To me, finding funding for your flip houses is one of the most interesting challenges in the house flipping business. If you’re an entrepreneur in any other business, when you approach investors with a pitch, you’ll show them a product or service, and you’ll be able to tell them exactly what it’s going to look like and how it’s going to work.
As a real estate entrepreneur, you’re going to show your investors a really ugly house and convince them that it’s worth a lot more than the cash you’re asking for to buy and rehab it. And the worst part? Some of the best, most profitable flip houses out there look like complete trash. They look like they’re about to collapse in on themselves, and you get to convince your investors that you have what it takes to turn that around and make it a house that they’d want to live in and that you can get full market value for.
To people who aren’t investors, that probably sounds like a nightmare, but for people like Christina and me, it’s actually kind of fun. It gives us a chance to show our investors what we can do and how we can help them while we help our sellers and our buyers, too. If you have a really ugly flip that you know is going to make a great profit when you’re done rehabbing it, and you’re worried about how you’re going to show your investors that, here are a few tips I’ve used over the past few years that have helped me get money for even the ugliest flip houses.
Make Your Pitch Tell a Story
If you want your investors to bite, you need to keep their attention. If your pitch has a defined beginning, middle, and end, you’ll have better success with this. Make it personal and tell a good story, and you’ll really hold their attention.
Don’t Overload Them with Numbers
Do all of your research, but don’t give a 30-minute speech about market values, after repair values, and percentages. You need to know all of that information, and it’s fine to give them a printout with that info in it. But don’t bore them with a ton of data when they really want to know what you need the money for and how it’s going to help them.
Focus on Them, Not You
Your investors are more interested in how investing with you will be good for them than how it’s going to be good for you. Show them what they get out of it. Of course, you shouldn’t completely leave out what you get out of it or they’re going to wonder if you’re hiding something or if you haven’t done your homework.
Show Them What You Can Do
Last but definitely not least, show them what you’ve done with other ugly flip houses. Show them all of the grossest before pictures, and then show them the remarkable after shots you’ve gotten. When they see these, they’ll get a better feeling of what you can do with the property you’re pitching to them now.
If you follow these steps and focus on demonstrable facts instead of speculation, you’ll show your investors that you know what you’re doing and that you’re up for the job in front of you. They’ll see that this is a quick and easy investment and that working with you will get them a positive return. Then, when you’re ready to do it all again, they’ll be ready to help you with more investment capital.