All Forum Posts by: Michael Krupp

Wow! Nice job Ryan, the house looks great, you got it done quickly and with a reasonable budget! This is a great win, keep it up!

I love your post George!  Taking into consideration what it takes to manage a business is truly the first step, not just learning about real estate, finding a house, and jumping in. Yes, people do it and can.  There is just so much more we can get into here for those that have not yet even started, owned, or managed a business.  Putting together a team is a key component as well, though probably a bit later.  I think some networking and education is a key piece up front, though books, audio, and seminars will not prepare you enough. I am also in the restaurant business, as I grew up in it and worked in it, and have owned my own as well.   When people come to me about getting into the restaurant business, I tell them to get a job in it first. They should really start as a dishwasher and work their way up and learn all facets. The same applies to real estate. New investors should go to investor meetings, network and either intern or volunteer to help out an experienced investor.  Work with them on flips, rentals, wholesale deals, etc.  They can knock on doors, drive neighborhoods, go get supplies, whatever is needed.  The education will be invaluable and simply cost time. I am sure you know the saying, give a man a fish, feed him for a day, teach him how to fish, feed him for a lifetime.  This is the type of education that can build someone willing, tremendous wealth.  Starting by flipping trucks is also to me a brilliant idea.  What is a better way to test systems and processes than to do it for less than $10k?  I may just start a side business with some newbie investors! Once the systems and processes are in place, you simply change out the product!  Love it!

As others have said, it is mostly about educating yourself to see what the options are that most interest you. The most basic options are doing flips, rental, and wholesaling. The list can grow from there in terms of location, price points, and types of property. It depends on your taste, risk tolerance, financial position, etc. I share this with most new investors. I would look for the local real estate investor groups, REIA's and the like, on meetup.com and attend as many as you can and network, network, network! Try to find the ones that provide a variety of education along with networking, and are not simply trying to sell you stuff. I am not saying that there are not valuable programs out there for purchase or that you should not pay for a coach or mentor, simply that you can get bombarded by offerings. This is just the best place to get started and find out who else is local and getting started like you as well as find experienced investors and wholesalers who will probably be happy to share their experiences and advice. There is so much many options, so this is simply an actionable takeaway to get you out there and started with your feet on the ground! The people you meet will help you down the path as to your next step. Get all the information you can to build your foundation and plan, then hit the gas! Best of luck! Reach out anytime. Remember, the key is taking action and your first steps, don't wait until you have the right answer or the right time. The time is now.

Ok, that is what I suspected.  Does the deal work for you as a single unit?  You could house hack, live in it, fix it up, then either rent it or sell it provided there was an upside that made sense to you.  Yes, you would need to remove anything that makes it look like an "illegal" 2 unit such as the kitchen and a locked second entrance. If you are only interested in it as a 2 unit, then you need to find out if it would be possible to even get the zoning for a 2 unit before you buy it or you could get stuck.  If you qualify for financing, and the numbers work, then a hard money lender like myself or any other in Baltimore would probably be the best option until you had the property fixed up and rented.  This will be a very tough deal to get done with a conventional lender I would think.  I hope this helps and am happy to discuss further.

@Robert Carter

Hey Robert, when you say “designated” as a row home with in law suite, I’m not really sure what that means. To lenders, banks, and appraisers, I believe it is the zoning that matters. Have you called or gone into the zoning board in Baltimore city? Does the property have 2 gas and or electric meters? It is not that easy or simple to change zoning from 1 to 2 units. There are specific guidelines as to the amount of building and total sf on a lot to qualify as a legally zoned 2 unit. It even doesn’t necessarily matter if the zoning was 2 units as if the property was vacant for a long period of time, over 12 months, it could lose that classification. I learned this the hard way years ago when I bought what appeared to be a 2 unit and started renovations. When I pulled permits and had my first inspection, the inspector stopped the project due to zoning. I ended up hiring someone to go to the zoning board and found I could not get it through as a 2 unit, not enough sf. Make sure you check into this ASAP as you may find yourself stuck with 1 legal unit.

@Solomon Morris

Hey Solomon, have you had your HVAC company check the ductwork throughout to make sure that there is sufficient duct to all rooms, that the duct work is properly sized, and that their are returns where they need to be?

If there is a return missing, that alone could be the problem and a new control board or even a new system would not solve that.

Sometimes the problem is not apparent. I have had houses where there’s little cooling airflow to the 2nd floor and the issue was simply that there was no return.

I also had an issue at one property where the walls of the 2nd floor were not properly insulated so the rooms did not retain the proper temps.

I’m not saying there’s nothing wrong with your HVAC equipment, though that is an easy fix. Hope this helps.

