Stepping Into My First Flip, Would Love Your Input!

[Brittany Mealey]

Hi everyone, I’d like to introduce myself, my name is Brittany and I’m based in New Orleans.

I’m newer to the investing side of real estate and am currently focused on learning the fix-and-flip strategy. I learn best through hands-on experience, so I’m here to connect, learn from others in the space, and gain insight from those who have been doing this successfully.

I do have a couple of rental properties already, but my next goal is to complete my first flip.

Right now, I’m researching hard money lenders and came across Stratton Equities. Has anyone here worked with them? I’d love to hear about your experience and whether you’d recommend them for a first deal.

Also, if anyone has recommendations for hard money lenders, especially ones that work in the New Orleans/Louisiana market, I’d really appreciate it.

Looking forward to connecting and learning from you all!

[Mike Klarman]

I know of Stratton, but never closed with them.  They are definitely not one of the top players.  You can definitely find better pricing would be my guess.

I've seen lots of fix n flips ups close.  Here is a list of things to consider:

1) Make sure your numbers are real. Make sure you see with your own eyes the exit numbers and if you are using top comps, then yours will need to be the same quality. I'd also deduct 10% - 15% off the ARV for the calculations so you have cushion. Too many people just get shown the. number, the ARV is 500k, but they have no idea that your finishes must be pristine and professional and if they are not, you will not get that number and the house will sit and sit and sit.

2) Rehabs are expensive.  You used to be able to gut and finish a house for 100k, that number is 175k - 200k now.  Extensive gut rehabs are time consuming, complicated, expensive.  Your contractor will yes you to death on times and budgets and then not keep to any of it.  Be prepared for that, and hope it goes better.  Stay away from a full gut.  Lipstick stuff like floors, paint, maybe redo kitchen/bath.

3) The loan portion of the flip will never kill you.  You won't look back and say only if you had a better priced loan the project would've been a winner.  Winning depends on: Sourcing. Execution. Exit. Of course you want the best terms, best pricing you can get but you can be in the best bridge loan in the world with 5% interest, and 0 points, with unlimited extensions, payments rolled in the back....and you can still lose.  Think of the loan as your Uber car type.  Any car can get you there, but you'd like to be in a nice clean, pleasant smelling car with a polite, good driver.   I mean you can get to the same destination in a smelly toyota with a disgruntled driver, may not be the same experience but you get to the same exact ending point.