Finances for starting out on a flip.

5 Replies

I am currently reading the beginners guide downloaded from here and have studied and followed RE for many, many years but have not taken the leap due to fear. I would like to hear from anyone who actually started their 1st flip deal with NONE of their own money by partnering up with an investor. What did you bring to the table that convinced your investor to partner up with you? How did you structure your deal? Any advice is much appreciated!

Sue,

I've done 4 deals in the Los Angeles area and didn't use any of my own money. What I brought to the table was my ability to find and negotiate deals that netted around $75,000 after renovation and realtor expenses. I split the net profit 50% with the investor. Finding deals in today's market is difficult and worth the 50% split. None of the homes were listed on the mls.

I've done 6 deals (7th in the rehab stage) here in LA, as well. Like Richard did, without any of my own money. The properties went from $125K - $1.4M purchase price. I put together deals that had the right spread in them, the investors believed were secure, and had the right team behind them to accomplish them on time and on budget. I brought my expertise to the table - finding the deals and doing the project management. It takes putting together the right team and selling the team to the investor, not just yourself.

Everything was structured through a JV agreement and the profit splits were 50/50 in most cases.

When you guys say you "brought a deal to the table".  Are you putting a contract so these investors don't go around you?  

Andre,

I'm the one in direct contact with the seller. I don't involve the investor with the negotiations because that's my responsibility. As for the investor going around me I wouldn't do business with anyone I didn't trust. 

Hope that helps.

Yes, somewhat. I was just trying to differentiate what you're deal from a wholesale deal.  It seems like one but without the contract and an "assignment fee" of 50%.  Correct me if I'm wrong.

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