Hello, BP fam! I don't have money, but my dad does. However, once he sells his small business he plans on moving out of the country and will use his money to build a house there. I'm not sure what his timeline is, but I'd like my timeline to be now. I want to get into flipping and have been actively reading The Book on Flipping Houses by @J Scott, which has been great thusfar! I'm thinking a 50/50 split because I would handle everything since he lives a few states away.
So, if I find that "good deal," what is the best way to show him it's worth his money? What would be a back-up plan that I can show him? Would I be able to finance through a bank or lender (such as a home equity loan) if I fail to get his money back?
Why not first show him you can do it without his money? That's probably the best way for both of you. Learn the basics and you'll learn how, partner with an owner first and you won't need tons of money. Just a quick comment to think about. ;)
Perhaps am open and frank talk about your plans. Show him examples of what you could do with his help. Maybe tell him you would like him to be a funding partner for $100,000 (or whatever) and do some actual projects that pay him a handsome return. If he balks at the prospect of investing with an untested investor, then regroup and see if you know someone else that will or come up with creative ways to make your dream work.
Awesome that you are thinking about it. Congrats.
Now, I think this is going to be a hard sale based on your terms. Would you put all your savings into one thing, and let a person who has never done it before run the show, on a TBD timeline, into a business you know nothing about, and only get 50% of profit? Or you can get your money, retire and sip margaritas on your ocean view front terrace?
What kind of return are you looking at? What are your numbers? What is your timeline? Do you have the time to do this? Maybe looking into doing to ground work for an experienced flipper for free will get you some experience and realistic expectations. I personally think real estate investing should be educated decisions and calculated risks, which would require experience, money and time. Otherwise it would be a gamble. Think twice before asking someone else to gamble with their retirement money.
@Eric Mauricio Do it on your dime -some how , some way first. You say you have no money, big red flag. Demonstrate that you are willing to live beneath your income so as to accumulate some. Wholesale, generate some $. Put yourself in his (dads) shoes, if some unproven son of yours made the same ask of you- how would you qualify it? Now don't give up, just figure out the hard steps necessary to accomplish your goals. Make your Dad proud of what you have accomplished so that he may ask you to participate in your deals. Persevere!
I would wait til I had my own money to do it (or be able to obtain regular financing). Think how you would feel if your father lends you the money and the project bombs. It could easily happen, especially since this would be your first project. There's a reason why people say to avoid doing business with family and friends.
I would "sell" the project to him like you would a hard money lender. Break the flip down professionally on a piece of paper. Show him all of the numbers and have evidence to back them up. That book that you're reading should have a template. My book does. At the end of the day, your Dad either wants a profit, or the real estate. If he's not interested in either then no dice.
Also if he's loaning you the funds to purchase+rehab then that's a private deal. Provided your name is on the deed, the conventional lender has no clue and assumes that you have 100% equity. You could pull a conventional mortgage or HELOC with a loan to value of 80+% it just depends. Yes you could pay him back. But now you occupy/rent the house. No flip.
name your firstborn after him.
@Eric M. Go to your Uncle (or Aunt) for a small loan on a Flip and pay them back 9%. He'll chase you!
@Arlan Potter "first born" That's the best way!
Sounds like he has worked hard, earned his retirement and you're looking to cash in on his work. Reading a couple books doesn't make you a flipper.
I don't do flips but I do light rehab and I haven't found one that was under budget yet.
Don't sacrifice your dad to move up your timetable.
@Bill Gulley - Too late for that. My first born is a girl and I know that my daughter would hate me for life naming her after my dad...even if I were to try to change the name to sound more feminine. Lol.
@Eric Mauricio agree with others that you should do it without him. get some experience and show some results first. talk about a good way to ruin your relationship with dad...
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