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Sam Hickey
  • Flipper/Rehabber
  • Joplin Missouri
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18
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I know what I want to be when I grow up. REI

Sam Hickey
  • Flipper/Rehabber
  • Joplin Missouri
Posted Sep 22 2018, 14:07

Warning long post but i'm so dang excited and I just wanted to share my plan so far:  

First,  if you had asked me a year or so ago what I wanted to be when I grow up, ( im 39 by the way) I would have told you........ Retired!  I like my job fine, but don't necessarily love it etc..  and the only thing I "really" look forward to is the day i don't have to do what someone else wants me to do in order to get paid.  Don't get me wrong, Im paid well and i love people so i'm happy in general to help people with home loans but now......  I know what I want to be/do for the rest of my life.   I want to be a Real Estate Investor

I live in SW Missouri and in my market there is a housing shortage for homes under 100k. More specifically, homes that will be eligible for USDA and FHA type home loans. As a Mortgage Banker, I have a pretty good feel for the market pulse here and i have begun flipping houses for this need exactly. I am buying homes that wouldn't pass appraisal standard for the low credit/low down loans and cleaning them up and rehabbing for the first time home buyer with marginal credit etc..

As a Loan officer, i have relationships with various other banks and have identified my chosen institution that will allow me to put down 15% of the original purchase price and no more, so long as the "Arv appraisal has a loan to value of 85% still. My business partner and I put together an LLC and bought our first house NOV 17 and the second in April of 18

examples:

1st house bought for 40k put in 25k and sold for 85 less closing and commission and holding costs = 13k net

2nd house bought for 44k put in 20k and sold for 86k less closing and commission and holding = 14k net ( under contract pending close)

Although these are not home runs, they are my first two houses and the education is priceless and the opportunity to put some systems in place has also been valuable.  I am now under contract to buy 4 other homes ranging from 35k to 70k purchase price.  I am buying each house with the hopes of 20k net profit.  in order to get those returns, i will need to get more efficient with rehab costs and such as well.  

Partnership;  My business partner owns the largest landscaping outfit in my area and because of that he has a number of connections that are beneficial to our cause as well as heavy equipment and wholesale cost on landscaping if/when needed.  My Loan team is the largest in our area and because of that I am familiar with most the heavy hitter agents and of course quite comfortable with the finance side of things.  We have no intentions of withdrawing any funds from our llc bank account until after tax time so that we can get a good feel for the tax implication in relation to our individual income from our primary careers and, neither of us currently need the money to go back to our respective pockets so we intend to roll it all back in to more houses/flips etc..  Eventually, we are both interested in Flipping, Rentals, Multi Family, Apartments, and more.  

I feel reasonably equipped for what we are trying to accomplish ( financial freedom in 5 years) but wide open to suggestions, guidance, mentoring, and changing the plan as needed;when needed.   any and all feedback is appreciated.

My main concerns are:  

1. Is my profit margin goals to low/high

2. should i buy and hold every other house or two to start building cash flow now or just keep flipping untill i can roll on a 'big' complex or something

3.  any reason not to start a second or third partnership with a different investor. ( different area, different price ranges, different skills to bring to the table etc.) 

4.  taxes in general.   My wife and I are very blessed with our current income but with that we have great big taxes every year.  will i actually be able to enjoy any of the money i hope to make now, or should i just accrue until I am ready to quit my job completely someday?  

5.  Does anyone out there acquire rentals with a partner?  I am inclined to buy the rental property by myself since it is a much more long term asset.  As of right now, if my partner and i decide to part ways, we simply have to wait untill the next flip sells and then we are done.

Thank you all..  I hope you will be seeing lots more of me in the future.