All Forum Posts by: JR Connor

Thank you all for the responses. You have all confirmed what I suspected and I am the main hold up and need to really tighten my focus on where I add the most value. 

@Dave Schmidt your last point makes a lost of sense and I am really glad you said that. On the current houses we are finishing up thats exactly what I did. We had been looking for 2 months for a property and we kind of “forced” these two houses to work with our numbers and we are paying for it now. Money should still be made, but not what we typically see. Thanks for that point, needed it. 

Thanks again all!

I have been flipping houses for 6 years and feel ive hit a hard ceiling. It started with me doing all of the work, and 1 house a year. Now I hire out 90-95% and can get through 3 houses, almost 4 in a year. Its not a bad side hustle (im a firefighter) but im getting frustraited I cann’t seem to break through to the next phase or level I guess.

I know some of the things holding me back is me and also not having a second crew of guys so 2 houses can be going at once. I typically deliver all materials to the job site and I am still doing some of the work at the end of project like cleaning floors and windows, installing appliances, odds and ends stuff. I know i need to grt away from that to free my time up but for some reason, it seems to be a struggle. I feel like i should push any odds and ends to my contractor and hire out a cleaning crew but I hate putting more money into something I can easily handle.

The other is finding a second crew of guys so we can have 2 houses running at one time. Currently my guy has a crew of 2 (him+2guys) and they cant really divide and concor. I know how to solve this issue, obviously its just finding the right crew to come on board but easier said than done

On a positive side, I know the Indy market well and for the most part, funding isn’t an issue. 

I would love to hear how some of you broke through and took your business to the next level. I want to go from 4 to 8 houses in 2022 and I feel like that is a realistic goal. Any tips, tricks, insights?
 

Thanks so much

So you think if I stay at 7 months or longer I could be in the clear?  

I have flipped 3 homes, but they have been homes i've lived in and renovated myself. Now, I'm looking to make more of a business out of it and flip side house's that I wont be living in. I would rather stick to conventional loans and I have the cash for a 20-30% down payment for a mortgage and cash for the renovations, what I need to be funded is the purchase of the house. I created an LLC for protection, but I am quickly realizing banks aren't looking to touch fix and flip mortgages. What I am thinking is for these first 2 or 3 homes until I build up enough cash to purchase the homes outright is to just finance the properties as personal investment properties in my name.

Am I asking for trouble if I turn around and sell these homes in say 4 months once the reno is complete?  I know this opens me up to some liability if someone were to get hurt at the house, but I'm more unsure about the actual bank side of things.  Is there some sort of gotcha to conventional investment property loans?  I talked to a bank yesterday and he said there weren't any issues paying back the mortgage in a short-term, but this is just new territory for me and 100% confident.  If I tell the bank the plan is to renovate and then rent the house, but once renovated it makes more sense for me to sell the house.  Can I get dinged by the bank because I didn't rent the house like I said I was planning on and instead sold it for a profit?   

I don't mind taking on risk, I just don't want to take on dumb risk that is easy to avoid.  I'm hoping someone could shed a little more light on person investment property loans and any possible downfalls.  

Thanks!

I've done 3 live in flips and have always used cash on hand.  After I sell the 3rd which should be in a month or so, I hope to start doing side houses and flip 3-5 a year.  That got me thinking about all of the materials I will be purchasing over the year.  I had planned on paying cash like always, but I got to thinking about what if I used a credit card of some sort every time and paid the card off before the bill was due to rack up the points or rewards or xxx% back.

Do any of you guys do that?  Or have a card that you would recommend that has a pretty good points system, x% back program that you take advantage of?

I am in the process of finishing up my 3rd live in flip.  Is this your first?  If so, here are my two pieces of advice from my own experience.

1) Be honest and realistic about your timelines with her.  If you think it will only take a week, just bank on it being 2 weeks.  In your mind (or at least for me) as I am planning out a project, lets say it's a kitchen renovation, I plan as if everything will go without any problems.  So yea...I can get this kitchen completely finished in 1 month.  Ok....well as you demo a small pony wall you reveal that there is electrical and water in there...crap.  You're 1-hour project now could be 2, 3, 8 days.  

Obviously, you can't plan for what you don't know, but the fact is stuff will happen...guaranteed.  So give yourself some padding for all of your projects and when everything does go as planned...hey, look at you, you are 3 days ahead of schedule ;). 