Hey Guys, as a hard money lender and investor, I will share my thoughts. I have a bunch of rentals as well. We do lend to new investors based on their qualifications and we do rentals. We do not lend 100%, we lend 90% of purchase, and 100% of rehab up to 65 % LTV based on the ARV. Borrowers always need skin in the game. Our typical loans are 12 month interest only, and can be extended, though I will do on a case by case basis, 60 month or 5 year fully amortizing loans on solid properties in Baltimore city for qualified borrowers. I highly suggest for all investors to use a local lender whether hard money or bank on most rehab type loans. For refinances, it is less important. I can elaborate if requested.

For refi's you should check out Eastern Savings Bank - Scott Freitag, SECU, MECU, Farmers & Merchants Bank - Kevin Bankert, People's Bank, and Revere Bank, to name some.  For the larger banks, you need strong credit, finances, and experience typically.  Loan seasoning or the time you need to hold the loan is typically 6 -12 months, every bank has their own requirements, criteria, and terms.

You do typically want to make sure the property is rented and has a DSC or Debt Service Coverage of 1.25 or better. If you need further explanation, you can email me or google this.  If you do have solid DSC then the property may even stand on it's own and your personal qualifications are less important to some banks.

Hey Robert! So you are interested in Baltimore!? Yes, there are opportunities as prices are relatively inexpensive compared to DC, MD Suburbs of DC, and VA. There are deals in Baltimore city and Baltimore county, as well as surrounding counties. In Baltimore city, you just need to know where you are buying as it is a block by block town. What I mean is that you can find a great block or two surrounded by a very rough block or two in general. There are a variety of neighborhoods and price points even within close proximity. It really depends on whether you want to do rentals or flips, and the price points you are comfortable with. I am an investor as well as a lender and have 17 rentals right now and am adding to that, and do around 10 flips or new builds per year. All my rentals have ARV's of $100k or more as I personally do not want to be in the rougher areas, though some investors do very well with the lower valued properties. It depends on your tolerance and risk level. There is plenty of opportunity, though it is a competitive market. Many new investors have been overpaying for properties, so make sure you are not one of them. Find a couple good realtors that work with investors and a knowledgeable lender or two as well. Do some driving to get to know the areas too. People always wonder if they should invest now or is the market overpriced and should they wait for a downturn. I have found that over time, real estate values go up, so there is no time like now! 5 years from now, you will look back and think I should have bought then. I know I have done that! I also know Baltimore pretty well, so if you need some specific advice, feel free to reach out.

Hey Xavier!  I would look for your local real estate investor groups on meetup.com and attend as many as you can and network, network, network!  Try to find the ones that provide a variety of education along with networking, and are not simply trying to sell you stuff.  I am not saying that there are not valuable programs out there for purchase or that you should not pay for a coach or mentor, simply that you can get bombarded by offerings.  This is just the best place to get started and find out who else is local and getting started like you as well as find experienced investors and wholesalers who will probably be happy to share their experiences and advice. There is so much to say, so this is simply an actionable takeaway to get you out there and started with your feet on the ground!  The people you meet will help down the path as to your next step.  Get all the information you can to build your foundation and plan, then hit the gas! Best of luck!  Reach out anytime.

@Misty Evans

Hi Misty! Great question with so many options. Lots of great advice already. As a veteran investor of 20 years, here’s my humble thoughts.

1) Get involved with local investor groups, go to a few meetings, meet people. You will find many people willing to share and advise. Just do your due diligence and make sure you connect with ones that are vetted and real. You will learn so much having your feet on the ground in your local market. You just have to be careful who you connect with.

2) You have the stake, now you need to build a team. Find a good realtor or two that work with investors. Find lenders, contractors, suppliers, property managers, etc.

3) Find an experienced investor that is willing to help or coach you, you’ll be surprised. If you find the right person, it would even be wise to pay them. The right coach will teach you how to make money in this business which is priceless.

4) Make a detailed plan, you have some good ideas. I can’t say flip or rental is best to start, it depends upon what you want and what type of deal comes to you first. You can with help minimize the risk on either one. Rentals are great to build passive income and flips for short term gains. Decide where to start, it doesn’t matter, just start!

5) By all means use leverage! OPM! Other people’s money. You can maybe do one deal or so with $60k, or you can do 3-4 deals only using the money as down payments to bank or hard money loans. Just don’t start out doing more than one deal at a time. So if you invest $15/20k, you will still sleep at night knowing the bulk of your money is in your account.

I think by doing all this you will have more practical knowledge and you won’t be alone so you will be more comfortable so the answers to your questions will be much more clear.

Best wishes and feel free to reach out! I know you can do this!