Financing my first deal

[Ti Jackson]

Hi,

Quick question - how did you finance your first deal? I am in the process of looking to flip my first home and would like to know how you financed your first flip. Additionally, has anyone done a hard money loan? If so what are your thoughts (pros & cons).

Thanks :)

[Rick Pozos]

My first flip did not happen until I had wholesaled about 5 houses. I was looking to start a deal flow to get good deals coming my way. I wholesaled some until I found a great rehab that was right for me.

I had little money so I borrowed some from a relative, charged up the credit cards for the rehab but took the property sub-to. Sold it quick and did the same thing again. 

When I came across a great rehab that needed cash or hard money, I got hard money. It was back in 2004 or 2005. Paid 18% and 4 points. I was so happy that someone would lend me money with no job. I was ecstatic. Ended up making about 25k on the deal. If the deal is good enough I would not worry too much about the interest rate. Nowadays rates are about 10% to 12% with a couple of points.

Use a hard money lender that is local. Preferably one that goes to your local REIAs. This way you can get recommendations from other users.