All Forum Posts by: Mike Dorneman

I have my contractor walk through potential deals if I’m unsure of any of the rehab costs / extent of work needed. I don’t pay him for this because I always use him for anything I need done and he knows that. He also knows that by helping me to identify the right deals, he’ll continue to have steady work from me. We’ve formed a “partnership” in ways that my success is correlated to his. The better job he does on the rehab and more value he creates for me affords me the opportunity to buy more deals which he then gets to work on. Find a contractor who understands the value in a great relationship.

You’re in the right track, you identified your target homes and sent the letter, good work! As for next steps, you’ve got many options. Direct mail campaigns are how I bought may last 3 houses. I never use a realtor, mainly because the whole idea of a direct campaign is to identify off market opportunities that you can purchase below retail value. You can ask your title company for a genetic sales agreement. After they sign it and the deal is under contract, you have title pulled and insurance prepared (Roughly $700.00). Once the clean title is returned (usually 2 weeks), you are ready to close the deal. It’s all handled at the title office and no additional cost to you... Keep sending those letters, we just closed on a house last month from a letter I sent back in November! Peoples situations change all the time, you never know when they’ll go looking for your letter.

Welcome to the group Bobby! A few things going on here I'll try to address. 

First the LLC Vs. DBA. A DBA is primarily used to simply establish a business license and or bank account. It will not provide or create separation between you and your new business from a legal (protection) perspective. An LLC is used to separate and protect your personal assets from your business. For example, something terrible happens on this flip your considering and you are found negligent / liable… An LLC will provide for a cushion and offer some protection and in most cases, it will protect your personal assets (Not Always). You can also consider purchasing additional insurance coverage (business and/or commercial) depending on the specifics of your deal.

As for the value of the property, Do Not use the tax assessment as your litmus for determining if the deal is a "good one or not". Hire an independent appraiser to help you figure this out. 

But lets assume for a minute that the tax assessment is fairly accurate and the property is worth about 180K. Will the 25-30 K you plan on spending drive appreciation and add more value, or simply bring the house up to livable standards and a value of 180K? 

Next, considering this is your first deal, you WILL go over your budget, it's nearly guaranteed. That said, your margins are already very slim after taking realtor fee's, holding fee's, overages and capital gains taxes. 

Based off the limited info, I'd say this is not the best deal for a first timer to try. Best of luck in whatever your choose to do!

I can’t help you with a referral for this job, but I have a bit of advice moving forward. It’s nearly impossible to be profitable in this business without a network / team. If you’re going to Google every time you need a contractor, you’re going to get crushed each time. I’ve found my contractors via referrals from local REI meetings. My plumber and electrician are bother referrals from guys I met at meet ups and we’re more than happy to share. You may need to pay “retail” this time, but then get yourself to a REI meeting and start building your team. Good luck!

Aside from listsource.com can suggest any other sites they’d recommend for purchasing DM lists? TIA

Andrew Pierre where are you purchasing your lists from?

@Mohammed A. I wouldn't put too much stake in the fact a few rentals are sitting for an extended period of time. For example, I've renovated and listed 7 houses over the past year, all in the same neighborhood. I've had multiple qualified applicants with my initial postings, and rented each property for about $100/month more than all my competitors. Those listed for extended periods and owned by "landlords" and they operate as such. The difference is that I operate as a business. The interactions I have with perspective applicants and they quality of our pictures, advertisements and the actual property separate us from the competition. In fact, I bought 2 houses off of "landlords" recently, spent about $1,000 on cosmetic updates (paint and such) and rented both immediately for a great cash flow. The previous landlord had the properties vacant for months... 

That being said, make sure you understand your local market and see what those successful rental property owners are doing in your area. Be careful relying solely on Zillow, I personally am not a fan of the site as most everything is undervalued and rental inventories are not frequently updated. It's like Wikipedia, anyone can basically input anything they want and it is not validated... Good Luck!

I’m currently having a duplex completely(3 bed / 1 bath, approx 1200 sq ft each side) rewired. They property had active knob and tube throughout. The home is about 100 years old and plank style construction (no studs or insulation in exterior walls). It’s looking like all in this will run about $10,000. I was wondering if anyone has gone through a similar project and what the cost was. I’m located in North East PA. Property is in a C+ neighborhood.

Thanks everyone for the insight. I’m up in the NE and with this recent cold snap, I put about $275 worth of oil in another vacant property which lasted a month. (Half double) So this issue that concerns me is then unpredictable severe weather that can make a major impact on oil usage. Had I owned this duplex this past month, oil would have exceeded $500 for that month. Now obviously it can go the other way and be exceptionally warm which would then give me a windfall and I’m sure in the summer months, the cost is around $50/month. Bottom line, I’ll likely install another heat source because I’m not comfortable leaving a variable in my monthly expenses.

John Underwood One oil burner and tank. The unit has a diverted which then allows each unit to control their own temperature. I’ve had units installed in my other properties and they run about 7-8k so I’d like to avoid that. I’m wondering if a Nest or other “smart” thermostat may be able to provide some type of data output that could then help me in dividing the oil usage between the two tenants??