New to real estate, looking to start my first flip

New to Real Estate · Chicago, IL · Member since 2022 · 1 post · 1 vote

Hello,

I've been in and out with this website since i've started getting an interest in flipping houses. I have zero real estate experience and I was just seeking some advice. I live in Chicago and I have been very interested in the Little Village (South Lawndale)/ North Lawndale neighborhoods to begin a new flip. I have been reading the book "The Flipping Blueprint" and I found it has some interesting advice. My only concern would be regarding the hard money loans, are they necessary? Would I be able to purchase the home with a bank loan and get a construction loan to start the flip? I appreciate anyone that takes their time to read this and throws some advice my way. Thank you.

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Paul De Luca

Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes

@Juan Montano

Hard money loans are necessary unless you have access to private money or cash. As for you second question, that depends on if the property passes conventional financing. Meaning it needs to be in livable condition - utilities are on & functional and there are no major problems like a hole in the roof.

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Paul De Luca
Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes
4y
@Juan Montano
Hard money loans are necessary unless you have access to private money or cash. As for you second question, that depends on if the property passes conventional financing. Meaning it needs to be in livable condition - utilities are on & functional and there are no major problems like a hole in the roof.
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John Warren
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
4y
@Juan Montano local banks will do construction loans for sure, but you normally need experience. Also, the local banks tend to be slower which isn't great a lot of times. Hard money definitely has it's place for the investor as a tool in the toolbox.
If I were you, I would find a more experienced person to partner with. Find someone who needs boots on the ground or money, etc. Find a complementary skill set where you can add value and get a small piece of the pie to start.
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J Morton
New to Real Estate · Chicago, IL · Member since 2021 · 5 posts · 1 vote
4y
Hey Juan.
Check out youtube and/or Facebook - iFlip Chicago (If you end up with this group of people, Let the coach know Jesse Morton sent you) :-)
Youtube- Lili Invests (watch from the beginning.)
Good Luck. You can do it!
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Jonathan KlemmBusiness Member
Moderator
Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
4y
@Juan Montano - Congrats on taking the step and getting on to the Chicago forums!! Sounds like you are doing all the right things!

Getting your first flip can be tough because you don't always have the experience needed for hard money, but if you find a good deal there is always a way to make it happen.

We are always looking to partner with newer investors who have the time, hustle, and true commitment (I know how hard is to get going so partnering can make it a little easier). Feel free to reach out and we can see how we might be able to help.

Also, I like all the areas you pointed out, we have a new flip that we just started on in Grand Crossing.
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Mike Kehoe
Wholesaler · Chicago, IL · Member since 2018 · 84 posts · 83 votes
4y
@Juan Montano unless you have the cash or someone in your network that will give you cash, you'll probably need to go the hard money route for at least the foreseeable future. Use hard money to build your flip portfolio so that you can leverage your experience for future, better lending options.
In Chicago, you can use North Point Lending (I've personally used them on several deals) or Renovo, among many others.
Aloha capital isn't based out of Chicago, but they lend across the country and have favorable terms. I've used them on projects as well.
The most important things to focus on in your first deal are buying right and finding the right contractors.
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Tom Shallcross
Rental Property Investor · Chicago · Member since 2018 · 613 posts · 1k+ votes
4y
I want to piggyback off of @Mike Kehoe's point that the focus should be buying right and having the right team to execute. Yes the financing is important but it is a smaller part of the equation and means nothing if you don't buy right nor have the right people.
You can be profitable with any of the lending options listed above but you can't be profitable if you don't enter the acquisition correctly. Not trying to diminish financing, but I'd put more focus on those other two pillars of deal flow and team; then start worrying bout financing.
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