Financing:
If you can avoid using hard money, I would suggest it. The problem with hard money is that there is a lot more risk involved because of the higher costs and because you will have to do more vetting in order to avoid scammers.
Even with no funds, you have other options. Some are better than others. If you have a good income and good credit, you can actually fund your down payments with credit lines or even credit cards. Obviously, you will get a better rate with a credit line. With that being said, most banks will not allow you to use a credit line for the down payment, if you are also using that same bank to fund the purchase and repair costs. For those banks who will allow you to use a credit line from another bank, they will that into account and use it against your debt to income ratio.
Depending on what you can get approved for on a credit line will largely determine your price point for your first flip. If you can get approved for a 20k credit line, then you can feasibly purchase a home at 70k at 20% down, leaving you some money left over for carrying costs.
Smaller banks are funding rehab loans at 80% of the total purchase and repair cost with 20% down. Some banks will require you to pull the repair money in draws contingent upon inspection and others will simply give you the money. The only downside to this is that it can take a few days for the inspection each time you need to make a draw. Most of these loans will be short term 12 to 24 month, interest only loans, so the carrying costs are not too bad. Make sure you get a good faith estimate on all loan fees and make sure there are not any prepayment penalties --although there shouldn't be as the banks expect you to purchase and sell the house as quickly as possible.
The Numbers:
Depending on your price point, the 70% rule is a good starting point for determining if a possible flip is worth looking at. There are tons of articles on this rule, so I wont go into too much detail, but basically the 70% accounts for the purchase price and cost of repairs, while the 30% accounts for closing costs, carrying costs, commission, etc. (about 10%) and Profit (about 20%). With that being said, you will have to adjust this rule (maybe to 60-65%) if you are going to use hard money or be willing to accept less profit.
Contractors:
1. Find a contractor that specifically works with investors on flips. These contractors understand the importance of budget and time and the balance between quality and quantity and will price accordingly. In fact, you should get more favorable prices with these contractors, vs those who are used to doing high end specialty work for the average consumer.
2. Network with investors in your area and find out which contractors they are using and which ones they avoid.
Business:
As a personal note, I don't know what your plans are for your business, but don't let it go. You will need that income (and proof of income) for at least a year or two until you have a proven track record and a new income to replace the old income if you want to get the most favorable rates and conditions on loans. I say this, because it is easy to get distracted and let your business go when you are trying to pursue other businesses.
Education:
READ, READ, READ AND READ. Seriously, get your hands on every book you can on business and real estate. Get Audio books if you don't have time to read. Always be investing into your education.
