I would use this profit to purchase a multifamily property, that is a good deal of course.

hey Kimo, you basically get the sellers property and you put it under contract yourself if the property is undervalued enough for you to make a profit from that property AND the buyer. then you just sell the contract to the buyer thats interested in the property and you make a nice profit from that wholesale deal

So complicated question...If me and my 2 partners set up an llc (declare to tax as pass through partnerships) for the sole purpose of flipping homes and assuming we each make a profit I’d 10k per year.

Yes, its very exciting b/c it's affordable to buy and you can pay it off within 5 yrs and it cash flow's from day one as opposed to NY where everything starts at almost $1M and the only people that will ever see a profit will be your children.  

Background:Own a rental property in Cheney WA, quite profitable for what it is.  

I am now renting the property out for about a $250 profit a month.

It's going to be regional, but put it this way: it's going to take a LOT of profit to make up the money saved on a good deal.

Does anybody know if I still get taxed on the profit from house 1 - considering I reinvested into another house purchase in my LLC?

Also, any profits you make is subject to split 50/50 with Phil.

If you aren't taking any profit on the performance other than a total of 5% for managing, then that seems better.