Specialist · Independence, MO · Member since 2016 · 66 posts · 9 votes
I have a client that is interested in a flip, He has a decent amount to invest however not enough to buy, rehab and hold for the right buyer, I found a private listed single family for $33,000 with similar houses selling for $102,000. This house will require about $20,000 in renovations and updates with rents in the area at $1200. So ballpark $55,000 total needed with a target asking price of $99,000... There is instant equity so how can we us this to secure short term financing with limited credit?
Your client has: 1 - No Credit 2 - No time 3 - No knowledge in REI 4 - No "skills" to offer for REI .....basicly nothing to offer but a limited sum of money that you say is a "decent amount", but you don't state how much....and your client wants to get into REI? Is that about the size of it?
...and,...
....you have a house that has a potential ARV just over $100k (you're only aiming for the first $99k...leaving a whopping 2.9% on the table), at a cost of $55k, and to make the deal happen, it needs everything from the above list of things your client doesn't have? Does that about cover that?
First, it would be helpful, (actually necessary) to know how much a "decent amount of cash" is equal to.
Second, surprisingly, this can be done...a couple of ways.
Method #1: Buy it on a Land Contract...but this depends on how much of that "decent amount" of funds you client has available.
Method $2: Use a partner(credit) for the needed financing.
Now there's a third method, a better one, that can't be applied to this property, but your client can execute immediately...without partners, and cash flow immediately as well. This is actually for anyone that is in the same position as your client is, and wants to get into cash flow REI. I do this all the time.
Method #3: Do an equity buyin to an existing property that already is cash flowing, where the current owner has cash in that they can't get out...but wants to.
There are a plethora of lending companies out there that will fund the purchase and rehab cost. Some require higher monthly payments back, others will take it back on the back end of the profits. If the deal is there, the money will too. Just have to dig it up.
@Joe Villeneuve I have turn key providers I currently preform renovations on there properties. This client had some unexpected cash come in and he wants to be smart with the money. Your correct he knows nothing about REI, He has $25,000 to invest, I explained about needing financing and that's when I learned about credit issues.
I passed the info I received to the client, We will see if how interested he really is.. I appreciate the input my friend.. I have great contacts in REI but not sure is I wanted to recommend this specific client. Thanks again