Looking to start my first flip.

8 Replies

Hey all BP members. I have a general contracting company that my father and I run. Im looking to start our first flip together. Although I do not have much capital of my own just yet is it still possible for me to get started? Also what is the best way to generate leads? Any advice will help.

@John Spina jr

Yes, of course you can do a flip even if you don't have much capital. Either use hard money or better yet private lenders (individuals with capital who are looking for better than average ROI - Return on Investment.) Another option is to look for deals where the owner is willing to carry the financing and wait to be cashed out, so you have to really only pay for the materials and labor. Since you own a general contracting company, you can probably do that pretty easily.

As far as leads, look for distressed properties. From driving for dollars, to preforeclosures, tax delinquent, abandoned homes, etc.

Aside from the above, you must learn your market first, learn how to estimate rehab costs (as a contractor, that should be easy for you, but having knowledge of design and what items bring the most resale value are also needed) and how to estimate the exit values. Without these abilities, all the other stuff (sourcing deals, funding deals, etc) is useless.

Once you do have this down, building a private money network is essential to your success and that comes from building relationships.

Originally posted by @John Spina jr :

.

@Will Barnard when you say exit values do you mean the ability to determine the correct ARV?

Correct. Exit value = ARV

@Will Barnard I would say I have a pretty good understanding of my market and estimating rehab costs. The issue I have currently is obtaining the capital needed to fund a flip and holding costs. Im going to continue to narrow down my search while saving capital until I can find an opportunity to start my first flip. Thank you

Originally posted by @John Spina jr :

@Will Barnard I would say I have a pretty good understanding of my market and estimating rehab costs. The issue I have currently is obtaining the capital needed to fund a flip and holding costs. Im going to continue to narrow down my search while saving capital until I can find an opportunity to start my first flip. Thank you

Raising capital comes down to not only the deal, but your ability to sell yourself. You need to show potential investors that you have done everything to mitigate risks, that you have covered all bases, what your plan is if A goes wrong and if B goes wrong. That you are borrowing at a safe LTV (if you are trying to 100% finance it, that is not possible), and that you have a solid business plan including an advisor, mentor, or experienced project manager on board.