New to the game, looking to start fixing and flipping

[Shawn Riley]

Im 22 years old and already sick of the 9-5 grind. I want to get into flipping houses and eventually build a long term rental portfolio that will earn me enough to live on. Ive done lots of research, read the books, listened to nearly all of the podcasts and all I need to do now is get my first deal.  

Im in the Annapolis area. Any advice for this area would be great. Im also open to shadowing somebody who would be willing to mentor me or even work as a partner.

Once again any advice or tips that will get me to the next step will be very much appreciated. TIA

[Jesus Roman]

I would advice for you to connect with a local agent. Let them know what you are planning to do and see if they can help. A good agent will be able to connect you with the people you need to kickstart your investment career. Hope this helps!

[Tom Shallcross]

Welcome @Shawn Riley. 

Flipping can be very lucrative, but make no doubt about it, it is a grind. Therefore, be prepared to work and invest more time and money than you initially expect.

Two biggest advice to shell out are know your numbers and all the auxiliary costs besides the obvious purchase and rehab. I have a blog outlining how to build a personal flipping calculator you can find on my profile or I can DM you if you want to use that as a model.   

More importantly is to ensure you have more capital than you think you need. Here's a rough example:

200k purchase

50k rehab

350k ARV

Capital needed:

1. HML will probably give you 80% LTC on your first deal which is .80*250 = 200k. You'll therefore need a down payment of 50k on day one to close.

2. Assuming permits take a few weeks, project is 2-3 months, and another 2-4 months to sell, you'll need something like 7 months of holding costs to make your payments but should plan for 12 months as you just never know. Your loan payment, utilities, taxes, insurance, landscape....etc prob add up to somewhere close to 4-5k/m. For 12 month period let's call that a nice round 50k of holding cost you will slowly pay over the course of the project. 

3. You don't receive your construction money from the lender until the requested draws are performed. Therefore you usually need capital to get the project off the ground and also to order materials. Let's call this 15-20k but can vary greatly depending on relationship with your subs and amount of the rehab that is dedicated to materials. 

4. What if that 50k rehab turns into a 75k rehab? That 25k difference comes out of your pocket or the project stalls. If you don't have that you're up the creek so you need to have a comfortable contingency to cover any changes in scope or unforseen expenses.

Add this all up and you should have something like 125-150k in working capital to do this deal. These are all round numbers and will vary, but point is you need capital from yourself and/or a partner to flip.