He sat in the back of the room.
While the instructor explained the foreclosure process to a packed class full of Realtors, this man quietly leafed through a large stack of papers.
My curiosity got the best of me.
So, during the break I pulled the guy aside and asked him why he brought a mountain of paperwork to a continuing education course for real estate agents. It turned out to be one of the most important questions I’ve ever asked another human being.
His name was Mark.
Mark explained that each sheet of paper had the name of a homeowner in foreclosure on it, along with a map to their house. The papers were distributed to people that would knock on these homeowners doors prior to the auction date.
If the homeowner answered their door, and if the homeowner was agreeable to sell the property to stave off foreclosure, then the doorknocker would pull out a purchase contract. Of course, the purchase price of the property would be significantly below market value.
And of course, the contract contained language in it that would allow the doorknocker to “assign” it to another buyer.
As it turns out, Mark was the “another buyer”.
Money is the Easy Part
Needless to say, I immediately volunteered to work for Mark.
Each week, I’d stop by his home office and pick up my stack of homeowner names and maps. Then, I’d drive all over the city knocking on 60-80 doors a weekend. From 2003-2004, I put about 40 deals under contract.
And Mark bought every single one I brought him.
Eventually, I learned that there were lots of buyers out there just like him. Guys with boatloads of cash eager to find and purchase below market deals.
Then it occurred to me…
It’s much more difficult to find profitable deals then it is to buy them. I figured out that money was the easy part.
The Secret to Funding Your Fix and Flip Deals
So here’s the secret…
You don’t need money (well, your own money) to fix and flip houses.
All you need is a profitable deal.
You see, if you have a profitable fix and flip deal under contract, the money will find you.
And here’s another secret…
Right now, there’s an abundance of cash in this country. Behind this mountain of money are men and women that want to invest it in real estate.
However, what these people lack are profitable deals.
And more importantly, profitable deal finders.
That’s where you and I come in. There just aren’t many people out there that know how to find below market properties, fix them up and resell them for a profit.
If all that’s stopping you from starting a fix and flip business is cash, it’s time to shift your focus. Concentrate ALL of your time, attention and effort on finding a profitable deal.
Once you get a distressed property locked up (under contract), put together recent comparables (comps) to support your after repair value, as well as a basic rehab budget and photos of the house.
Next, present this information to prospective investors and lenders in your area.
And by prospective investors and lenders, I mean anyone you know that has cash (i.e. family members, friends, co-workers, acquaintances, total strangers).
If the margins are solid, you will find the money to do the deal.