Raising Capital for Flips

[Dirk Smithson]

What are your thoughts and experiences in bringing capital from 3-5 investors to buy homes at court house auctions.

My reasoning for this is that closing costs and high interest rates usually eat up most profit, If I can find 3-5 people that can invest 15k to 30k it will allow some of us who cant risk more that that to invest and build a bigger investment pools.

Homes at auction ussually sell around 75-150, atleast thats what I'll be starting with, and should yield about 20-40k in profit. 

rinse and repeat!

[Kyle Parks]

I like the idea of partnerships and pooling funds but whenever you get into partnerships it can get sticky. Ultimately you should talk this over with your Attorney and CPA because the way that you structure this can have legal and tax repercussions.

Having said that there are many different ways to structure the funds. Here are two:

1) All parties invest in an LLC whereas they are silent partners and you are the manager so that you retain control of what happens with the funds. This takes trust on their part that you will deliver and a solid operating agreement that spells out everyone's involvement and responsibilities.

2) You could have them be private investors and just treat them as lenders. This way you can get a better rate and most likely not have to pay any points. You retain all control over what happens with the funds.