point.

Brandon L. · Answer

@Alexander Kostrubiec I think it would depend on the relationship in place. I don't see a seasoned investor with cash, giving it up to an investor they don't know, like, and trust.

How difficult to find a willing investor for a fix and flip?

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