2) Especially for your first live in flip or 2 or 3 or all of them for that matter, I would advise on sticking to mostly cosmetic updates to the house.  Redo the kitchen (even a full gut), redo the bathrooms, update the paint or trim.  What I would advise against is taking on a large scale addition or something where it could really affect the quality of living for her.  

I actually did this for my 3rd live in flip.  I removed 2/3rds of our roof with the plans of adding new walls and a new roof to produce new livable square footage.  I thought I had a solid plan, the weather looked great for the whole week...I took a circular saw to our house roof, around 1pm looked at my phone and there was a storm advisory out now for 6pm that night and that new storm was also going to be bringing in a possibility of rain for the next 3 to 5 days.  My stomach completely dropped out of me....I had no idea what to do.  I mean I had a tarp that was big enough to cover the house....but....but...this isn't the plan!! Then said tarp had a ton of pin holes in it so I end up running to lowes at 8pm, buying 10 buckets and I spend the entire night in the attic chasing drops and emptying buckets.  I felt defeated and embarrassed that this happened, but I felt even worse that I put my wife in a situation where her quality of life was seriously affected.  I could have ruined all of our things, I could have been hurt chasing raindrops in the dark in the attic...who knows what could have happened. 

Anyway, learn from my mistakes, try to keep it simple in the beginning.  Make sure you always have a plan for how you are going to complete the project and have a plan for how you will keep the quality of life for her.   

I have read a lot on here and done a ton of research, but I still have lingering questions and I want to make the right next steps.  

Over the past 4 years, I have been working towards being a full-time real estate investor.  I love working with my hands and have a good eye for what a project could be so I started with a live-in-flip.  I purchased my first house at 26 and renovated the house and lived in it for one year and then successfully sold that house.  I made sure to live there a year so I would only have to pay the 15% long-term capital gains tax.  I took the profits and moved into another live-in-flip that was a little bigger with more upside.  Same path as the first, I lived there a year, renovated the house and successfully sold the house.  At this point I had a fiance, but she was onboard to deal with 1 more live-in-flip.  

So with that, we bought a bigger house with the plans of putting a 1,000sqft addition on it and live there for 2 years (0% taxes on profits up to $250k) while I again did all of the work on the house.  I have a normal 8-5 job in advertising so this was going to be 4 years in a row of nights and weeks working on the house.

Fast forward to today, I am married, we have a 5-month-old baby girl, the house is 90% complete and we are looking to list the house in about a month.  So, my efforts over the last 4 years should net us around $200k to walk away with and here are where my questions come in.  I want to make the next step in becoming a more serious investor and increase the volume of flips.  I still want to be cautious and will most likely have a goal of 3-5 flips per year and keep my 8-5 job for the next year or 2 and then move to part time and ultimately full time investing.  I will contract the work out instead of me doing all of the work so I can turn them quicker.  The plan is to pay off all of our family debt (car/truck/student loan), put a substantial down payment on what I consider to be our first home and then put $100k towards my "business."  Here are my questions...

1) Start an LLC or S-Corp? Through my research, it sounds like an S-Corp would be best, but since I will only be doing 3-5 flips a year is there really a need? Can I just purchase the house as if I'm looking to purchase a second home? These flips will need to be consecutive so there shouldn't be any overlap if that matters. So at the most, I would have 2 mortgages (Primary home and the investment property). My main concern is financing and taxes. If I'm just purchasing a second property, I would think I could do a conventional loan at 5 or 10% down and then when I sell it I would be taxed at my normal taxable income rate which is 28%. So financing and tax wise for the next 2 years am I better off not forming an LLC or S-Corp?

2) What type of insurance coverage should I be looking into for these secondary properties and can I get this insurance through my normal agent that covers our family home or do you need to get "special" insurance for this investment "secondary" property?  I've tried researching it, but i'm getting really confused.  

3) Will I be able to be financed through a conventional loan on these secondary properties?  I know I can go the hard money lender route, but I would rather not simply because of the unknown with them.  Never worked with a hard money lender and from what I've read, the rates/points seem to be higher.  I have enough on hand cash to put down 20% if need be on a conventional loan, but I'm trying to limit the amount of upfront costs.  Also, I will be paying for all of the renovations out of pocket as well.   

So if you are still with me after that long post...thanks, hopefully, my questions make sense.

Cliff Notes:

1) If flipping 3-5 houses a year consecutively warrants starting an LLC or S-Corp that would help me benefit in the financing and tax department.

2) What type of insurance would be needed for 3-5 flips in a year and who carries said insurance?

3) Can I finance a secondary home/investment property via a conventional loan 3 to 5 times a year?

Thanks for reading my novel :)