Newbie from southeast Texas looking to start flipping
Flipper/Rehabber · Member since 2019 · 3 posts · 1 vote
Me an my husband are new to this, have been thinking of doing it for years but just didn’t know where to start. He is a contractor and I help him on some remodeling jobs that we do for friends an family etc...
We have found what we think would be a good flip but have no idea what the first step is that we need to take. Contact agent for a showing? Get a private money lender then go to the agent with an offer? We think the price is too high considering the work that needs to be done but not sure how to go about doing the offer. I read these forums religiously everyday and I have the books and the deal analyzer and all that, just not sure of the steps and what order. Can anyone give advice please? I’m also currently in a real estate class for my license and we don’t have the start up money is why I’m also looking into a private lender.
Laura, welcome to BP and hello fellow SETX resident! I would say you've already completed your first step by being on the forums, learning all you can and having the deal analyzer handy. Step two will be to get the lending in order. And then step 3 find a deal.
There are actually a few banks that will lend on flips, or will lend on buy and holds that need rehab with little to no money out of pocket. MCT credit union will do a 90/10 loan on a flip and both Education First and 5Point credit unions will do 80% LTV of buy and holds even if they need extensive rehab. That means, if you buy it right, they'll cut you a check at closing. Ask me how I know!
Assuming you can't secure funding for a flip, you could always buy a GREAT rental deal, make some money at closing, rent it out for 1.5-2 yrs and sell it for a "slow flip". That way the bank won't get mad at you and you can rock and roll from there. You also have an unfair advantage with your husband being a contractor!
Check this little creative method out: let's say person A and person B approach your rehab/construction business needing rehab. Let's assume all things are equal in this hypothetical: both A and B own a 1600 sqft 3/2 brick home in a nice local town that starts with an L, both need the same amount of rehab, and both need to sell fairly quickly, but neither really has the money to afford the rehab.
Person A owns the house outright and may be okay with a joint-venture in which they bring the home, you bring the labor and materials and you both split the profits according to the JV agreement filed with the county. Both you and them walk away with cash in their pockets and no more problem house.
Person B owes 40k on the home, is tired of it and wants it sold outright. Person B allows you to get it under contract for 50k, you then wholesale it to one of the local investors for 60k and hand them a quote to do all the rehab using your company. Boom! You just made a 10k assignment fee, plus the profits from the rehab.
Just thinking out of the box here before you go losing a ton on Hard Money fees.
@Aaron R. Wow! Thanks for all the info, you just gave me a lot to think about for sure! And thanks for the welcome!
I did not know about the credit unions doing this as we have been members of our local one for almost 3 years in good standing at that so I may need to chat with them.
I’m new to researching the wholesaling so not too sure on how all that works yet but we do eventually want to build a rental portfolio.
My brain is spinning more than it was now but in a good way so thank you so much for the advice.