Should i use an investor or my cash to purchase a house to flip?

8 Replies

Find the opportunity first...you might find one that you can afford to do on your own. If not, you'll still need to know what the end game looks like and how the profit will be split.  And, you'll need to have a contract between you and the investor to ensure that the game doesn't change somewhere along the line.

Again, go find the property first.  Figure out costs and marketing time.  Then figure out how to pay for it.

@Louis Cardiello

I think that's a decision on how many projects do you want to scale up to. You may have the cash for one or two projects simultaneously, however a solid investor would allow you to scale up and do many projects at the same time and leverage your skills and increase your annual income.

Best of luck in all your endeavors.

@Louis Cardiello , personally I feel lucky to be in a spot where I can self fund my flips with cash and no investors.  I have been approached by some over the years, but to me it becomes more of a hassle then it is worth.

I also don't have dreams of becoming a full-time flipper, or I would feel differently.  My wife and I do 2-3 per year, and will no longer have more than 1 active project going on at a time (we may buy a second before the first closes).  

That being said, an investor will let you take on more projects faster, and/or larger projects. They can offer insights or perspectives you may not have thought of on your own. Depending on the relationship and responsibilities they can act as more of an active partner than a passive investor. They may find out about deals to bring to you and invest in. There are a lot of benefits to having investors. It will just have to match your goals and needs.

@Louis Cardiello

You’ll have to ask yourself if you want to do this full time. We typically have 5-15 projects going on in the Raleigh / Durham area at one time. End of last year we had 18. Growing pains for sure. Sold those off before Rona.

There are plenty of great people in the area doing far more than us, but if you want to be able to scale, then network and ask everyone you know if they would consider investing with you. Our first few were HML, but I realized quickly we would never survive at those rates. Now we are between 8-12% no points depending on the deal.

I concur with everyone else. If you want to do lots of projects, use other people's money. If not, then use your own.  I use other people's money for my own house flips and I have 8 active projects at the moment.