Wasnt sure what category this fits in so ill ask it here.
I am trying to figure out the best route to go to get money for my first fix and flip. I do not have a deal yet and im starting my marketing for off market deals and searching the MLS with my agent. I want to be ready once a deal comes knocking.
I am looking at several strategies
1. HML - Pretty straight forward and definitely the most expensive. could be 10-15% interest + points. However without a track record it might be harder to get them to loan to me.
2. HELOC - I just bought a 500K owner occupied 4 unit building that i put 20% down. I have seen some banks that allow you to do a 85%ltv to 100%ltv heloc. This will allow me to draw anywhere from 25K -100K. Interest is between 4.5% - 9.5% based on my research.
3. Personal loan. - I just heard about this from one of the podcasts. It is essentially a loan from a peer to peer lending site (best egg, lendingclub and so on). I can get approx 35K at 6%-10% (credit is excellent).
4. Partnership - This is ideal and im working on how to approach this since i have no fix-flip track record. However if i went this route i do have approx 15k in the bank to contribute so i would have skin in the game.
Please let me know your opinions.
I've raised more money than I've made, lol. Partnerships in most cases are great, because you can return to the well if needed, for better or worse. I like (and so will your future partners) that you have "skin in the game", that is probably your biggest selling point...and yes solicitation of partnership has every bit to do with sales as marketing a home on the MLS. You're also, from what I can tell articulate and transparent to a fault. I think you're asking the wrong question. You should be asking WHERE to find Investors, other than that the only quality I'm unsure you possess is charisma. If you STAY LOCAL, Craigslist is good, heck even your local starbucks, or luxary dealership is good. If you spend a week hanging out where investors hang, and using the antiquated method of simply saying hello and passively shooting your pitch, you'll have a partner in no time. If you really want to fast track it, simply visit your areas real estate professional meetings, breakfadt etc. Pound the pavement. I prefer the former as people outside of real estate will typically accept less aggressive returns, and sometimes on an annual bases, allowing you to turn over the principal invest several times over. Just remeber even with the most solid investments, squat happens so always under promise and over deliver...
Oh, and dont worry about it being your first, investors are people, sharing your credit report to a potential investor is no different than what youd have to do to acquire hard money, so use that to youre advantage. Share with them tour other business experience. People generally understand, whether its lemonade, cars, homes, small boutiques if you've dealt with a level of responsibility in one area you generally can be trusted to remain honesty and ethical. And thats half the battle.
No reason you can't private loans from well-to-do individuals. Pay a little bit more in interest up front for a higher LTV, then either flip the property or refinance once it has "seasoned" and a bank will loan at appraised value versus the cost you have into it.
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