Originally posted by @Andrew Besecker:
Hello,
I have done my research and started looking for my first fix and flip property. All these online Guru's tell you that you can do it with little to no money down as long as you have investors. I have a few potential houses I need to do more research on and take some walk throughs. The question I have is how to make investors interested in financing what I am looking to do. I have talked to my business partner and we can come up with $15,000 ourselves, but need more capital to do the projects we are looking to start out with. My partner feels that on our first couple deals we will only be able to get investors if we offer them a percentage of the profits from each flip. I was thinking more of promising them a certain return on their investment such as 10-20% on a 2 year note. As this is our first deal and we have not spoke to investors yet, which way would you suggest we start off with. Would investors not be interested in a 10% return in 2 years, or do we need to find investors who will be? Is starting out with offering a percentage of our profits a good or bad idea? Please let me know what you may have done on your first couple projects. Thank you
Hi Mr. Besecker,
Congratulations on taking your first steps to complete your first fix and flip. I am in the same boat and have secured an investor. One thing you must remember though is risk must be commensurate with reward. If an investor is going to risk the amount of money put up for the flip, he's going to want to be compensated accordingly. For the investor, I secured, knowing I could not complete a deal without him (no matter how great the profits), I offered 50% of profits because I believe that's fair. I also outlined the potential fix and flip, everyone's roles, and the profit split in a neat power point presentation. And even though I knew the investor (personally), I believe he liked the professionalism I showed him. Keep those things in mind, and it may be easier to secure a good investor.
