My first potential flip!

[Marcus Yates]

Hi all,

New to real estate investing but I'm a huge fan of the BP podcasts! I'm considering my first flip in the Atlanta area and thought I'd try to get some advice. The house is a 4/1 1930's bungalow in the metro Atlanta area located in a popular/heavily hipster populated part of town (inside the perimeter off the proposed belt line, for those familiar with the area). The house is listed for $70K and likely needs that much in repairs (I'll have a better idea once my contractor looks at it this weekend). Our realtor tells us that ARV is around $225K but the property may sit until the spring (to get that price). Between a partner and myself, we have the funds to purchase the property cash, but we'd need financing to renovate. We're both self-employed, and I assume reno loans will be harder to come by. Never worked with an asset based lender before, but I'm wary of borrowing money on my first deal.

Question 1: Assuming a monthly carry cost of around $500, do the numbers make sense?

Question 2:  Does it make more sense to purchase the property cash, or try to finance it with 20 or 30% down and use the balance of cash for reno?

Question 3: What are your thoughts on asset based lending (given that I'm unsure how long the project will take to complete)?

[Ned Carey]

Welcome to BP @Marcus Yates

The numbers as you stated seem to work.

You have no choice but to finance one way or another it if you don't have enough money for both purchase and repairs. 

Don't put all you money into the purchase. You want cash reserves for the renovation.

That may be your only choice being that you are self employed. As long as conservative numbers work taking into account the increased cost of hard money, then don't worry about it.

A hard money lender can be a second set of eyes on the deal and can help you evaluate it.