I'm noticing that capital is what's hard to find, not deals... at least in my experience so far.
I'd like to get some help from the BP community on how to find capital to use for a rehab flip.
My friend and I have an opportunity to buy a single family home in Washington D.C. in a nice neighborhood.
Purchase price about 600k
interior 200k, exterior 150k, soft costs 150k (very conservative figures)
ARV 1.35 - 1.5 MIL
3 - 6 months for rehab, plan to market while rehabbing.
Problem for us now is we can't fund it. We don't qualify on our credit or income. Not sure if HML is an option and at what cost.
Any advice is greatly appreciated... as always.
And this is why you look for financing first, and then look for the deal...:)
Why not just wholesale it and let someone with the capital or access to the capital deal with it??
HML will be looking for 12%+ & points. How much are you funding yourself?
Ultimately, the profits follow risk/investment. If you risk little, you return little. If you risk a lot (~$1.1m for your project), you'd expect a healthy return.
There's no shame to passing up the "bulk of the profits." Assuming you have a real good deal, you'll be able to wholesale it, and even if you are taking only a slice of the projected 250-400k in profit, you get it upfront, at closing, without waiting 3-6 months to get out.
The key I would look at is 6 months from now might be the dead of winter in your area. Also as interest rates rise that can cause a flat lining in sales prices.
So you have two possible things working against you. A third thing is contracting with trying to get workers out in the cold weather. A fourth thing is the taxes on flipping and how much money you lose with profits versus regular investing.
Many other risks but you might want to wholesale this as mentioned. No legal advice.
@James Wise we don't have two coins to rub together so I wonder, are there hml's that lend purely on equity?
@Mike Harris you're right, no shame in it at all. Thx.
@Joel Owens great insight I can't wait to find out out how much I have to pay in taxes; it would mean I've done good :)
Thank you folks for taking the time to offer advice. Truly appreciated!
P.s. Currently having some rehabbers review deal. Hopefully we have a win win win.
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