Many new investors are joining the flipping properties craze. There are so many books, shows, and seminars that say it's easy. I recently had an email from someone who wanted to be realistic. Here is what I told him, so I decided to post it on the blog.
"I work with new flippers. There are many experienced rehabbers that I work with as well. They typically have private financing or use cash. They're looking for 70% including repairs. If someone wants to flip, they need to secure financing. A line of credit, cash, or money partner is a must.
I worked with new flippers who tried to do 100% with private money, but with points and fees, they needed to get a property at 60% including repair costs, which is not completely impossible, but shuts them out. If they happened to come across a seller who would sell for that amount, they'd be very lucky.
I'd first say to brainstorm about financing because once you have the details about money, then you can match a property to meet those numbers. I have new investors who are getting started on flips, but they have all had a line of credit. If you can't close within 14 days and pay cash, I'd say you had a 10% chance of getting a property unless it was a bad deal.
All the big boys can write a check on the spot. No muss, no fuss, no hassle for the seller. They can move when they want and don't have to worry about lenders and lender fees. Any escrow period over 15 days is too long for the seller, so the deal has to be sweetened. You also miss out on the more motivated people."
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