Not only is Jordan Reeder a loan officer for Magnolia Capital Partners, he’s a real estate investor who flips 3-4 properties per year. Because he’s an expert on both sides of the business, Rain City Capital asked him to guest write a blog post on how he plans to start 2019 off strong.
2019 is here and I’m excited. I view the New Year as a chance to develop strategy for the coming year, allowing me to define what kind of business I’m in now and where I want to be next year. In 2018, I only did one flip because I’d just started in my position as a loan officer at Magnolia Capital Partners.
A lot of both new and seasoned investors may be in a similar boat: we know we can do more. This is the year I challenge myself to do more than I ever have in this business, and if you feel the same way, it’s time to take action!
For 2019, the first question I’m asking myself: Why do I really want to be in this business?
You’ve probably heard the same answer from many different people, but it’s simple: I want the freedom to do what I want, when I want, and with who I want. It can’t get more basic than that. Flipping real estate can be stressful! Especially if you don’t have the systems in place to make it a repeatable process. The goal is not to create another job for myself; it’s to create a monthly stream of income.
I’m also asking: Do I want to keep flipping or pursue a buy-and-hold strategy?
My goal over the next 12 months is to take stock of the capital I have to work with and earn a certain rate of return on my investment. I want to turn my piles of cash into steady streams.
On flips, I’m looking for a 45-50% annualized rate of return, so if I can turn my capital 2-3 times during the year, I will earn almost half of my original investment back in profit. By re-investing that back into property using the BRRRR strategy (Buy, Rehab, Rent, Refinance, Repeat), I will be able to pull that capital back out once the project is completed and have a great investment property to hold.
In the Seattle area, there’s a great Meetup group for that.
What kinds of returns are you looking for on your flips? This is a piece of the puzzle that’s often overlooked. For me, the key to a good deal is to not buy at retail price. If you bargain hard, you can get it for under market value and turn it into a profitable investment.
It’s possible to get a rental without doing the BRRRR strategy, but you have to know what the pain points are for the seller and ensure you still have an equitable interest in the property. When a property has been on the market for 160 days, someone can make a good offer with a combination of cash and funding and get a good deal.
So my goals are to work on 2-4 properties and pursue the BRRRR strategy. This will move me closer toward the end goal of financial freedom. And I think 2019 is going to be a strong year.
Feel free to chime in below on the comments and say what your goals are for 2019!
And if you have similar goals and would like to connect, don’t hesitate to reach out to me directly!