All Forum Posts by: David Krulac

I agree with much already posted especially by @Joe Villeneuve.  I am not familiar with Industry, so can't speak to specifics.  But in general, an appraisal is somebody's opinion of value.  Often times I have disagreed with the appraisal values. Knowing values is a very important component of your investment arsenal of knowledge.  You need to know value, be able to see value both present and future value. We have bought hundreds of properties at auctions almost always without an appraisal, relying on our own judgement as to the value. After buying and selling over 1,000 properties, I'm pretty comfortable with my own judgement for value in the areas that I'm usually buying.  But I never have bought anything in Industry, so have no idea on values there.  I would look for comps of similar properties sold in the last 6 months, as similar as possible to the subject, and as close proximity to the subject as possible.  So besides penciling income/expenses and profit/loss, I would also be looking for comparable sales to justify your purchase price.

 David Krulac Bigger Poclets Podcast #82

One property we bought had a bad fire years earlier. Even with holes/tarp on roof and plywood over windows, the place still smelled like smoke.  We hired a remediation company, who recommended that we strip all the drywall/plaster from the walls to treat the smoke smell within the wall cavities.  If we treated the interior of the walls, the smoke smell might revive during some 90 degree day in July. 

@Kevin S. The second property that I bought was a multi-family property which I owned for 37 years and sold for over 5x what I paid. I still own some multi, but my favorite is detached SFH built since 2000. The best is detached, then townhouses with no units above or below, then condo/apts with tenants above and below as well as on both sides in last place.

David Krulac

Bigger Pockets Podcast #82

Additionally my experience is that SFH detached tenants stay longer, pay more utilities, bring more appliances, and take care of more functions and maintenance. But I've bought both detached and attached properties.

Here in PA, month to month leases can be terminated by either party with 30 days notice. We require the notice in writing and must terminate before the first of the month, no mid month terminations. 

I've bought and sold over 1,000 properties for my own inventory, and have owned TH, SFH detached, condo and apt. I've made lots of cashflow for all of them. HOAs are something to review and research before you but. Some HOA fees are high, some as high as $300 to $500 a month. in addition, some prohibit rentals or have rental quotas, most of which are already reached and effectively are prohibitions. And besides high HOA fees, low HOA fees can be an indication of high "one time" fees for improvements. At one condo I owned they kept the monthly fees low but during my ownership had a "special assessment" for new roofs and later had a "special assessment" for paving the parking lots. So much for low HOA fee.

Another aspect of rental expenses is utilities, as well as snow removal and lawn mowing.  In detached houses the tenants typically pay all utilities like water, sewer and trash, which often are common utilities in attached townhouses and condos.  And detached housing tenants always cut the grass and shovel the snow, and often take care of minor maintenance.  Another consideration is appliances.  At detached houses tenants often bring their own appliance like frig, washer and dryer, whereas in condos and TH those appliances are often supplied by the owner.   If you supply the appliances, then you have to repair and replace them.  At most of our detached houses we do supply a range, but even there we have had tenants bring their own deluxe models, which is fine with me.  I have a theory that the more heavy things a tenant brings, the longer they stay because of the difficulty of moving heavy things multiple times.  Have a baby grand piano, sure bring it. We have a current tenant who moved in 1984 and still there.  Long term tenants staying many years reduce your vacancy, which is an overlooked expense. In my experience sfh detached tenants stay longer than apt, condo, TH tenants.

In another Tax Sale case the owner of a property sold at Tax Sale was John Smith (not his real name), and on the tax records his last name was listed first so it read Smith John.  And notice was sent to "Smith John" at his proper address.  The property was sold at Tax Sale and John Smith appealed the Tax Sale on improper notice.  The Judge rules that the notice should have been sent either to John Smith or Smith, John.  Since the comma was missing between the last name and the first name the Judge ruled that the notice was not proper and the Tax Sale was over turned and property returned to John Smith or Smith, John.  

correction NOT giving legal advise!

I have used/employed many PA attorneys and spoken with many others, over this long journey, since buying my first Tax Sale property in 1986.  We have never found a PA attorney that would write a title insurance policy.  Somebody once told me there was an attorney in Lancaster that would write title insurance policies on Tax Sale properties, but the name of such attorney has been elusive and never detected.  There was a company in Los Angeles that said they would issue tax sale title insurance for $5,000.  They would conduct an investigation as to the viability of the notice procedure and if they were satisfied, they would then issue title insurance.  I did contact them with a PA case and after they did an initial research, came back and said they would NOT issue title insurance.  The problem is with "notice" there are many cases of property in PA being sold at Tax Sale where the "notice" to the former owner is incomplete, such as there are multiple owners and only one has provable notice, or no notice at all in the case of the owner being deceased and unlocatable.  WE had one case where the owner called the Tax Office before the Tax Sale, but refused to tell the tax personal what his correct address.  There was some unknown reason why he did not want to say where he was out of state.  I speculated that he was wanted by the law, was involved in a nasty divorce, or owed money to some money source that does not recognize Federal Bankruptcy, take your pick.  Therefore the "notice" was no valid as there was no written proof that he knew about the sale before it was sold by the government for taxes.  The title companies don't want to insure Tax Sales, because the former owner can come back and say that they did not have notice, or proper notice and overturn the tax sale years after the tax sale happened.  In another case we had, the wife had proper notice but testified in court under oath that she never told her husband, who was living in the same house as her of the sale, so he did NOT have notice. The judge sided with the former owner and overturned the tax sale.  And with out having good title you can not sell the property or finance the property.  And for some people that's ok because they just want to hold and rent out or just hold for future appreciation.  In PA the requirement for Adverse Possession is 21 years so if you buy at Tax Sale and hold for 21 years in PA, you can then claim Adverse Possession and the statute of limitations for appealing the Tax Sale has expired.  The Statute of limitation for Adverse Possession varies in every state, in CA it is 5 years, in Louisiana 30 years, Texas 25 years and Costa Rica 6 months.  I've taught an 8 hour course in Tax Sale where I can't go over everything involved in that time, so obviously can't go over everything in a BP post.  I am not an attorney and am now giving legal advise.

David Krulac Bigger Pockets Podcast #82 

as somebody who has bought and sold over 1,000 properties for my own inventory, truly I think EVERY week is the best week to buy real estate.  To me it doesn't matter if its 2023, 2008 or any other year, I'm a buyer.  I posted on BP that the time between Thanksgiving and Super Bowl, is the best time to buy as there are the fewest competitive buyers then.  i have bought proerty on December 24 and several properties in the week between December 25 and January 1.  And this year in 2023, Christmas and New Years are on a Monday so there will be at least a 3 day week end around each of those holidays and in some cases 3.5  or 4 day weekends.  Perhaps more of an opportunity!