LOC, lines of credit, purchasing property,

[Shayna Queen]

I am working with a company that is getting LOC on my behalf. I want to use the LOC to purchase my first investment property to flip. Anyone have experience with this process? I know that this process is going to ruin my credit score in the short run and I am worried about needing to go to a hard money lender later.

[John Warren]

@Shayna Queen I would urge you to be very, very cautious about getting into a flip using hard money and a LOC. Flipping can be a very cash intensive sport, and it is easy as a newbie to go over budget. I did a flip with a fellow investor last year in Berwyn, which is a market I am very active in as a real estate agent and buy and hold investor. Neither of us had flipped before, but we both owned multiple properties and had a lot of good sub contractors we had used. We ended up taking 14 months in total to complete the project instead of 6 months like we projected. We also ran over our $75,000 budget to the tune of $126,000 for rehab!

We used cash to complete our flip, and after 14 months of work GC'ing the project and listing the home for sale as the listing agent, I made a whopping $2,270... If we had used hard money we would have lost thousands.