Buying my first house for a flip with 5k cash?

Question

I have been listening to Bigger pockets podcast and have been thinking of getting into buying my first house for a flip. I have a stable job and currently living in an apartment. I have 750+ credit score and $5k in savings.

After doing some market research I have been thinking of getting a house in range of $120k for a flip. On my current salary I can afford rent + mortgage payment. I have a friend who flips houses and is also a realtor, where he can help me in finding good deals and I can hire his contracting team to do all the work.

I don't have cash required for a flip, so I was thinking maybe I can get a credit card with 0% interest for 12-15 months. I am more than sure that I can get a new credit card with $14-20k credit limit, since I already have couple within that limit.

Is this a good idea to start like this? I know it's a risk, but gotta start somewhere right?

I would really appreciate your suggestions.

Thank you

Samer Abbas · Answer

@Martin Vehlow

I would love to house hack if I could, but with my current family situation I won’t be able to house hack.

Martin Vehlow · Answer

@Samer Abbas, have you considered house hacking? If done correctly it can reduce your living expenses by reducing or eliminating your rent payment because the other tenants in the multi-unit pay the mortgage and expenses, leaving very little or none leftover for you to pay. Then you could use that increase in available cash to save up more quickly.

More info here:

https://www.biggerpockets.com/blog/6-house-hacking-strategies-you

More info here: https://www.biggerpockets.com/blog/6-house-hacking-strategies-you

Samer Abbas · Answer

@Derek Diamond

Thanks for the advice Derek! I will start working on it!

Derek Diamond · Answer

A conventional loan and FHA will always have the best rates/terms. But if the house is not ready for the end consumer (think cracked windows or something that does not make it livable) you might not get the loan. I would start with that financing and make them tell me "no" before I got to a private lender that will charge +12%.

Samer Abbas · Answer

@Derek Diamond

Hi Derek, thank you for your response!

I do have some family members who will be able to help me out in case it doesn’t go according to my plan.

I am definitely considering partnering with my realtor buddy.

Would I be able to get a house for flip on FHA or conventional loan? Or should I consider private loan?

Derek Diamond · Answer

@Samer Abbas

Hey Samer and welcome to BP! I like that you have a plan and resources AND you know it is risky! Make sure you have a plan if you don't finish in the 12-18 month and you have to start making payments. Have a plan if you need more money. Have a plan if you can't refinance and have a plan if the market turns. If you already know all this go for it. Is there a possibility of partnering with your Realtor buddy (share the risk)?

Buying my first house for a flip with 5k cash?

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