All Forum Posts by: Dalton Dellinger

Thanks for the advice Greg! I like the idea of using subcontractors. Eventually (within the next year) I will NOT be the one crawling under houses or swinging hammers. So in a sense, it will be subbed out. As for in the immediate future, my thoughts are:

     1. I can pay workers between $10 and $18 per hour under our supervision and still get the job done correctly. We have even trained one guy off the street to a level where we are comfortable sending him to work on our flips by himself. Through technology like Google Duo, picture messaging, electronic deadbolts, and Venmo, I am able to ensure progress on a project without having to personally be there.

     2. In between flips we have "small" jobs to keep us busy, so that I do not lose the few good workers I currently have. 

     3. I have been the face of my investing business as well as the construction business, so it is good advertising for both. In a county where everybody knows everybody, I get a lot of leads simply because people see the work we have been doing. (Mainly on Facebook)

     4. Maybe this should be number 1, I invest in a small town (population of about 17,000) where the contractors in the area are not used to working with investors. I only know of maybe 2 other people in my area who flip houses and they are not doing it on the scale that I am hoping to achieve. The contractors' pricing is very high for an investor. 

 I do agree that I need to work harder on setting up systems. Do you have any advice or resources on how to do that specifically? The only system that I have set up is the technology I mentioned in point 1.

Thank you again for your response.

Hello BP,

I own 7 units, am closing on the sale of my first flip and I am working on my second flip right now. I also own 50% of a construction company and my role in the company is the business side (accounting, legal, marketing) as well as growth and overall efficiency.

I have my eyes and ears out all the time analyzing deals. I have realtors and wholesalers send me deals and look on the sherriff's sales and tax sales. I even have financing lined up to where if I found an awesome deal, I think I could capitalize on it and run two projects at once.

The issue I am facing is finding labor to do the construction work needed on these properties! The work for the construction company is mainly being done by myself, my partner, and 1 or at most 2 other guys. Right now I'm mainly focusing on flips for the upcoming year while the market in my area is hot. Does anyone have any advice for finding quality workers? Or any other kind of advice you could give me? My goal is to be financially independent by the age of 30. I have 4.5 years left and cash-flow wise am already 1/3 of the way to my goal.

@Jasmin Whitson I couldn't agree with @Angel G more. She did an amazing job of presenting an overview of what it takes to be successful with any aspect of the business.

A year is a tough timeline to achieve financial independence, but then again, you didn't say your current financial position- income, expenses, current passive income, current investments, etc.

If you're starting from scratch, one thing I've heard from multiple investors is to work for a local realtor or one in your target market. This will give you a more flexible job and allow you to learn the market as well as the lingo around real estate. You might even build contacts with contractors, title companies, insurance agents, lenders, etc. These relationships will be VERY important to you.

It starts with education. Figure out how much you need to live on a make a plan to make that amount whether passively (rentals, notes, partnerships) or actively (flips, wholesales, etc.)

Hope this helps and good luck!

@Natalie Kolodij thank you. So in your example, the remaining $50,000 profit in the S-Corp would only be subject to income tax, and not SE tax correct?

Can you elaborate on this please with an example? I am a house flipper in Indiana and this interests me. As of now I have my properties held in an LLC. I was under the assumption that an S-Corp would mean double-taxation.

Hello BP,

I have two questions, but the first one will need some explaining.

I am on my second house I'm flipping in Southwestern Indiana. During the first project, I elected one of my handymen with a background in Construction Management (he has a college degree in it) to basically be my foreman. I would ultimately call the shots and make decisions but he would run the crew when I couldn't be there. We both have full-time jobs but work opposite schedules. I did about 50% of the labor myself, he and our crews/subs did the rest.

After the project was completed and listed, I came up with the idea to start our own construction company and do jobs for hire while we're between flips or if we had multiple crews. My plan is to use our construction company to do all the labor on my own flips. We are 50-50 owners of the construction company . He wants to get into the business side and do his own flips, but he simply doesn't have the education or the resources yet.

On this second flip, as kind of a "thank you" for his help on the last house, I offered him a 40% ownership. My investment company found the private financing, found the deal, got it under contract, did our due diligence and analysis. His role is to handle the entire project from start to finish. Ideally, I will only have to physically be at the house if I feel like doing some work.

My first question is: Is this a fair split or should I be offering more? Less? Other forum posts I read said that if a GC is only acting as a GC and not bringing any other value to the table, then pay them like a GC. What are your thoughts in my situation?

My second question is: if I were to split profits with a financial partner, what would be a common split? 50-50? 70-30? He (different person from question #1) would be a silent partner and just put up money. I would handle the entire project myself.

Sorry for the long and confusing post! Thank you in advance!

David Greene has a good book called Long-Distance Real Estate Investing. I read it and gleaned some good information even for investing in my own backyard. Finding great contractors, real estate agents, lenders, and property managers is vital to your long-term success. I have started using electronic deadbolts so that I can just give someone the code when they need to get in. I have also started using services like Venmo, the Cash app, and Paypal to pay my workers remotely. With picture and video messaging and even apps like google duo and google keep, it is very easy to get projects completed and minimize or eliminate the requirement for your presence.

Go to Zillow and look in the top agents in your area section. The first 1-3 agents should be good ones to start with.

Look for agents that are investor friendly. Some only work with home owners. It's not always a requirement but a good characteristic of a good agent for an investor is if the agent invests themselves, whether it be rentals or flips.

Having a good relationship with a realtor in the area in which you're wanting to invest is key for this reason. They can tell you (without you having to waste a lot of hours going to look at multiple houses in the neighborhood) what the comps look like, which upgrades will give you more bang for your buck, if they are worth doing, etc.

To answer your rehabbing cost question, I strongly recommend J Scott's book, The Book on Estimating Rehab Costs. I read the original version, and in the back, there are spreadsheets made up to give you a good idea of what costs to expect. Most contractors will give you free estimates for projects too, and you can (subtly) ask them what they charge for certain items. If you let them know you are an investor and will potentially use them for multiple projects, they might be more apt to give you this amount of time and information. 

Good luck!