All Forum Posts by: David Krulac

HUD requires 80 sq ft for a minimum bedroom size. Some local code say 9x9 or 81 sq ft. I've seen houses that were built post WW2 with 6X9 bedroom, which I would not consider a bedroom. This was in a 3 br house with 888 total sq ft.

I was just telling somebody else that we have accumulated about 20 hammers, left behind by tenants and former owners.  Tool boxes, other tools including power tools, garden tools were left behind.  Many of the properties that we bought were through Sheriff Sales and Taxes Sales, where the owners/tenants left involuntary or were deceased.  We've gotten multiple cars, none of which were running and were older used cars, nothing of any value and since we didn't have keys or titles ended up getting a salvage tower to come and get.  And since we didn't have titles, we didn't get any money just the towing was free.  We got a motorcycle once but it was missing a front wheel and we junked it.  Lots of metal junk went to the salvage yard for recycling, as well as paper, cans and bottles.  I one house we didn't get a dumpster, but put out 165 construction bags of trash, after donating clothes, furniture and household goods to local charities like Goodwill and Salvation Army. At one house I found an envelop under the carpet with about $100, I think that was the most cash I ever found after buying and selling over 1,000 properties.  Lots of furniture, at it looked like they left all the furniture and household goods including food.  It was an estate property and I did notice that there were gun magazines, but we never found any guns.  I presume that the family took all the guns and jewelry and left everything else.  We also bought some hoarder houses.  The first one was before I even heard the term "hoarder house". It was packed floor to ceiling with pathways that were two feet thick with trampled trash.  It took several 30 yard dumpsters to empty and there were no valuables recovered.  My business partner once bought a hoarder house and the only thing he kept was a long extension cord. Everything else was junk and trash. We bought a house that had a major fire and everything was left in the house, no valuables.  We also bought some flooded properties, no valuables found there either.  We've found lots of big items that are hard to move or heavy like refrigerators and other appliances, most were damaged, filthy and unusable and were taken to the scrap yards for the metal content.  We have found lots of pennies and loose coins; I think people are too lazy to pick them up and figure that pennies are worthless. 

If the kitchen is too small for a family sized dinning table then a dining room may be used every day.  If the kitchen is large enough for a dining table then the separate dining room is used less frequently, sometimes only for occasions and holidays.  Also sometimes the dining room has multiple doorways to maybe the kitchen, the living room or a hall and then its not as easy to close off as its a passageway to another room.

1. How seasoned is the note?

2. Is the borrower current and what is their payment history?

3. I want to see the property, which limits me to a range of say 50 miles.

4.  I want a discount on the price to reflect a higher yield than the stated interest.  The first that I bought had a 20% yield, and was done with Roth funds so was tax free.  

We changed a 4 br house into a 5 br house by putting a door on the dining room.  The kitchen was large and could accommodate a large dining table.  WE also changed the house from 2.5 baths to 3 full baths.  The tenants were most appreciative and stayed 25 years.  They were at the top of the list of best tenants we ever had.  We've had very few tenants stay longer than 25 years.  Think about it 25 years with zero days of vacancy!

Buy and Hold is one of the strategies that I have used.  The first property I owned (which I related on Bigger Pockets Podcast #82) I first house hacked, then rented whole property and owned for 24 years before selling.  The second property a multi-unit I owned for 37 years, also owned by the previous owner for 37 years, so only two owners in 74 years.  The third property, I rented part of it then build 17 new houses in my backyard, and owned for 23 years.  The next two properties I owned for 17 years each. The sixth property I bought was another multi that I owned for 31 years. The seventh property I owned for 24 years, and the eighth property I owned for 36 years.  Then I started rehabbing and flipping property also.   

I did a study of where I sourced real estate purchases, and I've bought and sold over 1,000 properties. 58% came from verbal auctions, 31% were from government auctions like tax sale and sheriff sales, FSBO were 19%, Estate/Probate 15%, Sealed bid auctions 15%, Word of mouth 13%, MLS 25%. There is more than 100%, because some purchases were in more than one category. But the overall point is only 25% came from listed properties, which I look at every day.

@John B. check out local banks or credit unions.  One of the ones we deal with in PA. has a line of credit with no collateral, that they call a "Signature Loan",  I've found better success with the locals than the national banks.

@John Kirtley If all you wanted was cash flow, you could be a hard money lender getting 12% to 15% and maybe points on your $1M, which would be about $150,000 a year. And if you did it in your Roth IRA or Roth 401K and it would be a tax free $150,000 per year.

HUD publishes the Fair Market Rent for all localities across the country. Their Fair Market Rent FMR is the MEDIAN rent for the area. Median is the middle rent where 50% are higher and 50% are lower. It is used to establish Section 8 rent among other things.

I would check there to see what other rents are in the area, plus Craigslist, Facebook, Zillow, rentometer and other online sources, to see where you rent compares to others.  Ideally you don't want to charge too much nor charge too little.