Contractor · Chicago, IL · Member since 2017 · 102 posts · 181 votes
If you're in this business you have heard the line "I bought 5000 houses with other people's money" (exaggerated for dramatic effect). I'm aware that experienced folks can generally find investors that would like a consistent return to give them their cash. What I'm baffled by is the amount of people who say on Saturday they were managing a dry cleaners, on Sunday bought "The art of flipping by Joe," on Monday gave up their day job and by Friday used other people's money to buy 5 houses. Is there some kind of equity leverage scheme going on here that I dont understand? Are completely inexperienced people actually going out and getting investors to provide the down? What in the world does this actually mean in real life? Or are these people all just full of it. Can anyone provide a real life story of using other people's money when you have little to no experience?
I like your sarcasm. No one is going to lend someone 100K or more on a flip or BRRRR without showing experience and the ability to execute the plan. Even family will want to know how you will complete the plan. You need experience or partner with someone who does. This is not an easy business. Many things can go wrong without the proper experience and team building. Even the most experienced investor can have things go wrong. It's knowing how to resolve the challenges that counts.
When it comes to protecting a private investors money you better treat it like your grandmothers last dollar. Protect your investors money even if it means you are taking a loss. Be ethical in your dealings or your poor reputation will destroy you.