All Forum Posts by: Devan Dorzok

@Devan Dorzok  Did you end up moving forward with this deal?  

Quote from @Devan Dorzok:

Hi everyone, I was wondering if anyone has some common mistakes to avoid when first starting out in long term multi-family rentals. I am currently looking at a multi-family foreclosure that needs about 60K in repairs, the numbers look good in the rental estimate calculator. Any suggestions on what things to look out for, and or questions to ask contractors and inspectors would be greatly appreciated.

Thank you!

 I bought my first duplex in Milwaukee 15 years ago, brand new investor, working in corporate, just read RichDad and attended one of their seminars. My agent was a super nice lady, probably 75, but no idea about investing. I still own the property, but it is on the list for a 1031 as soon as one of the tenants moves out. Here are my biggest mistakes:

1.) I did not understand the importance of square footage. I thought it's about # of bedrooms.

2.) I thought I had to be in an area "where renters live" LOL - today we target areas with as few renters as possible

3.) My planning horizon was from this month to next month. No consideration to what this building or the neighborhood would look like in 10 years.

4.) My repairs were more paint and duct tape. Years later I gutted both units and brought them up to our standard. I did not factor in long-term big-ticket capex.

Just because it is a foreclosure, does not mean its a good deal. We have only a microscopic amount of foreclosures in 2024. It used to be almost 45% of all sales back when I started, today it's about half a percent and many are not great deals, because the work will cost more than the discount you get.

A duplex for $69K and it needs $60K in repairs ?    I dont know where this is , but thats a red flag for me .  I invest in the Maryland area ( Not Baltimore )  and there is no such thing as a house let alone a duplex for less than $200K and thats cheap and usually a total gut or even a tear down . 

Beginner mistake ?   Buying based on price alone . 

Just curious what state is this " deal " in .  And what do you think its going to rent for ? 

There’s definitely been some learning about the cost of schedule slip. I’m waiting on a contractor to come install an egress anyways, so the extra month it’s taking me to do minor repairs and paint  hasnt affected the schedule yet, but it’s definitely an important lesson.

Quote from @Peter W.:

I bought a hoarder house in 2016 and did the renovation myself. It took up most of my spare time for six months. I saved a lot, but I also lost six months of rent income. I could have hired a pro, completed the work in under 30 days, and then collected five months of rent, which would have paid for the contractor and freed up my time.

I learned a lot from the experience and don't regret it, but I'm aware of my limitations and more selective about what I take on.

This may seem obvious, but ANALYSIS PARALYSIS.

This is the #1 issue I see in new investors. Action is better than no action. Spend time and be strategic - but also make sure you're moving forward and not getting hung up on things.

@Devan Dorzok

it's hard to say exactly what defines a 'major' rehab but 60K certainly seems major

Quote from @Devan Dorzok:

Hi everyone, I was wondering if anyone has some common mistakes to avoid when first starting out in long term multi-family rentals. I am currently looking at a multi-family foreclosure that needs about 60K in repairs, the numbers look good in the rental estimate calculator. Any suggestions on what things to look out for, and or questions to ask contractors and inspectors would be greatly appreciated.

Thank you!

Biggest things are to make sure you get a very thorough inspection report and make sure you have very reliable contractors. Make sure you know how the quality is of your contractor and how long it's going to take. Those are the biggest things that will protect while you are getting started on this project