All Forum Posts by: Michael Knaus

As far as the septic, I assume it's an on site system? Public sewer does not need inspection obviously. You do want to check the waste lines leading out as they are your responsibility however.

On site septic system failure can be the kiss of death in this line of work. Not to scare you but it is probably the single biggest problem that can kill your deal. Other issue can be corrected relatively inexpensively compared to a septic problem. If your system is bad, you are talking BIG money to fix ($15-20K in my area). 

Have a die test to see where the drain field is and a hydraulic load test to see if it's saturated. If it's a cesspool, I would be inclined to walk away unless it's a ridiculously good deal.

You can do visual inspection first though for certain properties. I bought an REO that was winterized. When I visually inspected the hot water baseboard, I could see swollen and busted/cracked copper which is obviously a sign of freeze damage. There was also some broken pipes in the basement. In this case, I wouldn't have wasted money on having someone come inspect it. I KNOW it leaks! Now some pipes are hidden in walls and there is no way of knowing if they cracked. If all the visual pipes are fine and the home was winterized, chances are good the pipes in the wall are fine. The exposed pipes freeze first. This is NOT a hard and fast rule but the odds are in your favor there.

The winterizing crews they use don't bother to check the system BEFORE they winterize. They are paid to winterize and just go do it. Sometimes, it's done AFTER the freeze up. Look for clues to freeze damage before you pay someone to tell you what you can see for yourself. 

Just a few words of caution. It's all about what development you buy in. I lived in the Poconos for over 20 years. Do not be tempted to buy in Pocono Country Place (PCP). It's one of the areas biggest developments. There are ridiculous deals there which entices out of state buyers. The problem is that development is like a separate community that unfortunately has a reputation of being less than desirable. Some will say it's a place with high crime, high turn-over, a glut of rentals that flooded the market and zero appreciation in values. They have been working hard to change that stigma for years but it does still remain. I know investors that go there and do make money. Some flip for small margins and make it up on volume. Others are slum lords that understand that game and play it well. That is not my cup of tea. Some Realtors will argue my opinion but it's just that, my opinion.

Something else to consider. Most of the housing volume in the Poconos is found in the developments that were created during the boom of the 80's and then again in the late 90's and after 9/11. Many of these homes built in the 80's were poorly constructed. There were zero construction codes to speak of at that time and they were slapping up homes as fast as they could to meet the demand. By the time the 90's rolled around, things did improve but there were still so many builders that did shoddy work. So be careful what you buy. If you do buy in one of the developments, make sure it's a sound structure. 

I would consider homes outside of a development anyway for straight rental. Stroudsburg/East Stroudsburg is great because of the college and hospital. Multi unit is probably the way to go there. Watch for taxes too. They went through the roof over the years. Still cheaper than NY and NJ for sure but the rent rates have not increased as fast as the taxes!

Vacation rental is a whole separate game. There you will most likely be in a development but they are different. They weren't built simply to cram as many house in one space, catering to commuters that drive back and forth to the city. They were built as getaway communities. They have lakes, ponds, pools and other amenities. They are close to ski resorts and other outdoor activities as well. I'd buy close to a highway. Route 80 or 476. It's easy and quick for people coming from Philly or NY/NJ to get to. There are hundreds of places to choose from.

The Poconos is actually not even "a place" really. It's more like a region. Its covers a HUGE area and several counties. I would stick with a local Realtor to which specific area you are looking at. For example if you want a vacation rental near Jack Frost/Big Boulder Ski Resort, I personally wouldn't go to a Realtor from Saw Creek Estates. They are almost an hour apart from each other. Both considered "The Poconos". Yes all those Realtors in that Board have access to the same MLS but you almost need someone that knows the area you want better than anyone. Many of the communities even have a Realtor that specializes in that development or community. 

I overheard an over zealous home inspector one time talking to my buyer. I was there in grimy work clothes finishing up some minor odds and ends and they assumed I was just "a worker". He was going on about the anti-tip device that was NOT present on the new range. He actually said the following....(i am paraphrasing but close enough).

" What we have here is a serious problem. Without this anti-tip device installed, let's assume your little toddler decides to open the oven door and stand on it to see what you have cooking on the stove top. Once they step on the oven door, the BOILING hot pot will spill all over your poor child's head giving them 3rd degree burns that will require skin grafts if it doesn't kill them".  

The buyer was MORTIFIED. She said they actually had a toddler and they envisioned this scenario unfolding right before them and I could tell she was upset by this.

This is where I stepped in. I introduced myself as the owner. I opened the stove where the anti-tip bracket was and told them I was there to install it and will have it done in 5 minutes. it's 2 screws....It was on my list of items to finish anyway. She was satisfied and seemed happy. Thank God I was there to talk her down.

The point here is, the HI was right. But why paint such a dire image in the buyer's head? Simply point out the issue and insist it is addressed before the closing. This is not an isolated event. I have seen this type of thing unfold time after time. I wish they could find a balance between finding a real problem and scaring the crap out of a buyer. SMH.

Could be @Ryan Murdock. Either way, the Home Inspectors will make sure the buyer knows it will kill them if they buy the house! LOL

First I will apologize to all the home inspectors that read this.....They are PROFESSIONAL deal killers. They have killed more deals for me than I can count. All for absolute BS. Your post is a great example. For the sake of this argument I will assume that the insulation they are referring to as being asbestos was probably pipe wrap for a steam radiation heat system. Experts in the field actually don't recommend removing that. It becomes friable and therefore posing a bigger problem. They recommend wrapping (encapsulating) the insulation. Most home inspectors don't bother to explain what I just did, that it is NOT a heath problem. It's gonna be ok and you will not die. They get their fee and feel they have to justify that fee by scaring the living sh** out of a prospective buyer. Maybe they get some kind of kick out of it, I don't know. 

Most buyer's are not competent enough to understand a true hazard when they see one. That's why they hire a HI to begin with. They are trusting what they say as gospel though because they are the "expert". 

AS a real estate investor and seller, I ALWAYS ask to be notified when the inspection will be and I show up myself. It's quite funny when you call them out on their BS scare tactics in front of their customers. 

That being said, there are some issues that a HI does catch that can and will pose a problem for the buyer and for that, it works. They did their job and deserve that fee. BUT for every legit problem they "uncover" they report 10 "problems" that are total BS!!! Buyers trust that report and run for the hills. Sorry to rant. They just have killed too many deals (for BS reasons) to not be bitter.

I see it all the time in this business. First I clean the walls with TSP or TSP substitute. It looks like someone threw coffee on the walls when it runs down after spraying that. Gross. Anyway, then I use a stain/odor blocking primer like Kilz or Bullseye. Then you can top coat with your reg paint.

Wells Fargo regularly renovates their REO's and lists them in my area. My office has one listed right across the street from my rental. I went to bid on that house at Sheriff Sale but the upset bid was too high for me. WF took it back and had some out of town crew show up and renovate it. When I spoke to the crew, they said they work full time for WF doing this throughout the state.

What's your real estate background? Any experience in sales or investing?

Drywall is still the cheapest by far, not even close. Your OP said saving money was key due to your overages. You can then paint the drywall to achieve a variety of looks.