How did you get started out?

Question

Just wanted to see how everyone got into fix n flips. Was it through birddogging, wholesaling, HML's or just having extra cash lying around? It would be great to know how the pros started out. Any and all starting out stories are welcomed. Sorry if this has been covered but I searched and didn't see what I was looking for.

Side note, Happy Veterans Day to all our Veteran, thanks for all your service!

Ibrahim Hughes · Answer

Had money saved from working double shifts in computer networking (when all the companies wanted to beat 'Y2K' and have their systems compliant - thus working us to the bone). Saved close to 6 figures in a couple of years. Then my Brother's business partner in a cell phone store (who wasn't too bright) left to fix and flip houses. Suddenly he was making a tone of money. This was the beginning of 2000. We then took our money and purchased our first house in 7/2000 - a vacant REO through a realtor. The 2nd house fell in my lap directly from a private seller who only wanted $10k to walk away. We did really good with that one. Our 3rd, 4th and 5th we got through another realtor who took advantage at the fact that we STILL didn't know how to crunch the numbers. That's when we realized we were lucky on our 1st two properties as we lost money on properties 3-5. Since then we started buying primarily from private sellers, wholesaling some (which allowed me to leave my job for good in 2003) and learned to crunch the numbers. Now we buy 70/30 from private sellers/reo agents. 11 years later we're surviving. Made a few more mistakes along the way but about to take it to the next level.

Dean Teter · Answer

These stories are really great. Does anyone else have a story to share?

Shawn Thom · Answer

I just started, in fact I am half way through my first rehab. My cousin is big into rentals and has done some fix and flips. He helped me along the way. I got on as many wholesaler lists as I could. Most "deals" are far from that. Most "wholesalers" just hock MLS deals or their deals are over 80cents on the dollar. My cousin sent one of his leads my way and I jumped on it. Its not a home run, but its pretty much all cosmetic, so it is an easy one to start on. I bought it for 63K, putting a little less than 15k in it and have a $2500 "uh-oh" budget. I am going to be asking $110k, and I'll be happy with 107 I do have a pretty serious chunk of change in savings, but I wanted to finance this so I could possibly do more than one at a time. My first company I went with decided not to finance the property. They didn't believe my rehab numbers. I have a buddy that is giving my a good deal on the rehab but they still didn't believe it. I had to end up going with more of hard money lender, although its not as bad as some terms out there. The best advice I can give you is see if you can find some one out there or here on BP to give you advice. I have my cousin, but I suspect you can find some one on here that will lend you a helping hand. figure out your criteria ahead of time so you can quickly figure out a good deal from a bad deal. Good deals will go fast. Have a lender lined up....and apparently (in my case) a back up lender as well. Hopefully you find someone in your area to help you out so they can give you leads on good contractors as well. Once you have those lined up and leads coming in... its time to cowboy up and do a deal. I have been so nervous through out all this but its been a good experience to stare a few fears in the face and chug along. I have already made some mistakes but I'm taking notes so my next one will be smoother. I'm learning a lot and having some fun. I am hoping to have it on the market mid-december. Good luck, hopefully some of these post encourage you to jump in!

Account Closed · Answer

I started by getting my first 2 rental houses financed via mortgage. I also saved my money from work and started buying bank owned houses with cash and then pulling lines of credit to purchase more houses. I kept reinvesting just about all my profits back into real estate and kept growing.

Ibrahim Hughes · Answer

That depends on the money invested. On a $80-100k, might not be too bad. But on a $300k rehab project you were lucky to make the $20k.

Brian Buckley · Answer

I'm considering beginning a flip in the next three months and I think I will have to use a HML but it will have to be a dynamite deal since the interest is so high. I'd like to receive a profit of 20,000 minimum as I'm sure most people feel the same way!

James Vermillion · Answer

We went to quite a few small/regional banks until we found one willing to lend to us. We receive loans that allows us to draw funds for renovations. Since then, we have developed a great relationship with the bank. Note: We both provide personal guarantees on the loan to our LLC.

Brian Buckley · Answer

Thanks for the replies, hopefully more people will share their stories. James where did you and your friend get your financing for your first deals?

James Vermillion · Answer

By no means am I a pro, but I will share the short version of how I got started. A good friend of mine were having a conversation about investing and real estate came up. The more and more we talked about it the more our interest grew. We each started researching our options to become educated and figure out how to get started. We decided we could start by flipping houses. We started an LLC, got our real estate salesperson licenses, and started finding contractors, financing, etc. We split the initial investment 50/50 and our on our 4th project in one year and we are currently looking for our next.