Acquiring Funds For First Wholesale/Flip/Buy & Hold

7 Replies

I'm a recent college grad looking to complete my first deal. I want to get started early but don't have any investors as of yet. What route would you guys recommend to get funding for my first property? Would you recommend getting a loan from my bank?

How much cash do you have to put towards a deal.  You have to add value to the deal.  If you can't add value through your experience, then what value do you bring?  Do you bring sweat equity, knowledge or cash?  It's really that simple for any investment.

God Bless You!

@Michael Evans   I don't have much cash which is why I was considering a loan as an option. I am willing to give up my free time in order to get things done because I already spend most of my free time learning how to become an investor. I have a lot of knowledge about the real estate investing but what's the value of knowledge with no experience?

Fix and flipping and wholesaling are real estate businesses.  Buy and hold (rentals) are an investment.  Really tough to get into any of these with none of your own cash.  So, a good place to start is by accumulating some cash.  Of those three, wholesaling is the best shot at getting started with a limited amount of cash.  But even that requires some of your own cash, especially if you're serious about marketing.  The other two are definitely cash intensive.  Even with a loan, you'll need a significant amount of your own cash.

For buy and hold, bank loans are your cheapest money. But 20% down is typically the minimum. I've heard of 15%, but that will require PMI and will hurt your cash flow. You might look at creative acquisitions, such as some sort of seller financing. Even those will usually require some money down. And you do not want to be a landlord without significant cash reserves. Six months PITI is a typical lender requirements. Six months rent is safer, IMHO.

Fix and flipping usually requires hard money because of the condition of the property.  Some banks do construction loans.  Here also, though, you do need some of your own cash.

Hello. I am not an investor with years of experience. However, I have seen other investors make deals with no cash of their own. Most investors frown on using your own money to close a deal. The method I taught was  OPM ( Other people's Money ). It is not a easy method but if you can find a good enough deal and you have a good buyers list, obtain funds should not be a problem. There are also hard money lenders out there too. Oh course using hard lender would cost you more but there's never a good idea to use your own money. I would look into blog and videos about  funding with no money. But I think it is a bad idea to fund a deal off a loan.

Wholesaling would be the best method to fund a deal with no money down using OPM.  

If you find a good enough deal, and can run a fix and flip, then you should get it under contract and then list the deal in the BP Marketplace. I fund theses types of deals (usually 60/40 depending on the deal and the flipper's experience) and is a great way to start to build your portfolio and brand. 

Once you get more experienced and bring that experience to the table you can probably command a 50/50 split. If you can find deals with $50k on the bone and be fine with making $20k, you can make a nice living doing 4-5 of theses a year. If you do 10-12, then you can begin to risk your nest egg and not have to split the profits with anyone. 

@Jonathan Godes  thank you for your comment. Do you fund deals outside of your state?

@Jon Holdman: An investor or business owner is someone who is not involved in the day-to-day running of how they make money.  Unless you use a property management company that handles every aspect of your buy and hold property (truly manages it), then you are self-employed.  One way to be a true investor in the real estate game is to finance the deals.  Once you finance a deal, you hire a servicing company to collect payments and deal with collections and foreclosures.

If you are putting in work in order to get money out of your real estate (fix and flip or buy and hold), then you are self-employed.  My company manages real estate deals for investors.  The investors are not involved with  the day-to-day management of the deal, they hire us to do that.  They are truly "passive investors".

So ask yourself what do you want to be: self-employed or an investor.  There's a big difference.

God Bless you!

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