Ultimately, "you make your money on the buy, not the sale," says Torres. "You collect your money on the sale." That means, he says, "you've got to go in there and really show your negotiating skills."
Torres negotiated the cost of his first flip down to $40,000, but "the actual property, as it sat there, appraised for $60,000," he says. "So I had $20,000 in equity before I even had to go look for a hard money lender. That's a good way to start because when you go to your hard money lender and you say, 'I'm buying this property for $40,000. I've got $20,000 in equity right off the bat,' who's not going to want to take that deal? Because if you default, he gets a $20,000 nice little chunk of cash because you brought him this property."
As a new flipper, strong negotiation on the front end can make all the difference, says Torres: "Because when you come to a hard money lender like myself and you don't have the financial statements to support borrowing the money, you don't have the income to support borrowing the money, but you've done enough negotiating to build equity into the deal, I know that you're the type of person I want to work with."