1st Buy - To Flip - Details on expenses until Sale.

Bird Dogs, Wholesaling
1

1st Buy - To Flip - Details on expenses until Sale.

I was intending to find a good property deal at 0 down or 5% down, and look
for financing through various banks/lenders/friends, etc… and then resell that same
property for 10-25% profit as soon as possible.

In the meanwhile, I was wondering what type of capital is needed/recommended for morgtage
if say it takes 3 - 4 months to sale the property, or I suppose this can also be financed, or borrowed
in the same way the down payment can be? Say on a 300k house …
Is there a way to delay/defer this at all?

Thanks,
Richard

2

no. Even if you find 100% financing, you’ll need cash for closing costs on purchase, etc.

Don’t forget repairs/make ready costs.

And it’ll take 6 months.

And during this time the water heater will go out.

And you’ll have to replace the fence and the GFCI that the inspector finds.

And the buyer will want a warranty.

And you get the point. I’m not trying to discourage you, just know what you’re getting into.

It’s not as easy as the infomercials say, and it’s never free.

3

Nods, I get the point, and appreciate it. Think I’m gonna go the route of saving 401k for a couple of years, get a 50% loan to put a small 5-10% down if necessary or use for other expenses if 100% financed, and continue saving a little extra capital on the side for such expenses… and begin reselling a few properties in about 2 years…

4

consider wholesaling. makes cash with low risk while you learn RE. you don’t have to deal with financing.

5

akashra,

Would you explain what you are talking about here? Are you saying that you will borrow from your 401k to help finance your purchase?

How does a 50% loan only require a 10% down?

I’m confused. Please explain what you mean.

6

I find that no matter how NO MONEY DOWN the deal is tehre is always cash needed for something somewhere. I have yet to find a bank that will finance a flip deal, besides the hard money lenders. If anyone knows of one please share. Traditionally closing costs run about 8% of the sales price not including down payment. That would be tax,insurance,points,legal fees,TITLE INSURANCE etc…

7

Dave,
What I think he means is that you can only borrow 50% of your vested balance of your 401k loan (there are conditions that allow more, but for an investment, you can only borrow 50%).
I see my employees use their 401k account as ATM machines and it is never good.
I can’t say that using 401k money to finance an investment is always a bad idea (maybe the investment choices available to you are dogs), but it ALMOST always is…