How to Secure Funding for your First House Flip Deal
If you've been following this blog for a little while then you probably understand that learning how to flip a house is not for everyone. You really need to have the right kind of motivation, mindset and passion to get into this business.
As with anything there are many challenges and hurdles to overcome when you are new to the real estate investing business. Believe me when I say that these challenges are very conquerable, yet they are challenges nonetheless.
One of the most daunting tasks for many newbie house flippers who want to learn how to flip a house is getting that very first deal together. Quite a bit of work and preparation goes into making that first deal happen. I should know, it was not that long ago that I myself was sweating over my very first house flip deal!
An important part of any deal is funding. This is especially true when you are just starting out, because often times you may not have enough money of your own to fund a deal so they need to learn how to flip a house with no money. Many new to the business house flippers struggle with how to approach an investor and ask for money, when they really have no experience and lack a long track history of successful house flips.
Which leads to the question...should you fake it until you make it?
How to Flip a House | Approaching Investors
In certain businesses you may be able to get away with "faking it until you make it" - however real estate is not such a business.
I think it is best to be very honest and transparent when you approach a potential investor. In my opinion there is nothing wrong with telling an investor that this is your first house flip deal.
If you do tell them that this is your first deal (which I highly recommend) then you must be prepared to convey how serious you are about the deal. Consider putting together an investor presentation highlighting topics such as the ARV (after repair value), soft costs and projections. Explain the 70% rule and show them how you expect the deal to work.
If you want to stay in this business for the long term, then always be honest. Stretching the truth and not being 100% transparent with regards to your current level of real estate experience will often times come back to nip you in the butt sometime down the road.
How to Flip a House with No Money of Your Own | Working with a Mentor
In addition to being honest I also recommend seeking out the guidance of a more experienced real estate mentor or real estate coach. This person could be a friend that you meet through a REIA meeting or a even a paid coach.
Actually, it could even be me!
Having an experienced and successful real estate investor by your side is added "ammo" when presenting to potential investors. You can tell the investor that you are working side by side with someone who knows how to flip a house and has dozens of successful deals under their belt.
This added "ammo" is oftentimes all it takes to convince an investor that lending you money for your house flip is a smart decision.
As always thanks for checking out the blog - I really appreciate it.
We have also just launched a new House Flipping School Facebook page that I would love for you to become a part of. We have a really nice community coming together here on the blog, and I am planning on developing the same type of community via Facebook over the coming months.
Thanks again and see you at the top!