Real Estate Mentor Program Student Learns About Exploding Electrical Panels.

A real estate mentor program student recently decided to cherry pick a wholesale property he got under contract and do a complete rehab instead of flipping it. The property had what were mostly serious cosmetic issues that he got for a price at 1/5 of the After Repaired Value (ARV). So instead of flipping it for a $30k – $40k wholesale profit, he decided to go for a $80k to $100k profit.

Let me reiterate why he got the property so inexpensively – he solved the problem of the seller which was an “unwanted house.” His sincere effort to help the seller not only resulted in a great price but his credibility with the seller stood up against another investor’s offer of an additional $20,000 that was made to the seller.

This was not this real estate mentor program Student’s first attempt at rehabbing as he was actually very experienced but the past few years decided to stop rehabbing and wholesale only. He also made the proper decision to pull permits for the roof, electrical and air conditioning repairs he had in mind.

He encountered the usual ups and downs with the city’s Building Department getting permits simply because it wasn’t going to be his residence. He could have lied and said he was going to live in it but the city will check later and if you aren’t homesteading the property and living in it, they usually fine you. You’ll find that lying gets you through the day but it can have long-lasting consequences.

When he started getting electrical contractors to bid on updating the existing electrical panel, he got a huge surprise. For the sake of legal issues, I have to say that the information I’m now going to relate is hearsay from a couple of licensed electricians and contractors – actually everyone that he had bid the job.

It turns out that the electrical panel in the home had been manufactured in the early to mid-1970’s and had been recalled a number of times. The reason was that the breakers in the panel, if properly grounded, were defective and could and often did start fires and the breaker stayed closed when they should have tripped. I am not sure if deaths resulted but it not far-fetched to believe that it happened. I say “properly grounded” above and I mean that – if the panel was improperly grounded, these seemed to be little problems – again hearsay.

A recall of electrical panels is not like an auto recall where it’s easy to find the current owners. The recall notice goes to “known” contractors and electricians who purchased the panels. In most cases the recalls resulted in “no action” as these people had moved on and may not have even remembered where they were installed.

So if you are rehabbing or simply buying a home to live in, I would check online regarding the manufacture’s name, date of manufacture and load service (50 amp, 100 amp, etc.) and panel ID number if available that is in the property. If you see aluminum incoming power lines (leads) to the panel, these have to be replaced by an electrician! This is where the real estate mentor program student lost money not seeing the aluminum conduit and did not plan for this in his property repair cost evaluation. Any decent home inspector should spot the aluminum feed right away. This will become a negative aspect of any property you are going to wholesale or wholetail.

An ironic twist of fate is that these defective breakers are still trading on E-bay because they are no longer manufactured because they are DEFECTIVE! Rehabbers and even electricians buy these breakers to fix seemingly broken circuit breakers rather than replace the panel. However, the company has left behind a legacy of fires, destroyed homes and pending disasters that will last for many years to come.

What’s the cost to replace aluminum feeder lines and an electrical panel? It depends but it’s a whole lot less than the cost of a life or a burned out property. Don’t think you have sold the property and it doesn’t matter – anyone can be sued and if this situation (bad breakers) happens to you you’ll also have to live with your conscious. For some people living with one’s conscience isn’t a problem but think before you take shortcuts to say a few bucks or save a little time because it could result in a death.

real estatementor program student 1 300x220 1The panel in question that our real estate mentor program student encountered and had replaced is an FP&E Federal Pacific Electric Company. I have no idea how many other defective electrical panels or breakers have been recalled – due your own due diligence.

In addition even if you replace the breaker panel inside the property the aluminum feeds must be changed to copper feeds for current codes.

This is where my real estate mentor program student got caught paying an additional $1200 for the copper feeds and outside new disconnect panel to go with them for the newer codes. In my mentor students eyes he lost $1200 by not catching this error but in reality he has made his property safe for the future home owners. Now the electric upgrade will be sold as benefit to the new potential buyers looking in that area for their new home and may bring even a larger profit for the deal.

change your life mentoring click button j 300x236 1

To your limitless success,

Dave Dinkel

Real Estate Mentor Program Founders.

