Discouraged already, and haven't even started. Fix and Flip

14 Replies

I've found ways to get 70% of Purchase price funded by hard money.  However, I don't seem to have enough cash and credit cards to fill the gap.  Been at this for almost a year now and can't get the finances in place to start doing Fix and Flips.  

Any suggestions or words of encouragement?  Not ready to give up! 

I would get your finances in order (pay off all debts) and increase your savings before doing this. If you are relying on credit cards and anything goes wrong which is likely on a first deal, you will be stuck without reserves to cover expenses. Because of interest rates you could end up losing money on the deal if you go over your renovation budget or if it takes longer than planned to renovate or sell it.

If you can’t save money then either you need to really look at your budget and how you are prioritizing your money or increase your income.

Change your life style, live frugally and save more money. There is no other option that will work without 10X the amount of effort. Until you have the cash you should not be looking to start. Flipping is very high risk esspically now.

Just partner with someone. Or, at minimum, bring someone a deal and build in a nice wholesale fee for yourself. Do that a few times and you’ll have the gap filled. I only have 75k saved but I partner with 3 guys so we all pool in. It’s better than trying to do it on my own.

to be an actual fix and flip investor / business  its quite capital intensive.. and just a down payment is just a drop in the bucket of the capital required.

your best bet is to put a little private network together if you really want to do this.

or get your license and specialize in finding these types of properties for fix and flippers.. 

make a commish selling it for them.. and then the list back.. that's what agents in our market here do and they will knock down 250 to 500k a year no sweat in commish with no risks of borrowing money or a flip that did not work.

Thanks everyone.  Yes, it does look like I need to save up some more money.  Just seems that they talk on bigger pockets all the time about "little or no money down".  

@Sam Marcos that is probably the biggest misconception because it depends on your exit strategy.  Just know that the less money you have the more time you need.  Lets look at some exit strategies to determine how much capital you need

If you are wholesaling:  Costs: Marketing (rather small)

If you are a buy and hold: Costs: Downpayment (can be hefty)

If you are a flipper:  Costs:  High (downpayment and repairs)

There are ways around it. Such as borrowing from a HML and having a frined supplement the rest but you need a really good deal with alot of spread to make this work. Other options are seller financing options where the sellers holds the loan and you pay them a monthy mortage payment.

Real Estate Investing is a daunting challenge that I feel at time is too idolized.  It can lead to great financial freedom and wealth but requires work.  You will need to put in about 20 offers to 1 accepted (ish not a rule).  This means you get rejected alot and it can be draining when you are putting your time and money in something that hasn't even happened yet.

Keep at it my friend.  This isn't a sprint but a marathon.  I know you've been at this for a year but if you find a good enough deal then you can always wholesale it off.  Sure its not a flip but aleast you can make some money and save up and become great at marketing so you can do a large amount of flips in a couple of years.

Hey, Sam!  Some words of encouragement.  Over the last few years of investing, the one thing that I have learned is that whatever “plan” you may develop, the only certainty is that there will be a bump in the road.  Something always trys to derail you, but as long as you keep your head down and keep working at it, one of two things happen.  #1 - it works out (ya!).  #2 - you learn a lesson (this sucks, but you realize you needed to learn it to succeed in the future).  Either way you end up growing in the end.  Good luck!

I promise. All you need is a good deal under contract. Partners with money, private lenders, hard money lenders, IRAs and others are chasing deals. Your local rei group has people with cash and no deals. Make offers like you have the money. Money is easy. Finding deal is hard. I have about one new investor call me every week to build a buyer's list. Almost none have deals for me to look at. I explain that they are done "building a team". Just bring me a deal and I'll provide the rest. Generate leads that lead to offers. Offers lead to deal under contract. Then find the money. Don't need the money until you have deal. I believe your supply of cash for good deals is unlimited.

Hm.....I've been at this +20 years and I've never had money just come up when I found a deal. To me, finding money has always been the hardest thing. If I found a great deal, people that I approached suddenly became greedy and wanted half the deal or 10 points - when their normal is 5 points - etc. 

In my experience 'just find a deal and the money will come' has not been realistic.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you