Where to start a little guidance

Question

so I'm trying to start out with the least capital possible I was thinking about doing a fix and flip or wholesale flip to help build capital but my ultimate goal is to build cash flow in rentals so I'm not sure which way to go

Matt K. · Answer

Hang out with or make friends with GCs or other trades people... they can help you learn to est costs and see things differently. They also can be good source of leads for homes like mentioned above, even more so if you give them a finders fee or cut of the action.

Allan Rosso · Answer

@Luis Angel Lopez, I definitely agree with what @Matt Katsaris said about working with houses worth 16k. With those numbers, other costs will eat up your profit, and you may find yourself in a hole.

However, cheaply priced houses with LOTS of value are definitely out there. For example, what if a person has owned their house for 20 years on a 30 year mortgage? He/she passes away and leaves the house to the children. The children live out of state, have their own lives to worry about, and don't care for the property. This home, with 20 years of equity built up will sit abandoned waiting for someone like you to find it. You contact the out of state owners about the abandoned house they are taking no initiative to sell, low ball them, they just want to get rid of the property so they take your offer. You find yourself owning a home that may need some repairs, with lots of equity built up.

Houses like these are out there, but it takes work to find. That's why I said be patient to find the right house, and make sure you do your research on it. If you can find a real estate agent that is investor friendly, maybe even an investor themselves, that will go a long way.

Matt K. · Answer

This seems like a terrible idea, no offense but if you have no clue where to start you're likely going to have a bad time with a flip. Think of it this way... what do you see that an EXPERIENCED investor missed in this property in order to turn a profit on it? Do you have construction background, do you know the neighborhood better, what makes you think this is deal?I say this because plenty of people see cheap as a quick way to make a buck, but what is more likely to happen is it's a quick way to lose your investment. The abandoned house is likely that way for a reason, otherwise someone else would of picked it up already. Keep saving and look for a good value, not cheap.

Debbie Farrell · Answer

@Luis Angel Lopez I would love to answer any questions you may have on loan options for you

We do fix and flips

90% Purchase Price

100% Rehab

as low as 550 FICO

5 to 7 day closing

no income docs

no source or seasoning on down payment

points can be rolled into loan

Allan Rosso · Answer

@Luis Angel Lopez I don't know about wholesaling, but you can try to do a fix and flip type deal. With little capital available, try to find a home that has a good amount of equity, before you even do any repairs. Put a short term interest only loan, like a construction loan, that will allow you to finance the repairs. These are typically 6 month to a year type loans. Make sure the bank you are using will accept the equity already in the house to account for the down payment they would typically ask for. Up until now, the biggest out of pocket expense should be the inspection you got before buying the house. Once the house is ready, sell it, pay off your construction loan, and the equity in the house should be your profit (of course there are other expenses that will come with the transaction, which is why it is important to find a house with a lot of equity).

Before making the buy, make sure that the capital you DO have, is going to be enough to cover carrying costs and anything that may come up, in case the house takes longer than expected to sell. Be patient enough to find the "right" house. Investing without much capital can be risky, but profitable if you do your research.

Luis Angel Lopez · Answer

Thank you guys a lot for your time and guidance you've really helped me consider things from a different perspective and I appreciate all the help

Luis Angel Lopez · Answer

The house was 16 the value was 28 but I still get the gist of what you are saying

Matt K. · Answer

A good value can be cheap, but if you're looking at an abandoned house you have to ask, why isn't this house being lived in or has been sold? But on a 16k house, that doesn't leave you much room for profit after construction depending on what's needed. I don't know the specifics of construction costs, but let's pretend you get the house for 5k, then 5k for repairs, that leaves you 5k profit. Then from that 5k you have closing costs from the loan, interest on that loan, closing costs when you sale the house, and then taxes. There wasn't much profit from the start let alone once it's done. I don't think my example is realistic though, I don't have a clue what construction costs are in your market but I feel like 5k wouldn't get you very far...

Luis Angel Lopez · Answer

I appreciate the input that's why I ask but in this town real estate is cheap my current home was only 16k

Where to start a little guidance

Most Popular Reply