All Forum Posts by: David Krulac

@Allison Park if the vancancy rate is too low, that may not be a good thing either.  If you see 0% vacancy rate, it may be an indication that the rents are too low, or have not been raised in awhile, and the tenants realize that and therefore don't move.  Expenses go up every year, especially in the recent years with the inflation, so if the owner is not raising rents, the returns are declining every year.  We have aproperty where insurance went up 400% in one year.  Water bills are up 50% to 100%, electric bills are up 33% and gas bills are up 30%, and of course tax bills are up and new bills for new items are created.  And also maintenance labor costs are up 30% to 50%.

@Daryn Dockter if your profit is low it probably now worth it to do a 1031.  There is a cost to doing an 1031, the Qualified Intemediate could charge say from say $500 to $2,000 or more.  If your Capital Gain tax is less than a few throusands then its probably not worth doing a 1031.  oth, if you have a large Capital Gain, it can make a lot of sence to do a 1031.  For example we had a property that we bought at a great bargain price of $30,000; and sold it for $435,000, with a Capital Gain of over $400,000. Even at 20% Federal Capital Gains would be $80,000 plus any state and local taxes, and 25% Depreciation Recapture, if any. For me I'd spend the $2,000 to save $80,000 + even if I only kept the acquired property for a few years.  As mentioned above one way to mitigate the tax bill when due would be to convert the acquired property to a personal residence and use as such for the next 2 of 5 years, and cancel out $500,000 of gains, if married.  

@Mak K.

We bought a property where curb and sidewalk bills from the prior owner were unpaid.  After we went to the former owner, who refused.  We went to the Tittle Insurance Company, who paid the bill then sued the former owner for recovery using their own attorney and paying ttheir own attorney.  Unpaid taxes or municipal bills are coverred by the title insurance.  btw, we;ve bought and sold over 1,000 properties for our own inventory and that was the only time we ever collected on a title insurance claim.

David Krulac, Bigger Pockets Podcast #82

@Kinnari Pandya  I look to invest in the fastest growing areas, wher epeople are moving TO, where construction is booming, rising tide raises all ships, etc.  I've invested in the fastets growing counties in the states that I am in.  I like Nashville, Charlotte, Raleigh, Wilmington, etc .  when I was in Nashville recently saw 16 consruction cranes in downtown.  When I was in Charlotte in April, saw many cranes there as well. You can made money anywhere even counties with no growth even negative growth, but its easier where there is growth.

@Jacorion Williams Long story short, bought first real estate SFH, rented rooms, lived there mostly for free,Then long term rental, bought new place, rinse and repeat 1,000 times(no joke). Longer version told in Bigger Pockets Podcast #82

David Krulac

Bigger Pockets Podcast #82

@Hughston Thackham Here's what I did for myself. After buying my first real estate property (the story is in Bigger Pockets Podcast #82) I first house hacked getting one or two roommates to pay my mortgage, then I rented the whole house to long term tenants. I kept the house for 24 years before selling for about 4x of what I paid.  I refinanced multiple times to both get cash out and lower the interest rate.  The initial rate was 9% fixed for 30 years. When I refinanced I always used the cash take out on real estate, never vacations, toys, cars etc. The next property I bought was a 3 unit rental property held long term and the next personal residence I bought turned into 17 new houses built in my back yard.  I strongly belive in the powe rof buy and hold, long term rentals, only cashing out to fund more real estate, and the power of Section 1031 Tax Free Exchange.

David Krulac

Bigger Pockets Podcast #82

The housing authority can mitigate the rent payment based on the utilities that the tenant must pay. Therefore, if the tenant must pay heat, electric, hot water, cold water, sewer or trash, their rent assistance would be lowered to accommodate the tenant utility payments. And conversely is ALL utilities are included in the rent the assistance payment will be higher.  In my market a 3br apt rents for less than a 3br townhouse, which rents for less than a 3 br detached house.  Housing does NOT use this distinction.  They do not add more for garage, basement extra storage, central air conditioning etc, which are market rent additives. 

@Jay Hurst Every municipality where I have done subdivisions and land development plan ALL required municipal review even for 2-4 units.  My experience is limited to PA & DE.  In PA all required Municipal APPROVAL for every plan.  We did a 2 lot plan where one of the lots was to be a non-buildable lot, as there was only 1 building right left for the original 25 acre tract.  The non-buildable tract of 15 acres was being sold to a farmer for crops, not houses and they were not permitted because no building rights were remaining.  In another 2 lot subdivision, there was also a paved public road that already separated/divided the property.  Effectively a defacto subdivision created by the road.  Both of the above required a formal subdivision plan and municipal APPROVAL.  Here in PA.  subdivisions by state law since about 1986 have required Municipal approval before they can be recorded at the courthouse.  In some municipalities they require both a preliminary plan and a final plan, effectively making you go through the approval cycle TWICE.  Some municipalities have waived preliminary plans for less than 4 lots.  And even for the smallest subdivisions that I have personally done, it takes months to get approval.  Most of the municipalities have a 2 step process first going through Planning commission for a recommendation, then going before the governing body for approval.  Most of these bodies only meet once a month, and you need to have all docs into then a month in advance.  If you require a variance is needed that's another governing body, the Zoning Hearing Board, which also required monthly or more lead time and advertising in newspapers (what are they) so that the public can come to the hearing.  And if you need "waivers" for your plan that also required a separate public hearing with lead times.  I our business plan we allot a year for plan approval, usually for a 2-4 that's enough.  And if you need some "outside" agency approval, like state road access, wetlands, stream crossing, perk tests, hydrogeological study, from either state or Federal agencies add more time.  On one five lot subdivisions we needed an endangered species review for approval which took 16 months to initiate.  But for one larger project we were in the "approval cycle" for over 3 years.  Time is money, so now you know what the price of lots and land are constantly rising.  

@David Cheng It was pre-Covid.  We've done many other land subdivisions, but no more condo development or conversions.  The pre-existing condo conversion was super easy as it already was a multi-family, so the de-facto split already happened in the past.  Not every existing multi-family is an ideal candidate for condo, but usually it is worthwhile and the sale prices of the individual pieces far exceeds the total un-condo value.

@Bruce Lynn @Jay Hurst On the 17 th condos that we did there was no problem getting financing, 15 were sold to owner occupants and 2 were sold to one investor. we did not do owner financing on any condo project we did and everybody got institutional financing including conventional, FHA and VA. In the existing building project all condos were sold to owner occupants.