Visit davedinkel.com for full privacy policy, terms of use, etc.  Be sure to contact us through the website at davedinkel.com if you have questions or concerns ([email protected]).  Results mentioned in this presentation and any video, article, and/or material related to Dave Dinkel and his associated businesses are not typical nor are a guarantee of any earning potential.  No advice is to be construed as legal, accounting, or professional advice EVER.  Please consult related licensed and qualified professionals before taking any action.  No person(s) mentioned in the articles and /or shown on videos received compensation in any form for their opinions.

Real Estate Mentor Program Student Learns About Exploding Electrical Panels.

A real estate mentor program student recently decided to cherry pick a wholesale property he got under contract and do a complete rehab instead of flipping it. The property had what were mostly serious cosmetic issues that he got for a price at 1/5 of the After Repaired Value (ARV). So instead of flipping it for a $30k – $40k wholesale profit, he decided to go for a $80k to $100k profit.

Let me reiterate why he got the property so inexpensively – he solved the problem of the seller which was an “unwanted house.” His sincere effort to help the seller not only resulted in a great price but his credibility with the seller stood up against another investor’s offer of an additional $20,000 that was made to the seller.

This was not this real estate mentor program Student’s first attempt at rehabbing as he was actually very experienced but the past few years decided to stop rehabbing and wholesale only. He also made the proper decision to pull permits for the roof, electrical and air conditioning repairs he had in mind.

He encountered the usual ups and downs with the city’s Building Department getting permits simply because it wasn’t going to be his residence. He could have lied and said he was going to live in it but the city will check later and if you aren’t homesteading the property and living in it, they usually fine you. You’ll find that lying gets you through the day but it can have long-lasting consequences.

When he started getting electrical contractors to bid on updating the existing electrical panel, he got a huge surprise. For the sake of legal issues, I have to say that the information I’m now going to relate is hearsay from a couple of licensed electricians and contractors – actually everyone that he had bid the job.

It turns out that the electrical panel in the home had been manufactured in the early to mid-1970’s and had been recalled a number of times. The reason was that the breakers in the panel, if properly grounded, were defective and could and often did start fires and the breaker stayed closed when they should have tripped. I am not sure if deaths resulted but it not far-fetched to believe that it happened. I say “properly grounded” above and I mean that – if the panel was improperly grounded, these seemed to be little problems – again hearsay.

A recall of electrical panels is not like an auto recall where it’s easy to find the current owners. The recall notice goes to “known” contractors and electricians who purchased the panels. In most cases the recalls resulted in “no action” as these people had moved on and may not have even remembered where they were installed.

So if you are rehabbing or simply buying a home to live in, I would check online regarding the manufacture’s name, date of manufacture and load service (50 amp, 100 amp, etc.) and panel ID number if available that is in the property. If you see aluminum incoming power lines (leads) to the panel, these have to be replaced by an electrician! This is where the real estate mentor program student lost money not seeing the aluminum conduit and did not plan for this in his property repair cost evaluation. Any decent home inspector should spot the aluminum feed right away. This will become a negative aspect of any property you are going to wholesale or wholetail.

An ironic twist of fate is that these defective breakers are still trading on E-bay because they are no longer manufactured because they are DEFECTIVE! Rehabbers and even electricians buy these breakers to fix seemingly broken circuit breakers rather than replace the panel. However, the company has left behind a legacy of fires, destroyed homes and pending disasters that will last for many years to come.

What’s the cost to replace aluminum feeder lines and an electrical panel? It depends but it’s a whole lot less than the cost of a life or a burned out property. Don’t think you have sold the property and it doesn’t matter – anyone can be sued and if this situation (bad breakers) happens to you you’ll also have to live with your conscious. For some people living with one’s conscience isn’t a problem but think before you take shortcuts to say a few bucks or save a little time because it could result in a death.

real estatementor program student 1 300x220 1The panel in question that our real estate mentor program student encountered and had replaced is an FP&E Federal Pacific Electric Company. I have no idea how many other defective electrical panels or breakers have been recalled – due your own due diligence.

