All Forum Posts by: David Krulac

Most owner occupied mortgages require that you live there for the first year.  If you don't live there for a year, how is that different than an investment property.

Hard money loan paid off when house sells. 80% of ARV, maximum term 1 year at 12% to 15% interest.

@Chris Mclaughlin Nationally HUD determines the "Fair Market Rent", which is the Median rent and is broken down by either zip code or for the whole county. The determine the rent by doing surveys of landlords. We have been a participant in those surveys because we have been a long time Section 8 landlord. They are also surveying apartment complexes as well, as individual landlords. The Median Rent is the rent in the middle where 50% of area rents are Higher and 50% are lower. For most of our rentals our rents are higher than the Median so they are not eligible for Section 8. We have been a Section 8 landlord for decades. Most of the tenants were employed single parents with children, where they employment was at lower levels. BY HUD rules children of different genders require different bedrooms, therefore a single parent with a male and female child qualifies for a 3 bedroom unit. Other tenants that we have had were seniors on fixed income such as Social Security or pensions. We rented to a two parent family with 10 children, who had a difficult time finding an acceptable place to live. They stayed 12 years. The single parent families typically stayed 3 years. And senior tenants stayed longer. HUD does yearly inspections on all properties, which have been fairly easy. They look for peeling paint, handrails for all stairs, and cracked or broken glass windows, as well as health and safety issues.

@Dave Smart I'd say go with is the norm for the area.  In the Northeast basements are common and the frost line is about 4 feet deep, therefore the crawl space wall goes down 4 feet while the basement wall goes down 8 feet or typically less.  Buyers are used to basement storage as well as as finishing basements for additional living space.  I have NEVER finished a basement but have had houses with finished basements done by prior owners.

In the south basements and slabs are the norm as well as areas with high water tables.  At one property in Delaware, we drill a well and hit water at 8 feet, obviously not a good area for a basement.

A third alternative is to build a house on a slab, cheaper than a basement and don't have issues with moisture issues.  Lots of new construction here in PA. is done with slab construction. The $300-$400 starter home here is a townhouse, often with the garage at ground level built on a slab.  Even small lots can have say 4 townhouses if the zoning permits.  

@Brandon Lee I say neither! I bought 7 properties this year.  3 came from a new home builder, who had old unused financing arranged when the subdivision was started.  Those fixed rate mortgages were 4.25% and 4.75%, both of which I'm very satisfied with.  2 others were bank foreclosures, which numbers are rising year over year; therefore more selection and a seller who MUST sell. 1 was bought at Sheriff Sale and the last one came from a property management company who had managed property, where the owner needed to cash out to pay for their child's college tuition.  We also found some other deals that we referred to other buyers. I recently read an article that quoted the amount of money in retirement funds such as IRAs and 401Ks that is not deployed and available for lending.  It said that at most custodians most of there assets are not deployed in active lending; sitting in those accounts either getting low interest or no interest returns.

@John B. Waugaman Jr. I've been getting cabinets from the factory which is not too far away.  But they since have closed the factory.  They were already assembled and also sold cabinets that were ordered but never picked up at big discounts.  Since they closed, I asked a rehabber where they were getting their cabinets.  They recommended a local lumber yard selling RTA.  I bought 10 cabinets for $1,931.  I had my regular carpenter and a helper assemble the cabinets.  It took the 2 all day to assemble the cabinets. Part of the problem was that they were unfamiliar with assembling RTA. Different brand of RTA cabinets go together differently. It then took 2 experienced carpenters to hang and set all the cabinets. It ended up being 14 cabinets (4 were already assembled and added from my own inventory.) I was able to transport the 10 RTA cabinets in one pickup load, as it was palletized on one pallet and shrink wrapped;  so easy to transport.  Another builder told me they always use RTA, and buys them from the big box stores.

@Johnathan Cummings  Make the sales contract contingent upon the property being vacant.  Make it the sellers' problem not your.

@Paul Kubin  Curious, what is the total cost of the ADA 48' ramp?

@Gerardo Jimenez  All the property bought this year were vacant and all except one is to be a long term rental.  Of the 6, they are in 3 different states, and the 5 keepers are/will be managed by a property management company.  And of those 5 , four are already rented long term, one year leases, and the fifth one needed some rehab but is almost ready to rent.

But buy and hold and rehab are not my only diversification. I've bought hundreds of property at Tax Sales, even bought a whole development at Sheriff Sale, and have done land subdivision and development as large as 100 acres. I've also bought hundreds of scattered vacant lots.  I have over 20 different acquisition strategies and am always looking for value adds, and bargain purchases.

We bought 6 properties this year, 3 brand new with financing arranged through the builder at 4.25% and 4.75% fixed mortgages. Bought one at Sheriff Sale at about 58% of ARV. And bought 2 other bank foreclosures at about 70% of their asking prices. Of the 6 I'm keeping 5 as long term rentals and sold one as-is to an owner occupant who will do the work then move in. I'm also selling a few long term rentals, after rehabbing.