New from Oklahoma City

[Eric Bertolasio]

I am new to this site and am looking to get involved with buying homes from auction and flipping. While I don't have any experience with it, I have done plenty of reading and learning, but I feel like it is time to actually get my hands on a project. I do have an initial question that hopefully can get answered.

I am going to need a financial investor. From a financial investor's viewpoint, what kind of information do I need to have in order for you to be interested in getting involved in a home? I know the basics such as after renovation value, projected renovation and purchase costs. But with auction homes the final cost is obviously in the air and renovation costs are hard to pinpoint. So basically, as an investor, what information do you need from me?

Thank you for any and all responses,

Eric

[Alex Owens]

What's going on Eric, welcome to BP!

I am curious why you are starting with the auctions to pick up properties? I have been to dozens of real estate auctions in Oklahoma over the last two years and I have found them to be highly competitive and rarely do I ever see someone get a good deal. The problem is that typically in Oklahoma the auction sales price cannot be lower than 2/3 of the appraised value of the property. In addition, everyone and their mom thinks they are a house flipper out here and the purchase price tends to get bid up way beyond what I would pay for a deal at auction. 

If I were a private investor, I would not lend to you if your strategy was to pick up properties at auction. These properties are sight-unseen and it is impossible for you to give someone an accurate estimate of the work that needs to be done to get the property where it needs to be. I would recommend working with local investors as either an apprentice or partner on some of their projects first before I try and pull in investors to back your business. 

As an investor, what I would want to see is a proven track record and concrete data/numbers supporting why you think a property will be a good deal. For example, if you come to me and say you think the rehab will be $40k, I need to see at least one - and preferably 2-3 - written estimates from qualified contractors. In addition, I would want to see a full CMA to show what the ARV will be for the particular property. Even further, I want to know that you have a "Dooms Day Plan" in case everything hits the fan. If everything went wrong: rehab went over budget, sales price was lower than anticipate, and days on market was over extended I want to know that we are still protected and this is still a good deal.

Your first few deals are going to be the most difficult to bring investors in on because you have no experience or proven track record. However, once you have a few successful projects under your belt, finding private money should become easier and easier. Good luck my man!