In addition even if you replace the breaker panel inside the property the aluminum feeds must be changed to copper feeds for current codes.

This is where my real estate mentor program student got caught paying an additional $1200 for the copper feeds and outside new disconnect panel to go with them for the newer codes. In my mentor students eyes he lost $1200 by not catching this error but in reality he has made his property safe for the future home owners. Now the electric upgrade will be sold as benefit to the new potential buyers looking in that area for their new home and may bring even a larger profit for the deal.

change your life mentoring click button j 300x236 1

To your limitless success,

Dave Dinkel

Real Estate Mentor Program Founders.

Frequently Asked Questions

1. What Should I Do If a Seller Ghosts Me?

If you feel you have been ghosted, act decisively and quickly. If you have tried texting and calling, it’s time to drive by the seller’s location. I always take the recorded Notice of Interest or Memorandum of Contract to leave, so the seller knows it exists. Go by at a time when you know they will be there and don’t be confrontational, just get the facts.

In our experience with new investors, the chances of losing a deal with no contract is likely over 85%. Verbal commitments do not apply in contract law; get everything in writing, especially contract changes.

Different ‘gurus’ have different opinions, but our experience is finding motivated sellers and then a buyer for your deal. Ideally, you should be finding motivated buyers from day one, so you are ready when you find a seller. Buyers are easier to find as you can see at https://davedinkel.com/products/

Prevention only comes about by thinking a Black Hat wholesaler will be coming after your deal. First, educate the seller that an unscrupulous investor may come by and illegally offer more money, have the seller sign your “Notice to Homeowner,” stating that he understands he cannot accept another offer.

There is nothing illegal about changing their mind, it is called seller remorse and occurs about 25% of the time. However, if they have signed your contract, it can’t be cancelled for any reason unless acceptable to the investor/buyer.

If price is an objection, you need to find out how important it is to sell fast and for cash. If the seller isn’t under a time constraint, has a money issue, or has a personal dilemma, he may not agree to the price you need. Offer to help move and build it into your price before you make your offer. However, never give the seller money; only pay the moving company, and only after closing (escrow with a closing agent). If fear is the seller’s issue, break it down into what the real problem is and answer their objections one at a time.

You can get to the root of motivation for a seller by asking a few questions. First, “Why are you selling?”, “How soon can you close?”, and Are you ready to sign an AGREEMENT today, if not, what do I have to do to make you comfortable?’. The answers to these questions will determine the truth about your seller’s motivations.

The best times to involve your attorney in your deals are to have him review your contracting, review the signed contracts from the seller and end buyer, have him open escrow and start the title work, negotiate with city or counties for lien reductions or mortgage payoffs with lenders, and to close the transactions.” Your attorney is not the adversary; it’s the opposing party’s attorney who is a deal killer, and having your attorney allows him to help overcome this obstacle.

The key to successful prospecting and bringing back deals that didn’t close is to follow up until the property is transferred in the public record. Some of our deals have been where the seller came back to us months and years later because they felt comfortable with us and not the other “pushy” investors who contacted them.

Your contract’s most important clauses are inspection period (as long as possible), when the EMD must be deposited if at all, your ability to access the property, any added clauses specific to the property that will protect you against seller claims later that were verbal only.

Visit davedinkel.com for full privacy policy, terms of use, etc.  Be sure to contact us through the website at davedinkel.com if you have questions or concerns ([email protected]).  Results mentioned in this presentation and any video, article, and/or material related to Dave Dinkel and his associated businesses are not typical nor are a guarantee of any earning potential.  No advice is to be construed as legal, accounting, or professional advice EVER.  Please consult related licensed and qualified professionals before taking any action.  No person(s) mentioned in the articles and /or shown on videos received compensation in any form for their opinions.