All Forum Posts by: David Krulac

Bought 3 new houses this year from a builder.  Used bank financing he had procured when development started, so was money committed at lower rates.  I got 4.75% fixed for 30 years and two at 4.25% fixed for 10 years then variable for the last 20 years.  I've bought and sold over 1,000 properties and never get straight variable mortgages.  The lowest fixed term I will accept is 5 years, and I like the longer the better.  Most of the financing has been fixed for either 15 years, no balloon or 30 years. 

I like the lower interest rates of institutional financing.  This year got bank mortgages for 4.25%, 4.75%, 4.25% fixed rates.  And I like the longer terms of 30 years.  Usually the private lenders want higher interest rates and shorter terms.  I'm in it for the long term.

We just renovated a rental kitchen and installed 42" wall cabinets, it provides so much more storage age space and signals this is a new modern kitchen.

One technique we have used is to contact employers, particularly ones that have a housing office and list our rentals with them.  If they have new employees coming on board they can share your information with those new employees, especially the ones relocating from outside the area.

Rented room for several years, never advertised, no sign in lawn, no posting online anywhere. Did post with a large employer in the area. (6,000 employees).  There was a constant stream of new hires or transfers for other sites of the enterprise.  Some were married and their spouse was back home selling the family home. Besides those employees, everybody else was somebody I knew or somebody referred by somebody I knew.  Everybody was employed, most were younger males in their twenties, like me. No lease and they could leave any time they wanted. We never had to ask anybody to leave. The rent was a flat rent and utilities were included.

@Barbara Johannsen Why do you have to chose? Do both! And you can do both TAX FREE in Roth IRA or Roth 401K.

I've looked at rural properties.  Some of the criteria that I looked at are:

1. Is population increasing or declining?

2.  Is the school population increasing or declining? 

3.  What is the unemployment figures for the area?

4.  What are average property values and average rents?

In one area that I looked the high school graduation class in 1964 was the same number as 2019.  That indicates that there not much growth and the general population also remained the same which indicated that young people are moving away because there are no jobs in the area.  I also found that real estate prices were lower but so were rents.  An investor I know bought a 4 units, it was rented and needed work for $25,000.  Today with lots of upgrades and improvements they still rent a 3 br unit for $750.  Fifty miles away in more densely populated areas I'm renting 3 br units for $1,350 to $2,100 and a 4 br for $2,500.  But of course I paid a lot more than $25,000 for those properties.  I did buy a 12 year old 4br 3 bath house for $2,050 rent per month from the first tenant after paying $30,000 for the house, but that was an extraordinary purchase well, well below market. 

I would suggest a "post nuptial agreement", which states that what is yours before marriage will always be yours solely, and what is his pre-marriage is his solely. Since filing separate tax returns could increase your taxes, a "post nuptial agreement" would allow you to still file jointly but distinguish the properties for your other situation.

The first 11 properties that I bought were 100% financed in one way or another.  I started with Nothing and getting financing was the only way I could go.  I used first mortgages, second mortgages, HELOCs, private loans, Lines of Credit and what ever source I could find. I even had 13 credit cards which I used for real estate projects, fix ups and repairs, (which I don't recommend).  My philosophy was to borrow as much as I could for as long as I could.  On the second property, the lender who was the lender on the first property turned me down.  They said that the property was "too old", as it was 68 year old multi-unit.  It had a roof that was partially slate and partially tin, lots of the plumbing and electric was old and obsolete.  I could have walked away, but talked with the seller, who recommended that I go to his and his mothers bank and a specific loan officer there that he had dealt and was a personal friend.  I'm not sure how influential the seller was but I got the mortgage.  It was 15 years when I asked for 30 years and the interest rate was a little higher, but it was better than no mortgage, and I settled, then proceeded to update the property separating the heating (new gas furnaces), separate the electric, and update the plumbing (I had 2 plumbers work a solid 5 days exclusively on this property) ((to pay their large bill I sold my second car and gave them the money)).  What ever it takes, I would do!

@Jazzous Anderson Thank you for your service. I've worked with several active duty or retired military. My advise has been to buy a property at each duty station, and when reassigned, keep that property as a rental. If you buy and hold a property at each duty station, by retirement time you'll have a nice portfolio of rental properties. Use you VA benefit to buy owner occupant 100% financed, then when reassigned you have a rental property that is 100% financed. In my personal life, when starting out I would borrow as much as I can for as long as I can. At one time I had 6 VA mortgages by buying VA foreclosed properties and having the VA finance them to me as an investor with 90% financing fixed for 30 years. It was a wonderful program. The don't finance evert repossessed property but usually only the ones in the best condition.

As far as being a Real Estate Professional for IRS purposes, its hard to do as it requires a minimum of 750 hours a years devoted to real estate.  That's hard to do with a military, especially if you have TDY.  One work around would be for your spouse to work the 750 hours and if you file Married Filing Jointly, it would apply to you & spouse IRS return.