I'm relatively new to this site and wanted to get an opinion on my plan to break into the real estate market. Ideally, I want to begin flipping in the Central New Jersey area. My initial plan is to purchase a fixer-upper with an FHA rehab loan for a few reasons. 1) I'm prequalified and only need to put 3.5% down to fund the project which leaves me with more residual funds for other opportunities 2) my wife and I are sick of wasting money rent 3) to be able to manage and learn the rehab process in my own home on a daily basis.
I would hold on to the FHA property for 1.5 to 2 years then either refinance and keep the house for myself or sell and hopefully make some cash to put into another home.
I currently own a rental townhome in VA and plan on purchasing the FHA fixer-upper in the near future.
With that being said,
1) Will I still be able to get hard money loans if I have two mortgages already?
2) Specific to Central New Jersey, which areas are good places to start looking for rehab deals?
3) Should you meet with hard money lenders before you have a deal to get pre-qualified? or should you find a great deal first before lining up your lender?
4) Are wholesalers a good place to start finding off market deals early on in your career?
I have the contractors and subs lined up when the right deal presents itself, but I want to make sure the compass is pointed in the right direction before taking the plunge.
Any advice would be greatly appreciated.
Welcome @John Walker ! Glad to see you're using the site to ask questions! Allow me to give a bit of advice. I think your plan sounds good doing the FHA route and selling a few years later.
1. You can potentially still get Hard Money. They don't treat you like a traditional bank would. They want to make sure you've got skin in the game and that you've got some experience built - which you will after you flip your first FHA home. What they care about most is that the deal is a no brainer that will make them money and that they trust that you can succeed at flipping the home in the time frame agreed upon.
2. Can't say at all
3. You can try to meet before hand but I doubt you'll get straight answers. It depends on the size - some companies such as Pine Financial can pre qualify you while smaller ma and pa lenders want to vet the deal first. Keep in mind, they are in the business of making money so if you don't have a deal already they may not give you the time of day. On the other hand, you may find a HML that is glad to teach. You may be able to bring a deal you're looking at and after running the numbers present it to the lender. Then listen to what they have to say. You're starting out and have little experience. Their business is making money off of good successful deals and they will know what one looks like very quickly.
4. Depends on the legitimacy of the wholesaler. You'll see tons of posts about all the wholesalers on BP. Some GREAT, some good, most bad. I'd suggest asking HMLs if they are associated with any wholesalers that have good deals, or who the big players are. Again, trust the experienced ones but still verify what you find.
Thanks so much for the advice. I completely agree when it comes to wholesalers and knowing who to trust. My biggest hesitancy in moving forward is making sure I have the right deal. I will continue to research/network and will be ready to attack it full steam ahead when the time comes.
Hey John welcome to BP. The first thing i would do is start attending local REIA meetings and network with everybody. Those meeting are a wealth of great information. Next one is on the 18th in Princeton NJ http://sjreia.org/central/. I will be there if you want to meet up.
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