Fix and Flip question...

[Kerry Boyle]

Theory question here, curious as to everyone's thoughts.

$155,000 purchase; $50,000 rehab; $350,000 ARV.

Would you rather: 

A: Fund the entire thing on your own, $205,000 + $3,000 closing costs.

B: Pay 7% I/O, and put down $30,000 (incl all closing costs + 3mo payments).

C: Pay 10.5% I/O, and put down $9,000 (incl all closing costs + 3mo payments).

[Kerry Boyle]

Originally posted by @Kevin Sobilo:

@Kerry Boyle, an even better question might be what factors should one consider when making that decision. 

There is certainly a lot of value in coming out of pocket less money. Less personal risk for one. Also, the ability to work more deals at once.

However, what if you aren't going to work multiple deals at once. Is it better to let a pile of cash sit idle while putting only a small amount into a deal?!? 

It isn't a once size fits all proposition. I think understanding the factors to make the decision would be most useful.

 
I agree. As a lender, I'm often only asked what are my interest rate and points. I was curious if others found value outside of those two items, things that aren't often asked. Each one of the above can certainly be the best choice for an individual, each person is different and has different financial goals, needs, and wants.