First Time Fix/Flip Funding

[Nick Gauss]

Hey again everyone,

I've been at it the last few months learning/studying the fix/flip game, brrr stategies etc. I ran into an off market deal a few months back and started to get serious about things. I ran my numbers over and over and it could have worked. Now that I knew I had something I could make work, I began the process with a hard money lender, and a traditional lender. I was excited to finally get myself into my first flip home but then I got calls back from both of them. My hard money lender was great, he wanted to help, but explained to me that they like to see anywhere from 50-70k in the bank at the time of underwriting. This would cover the 20% down, 10% construction costs, first six months interest, etc. Not to mention the work has to be done before they let you draw. I then heard back from my traditional lender on an investment loan. He told me that I was "soft" pre-approved for the amount that we tried for (200k) but needed a 20% down payment or 40k in the bank at the time of purchase. So I'd have to come up with the downpayment and figure out a piggy back loan or private investor to cover the rehab costs as well. 

My question to you all is how does one get to that first deal if they don't have this kind of capital to get started? What if you don't have family to cover that gap of funding? I'm trying to earn my first 50-70k and continue to build from there. Many of these real estate guru's play it off like funding is no big deal and you can easily get into your first deal with no money down. I don't plan to go into it with zero money of my own but it would take me years to get to that initial funding working my current HVAC job. Any helpful advice would be greatly appreciated. 

[Jules Aton]

TBH an ugly but in decent shape live in rehab that would be a good flip or rental is probably your best bet if you aren’t able to come up with 20% down plus misc expenses. A primary residence loan is more flexible and often a great starting point in RE. With your HVAC skills you will be head and shoulders ahead of most new investors. Keep us posted.