Flipped my first house. Ready to sell and buy another

[Jason Harbison]

Ok, so I’m new to real estate investing. I just flipped my first residential property. I am ready to sell in the next 2 weeks. I would like to get my next one under contract as soon as I sell this property (without using my own cash!)

So for this first flip, everything did not go as planned!! I purchased home with a traditional 30 yr mortgage (4.75%). Due to multiple reasons, I was not able to get much work done, at all, in the first YEAR+!! It was bad timing on my part. However 2 years later, embarrassing to say, I am 2 weeks out from being completed!!

I bought this home in a very nice area. School district ranked 9th in the state. I purchased it for $140k with $40k down. Without valuing my own time (not planned), I have $65k total into the project with $28k of that being the mortgage... eeeek!! ARV of home is $250k.

I do not want to tie up this much cash in my next purchase. Actually, I would like to use very little, if any, of our own cash on the next deal!

My goal is to become heavily involved in real estate investing. I would like to get the next property as a sheriffs sale. After a few flips, get into residential rentals so that I can put the BRRR strategy to work! Eventually, I would like to have a mix of residential and commercial (leased) properties in my portfolio.

During this past year, my wife and I made the decision that I am going to leave my career as a PM in commercial construction for multiple reasons, real estate investing being one of them!! We are finally at that stage that we can make the leap! However, my first flip didn’t go according to plans and my wife’s hopes are slowing dwindling!! I need to get her back on track as I believe this could lead to a great future!!

I am just looking for any advice on ways to purchase my next property, and funding the reno, without tying up so much of our cash (which in turn would make my wife happier as well.. lol)! I apologize for this novel. I wanted to give a little (or a ton lol) of background info!!

Thank you so kindly in advance,

Jason

[Kuba F.]

First of all congratulations on surviving your first one. It’s usually the hardest.

Now as far as getting your investing off the ground, I would recommend that if you can, that you keep your day job for a little bit longer. For several reasons.

The first reason is that where most real estate investors fail, is in figuring out enough deal flow, and financing.

Usually the two are at odds. If you have enough deal flow then you don’t have enough financing to support it, and if you have enough financing, you can’t seem to find the deals.

So how many deals is enough?

If you do 5 deals in a year and each one profits $20,000 then your business will have made $100,000 before paying yourself. That’s a start of a job, not yet of a business.

And how can you get into 5 deals?

Well you need a source of deals, and a sheriff’s auction could work, I’ve seen a number of my customers be successful at that in NC. Other people buy lists and spend marketing dollars, cold call, do email marketing, market their websites, work with wholesalers to do all of that for them, etc etc etc.

I wrote a number of blog posts on how to find deals and there are hundreds of ways, but it still takes a while to find what works.

(here are some links to BiggerPockets blog posts )

27 Ways to Find Off-Market & Wholesale Real Estate Deals: Offline

55 Resources to Find Real Estate Deals Online

35 Relationships To Help You Find More Houses To Flip or Wholesale

You’ll need to buy those in cash, whether your own money, private money, or hard money.

To make $20,000 on a property you’ll need to spend at least $150,000 per project, so you’ll need access to $150,000 X 5 = $750,000.

The easiest way to get this money is via a hard money lender, but you’ll generally need to come up with 30% of the cash and you’ll need to be able to show that you can pay the monthly payments.

This is where your job will come in handy, in 2 ways. 1) You need to be able to make the payments; 2) Your specific job gives you a ton of credibility with hard money lenders showing them that you know what to do and how to manage a project.

Hope that helps!

Kuba