Podcast 77 Buying over 900 Houses with Real Estate Investor David Krulac

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david krulacOn this podcast I talk with David Krulac, who has bought over 900 homes in his career. David is not only a real estate investor, but is also a real estate broker who runs his own office. David was one of the top agents in his area because he helped develop subdivisions, and worked with many builders. David loves to buy rentals and flip properties, and has developed many ways to find deals. He is an expert at finding good deals through tax sales, the MLS, and networking.

How did David Krulac get started in the real estate business?

David got started in real estate because he had a friend who had found some success buying houses. David bought his first house at an auction that was owner by the state highway department. There were some delays in closing on the property, and as a result David ended up living in the home for free for 6 months! After buying his first house, he realized how much he loved real estate and got his real estate license one year later. David worked part-time as an agent to begin with, but eventually became one of the top salesman in  his office and then opened his own brokerage.

How did David find success as a real estate agent and broker?

David started out as a traditional agent, and did very well. When he found his niche he became one of the most successful agents in his area. He became an expert at developing subdivisions, working with builders, and selling lots. Because David was able to develop land, he always had a large supply of listings. The more listings you can get as a real estate agent, the more successful you will be. David was doing very well working as an agent, but he knew he was paying a lot of money to his broker that he could be keeping for himself. David obtained his brokers license and opened up his own real estate office. He still operates his own office and loves it!

How much money do real estate agents make?

How did David learn to develop subdivisions?

David has always been a fan of tax sales in his area (Pennsylvania). At one of the sales he kept seeing the same investor over and over, eventually they started talking and became friends. This investor developed land and taught David how to develop a subdivision. David also became certified to install septic systems, which was a huge benefit for developers. David and the investor he met at the tax sales ended up creating many subdivisions, and selling a lot of property.

David explains on the show how it takes about three years to develop land into a subdivision and sell the lots. You have to go through the planning, the approvals, and the actual development, before you can sell anything. David even create subdivisions before the housing crisis, but made out okay because he has always believed in getting a great deal on anything he buys.

How to create a minor subdivision.

How does David buy so many houses?

Not only has David done very well as a real estate agent and broker, he is a very successful investor. He has bought over 900 houses in his career from a variety of sources. David holds most of his houses as rentals, but has also flipped houses and wholesaled deals. David shares many of his techniques for buying houses on this show. Below are  a few highlights:

  • Tax Sales: David loves the tax sales, because in his area he can buy tax deeds. In other parts of the country you may only be able to buy a tax lien, which means you may never get the property.
  • MLS: I buy most of my properties from the MLS as does David. Being a real estate agent is a huge advantage for finding more deals.
  • Networking: I get deals from networking as well. I have agents bringing me deals, but David had a slightly different strategy I love. He talks to all the neighbors when he buys a house and says he ends up having many neighbors call him to sell down the road.

How to get a great deal on a house.

How can you learn more from David?

David has written a book that details many of his acquisition strategies. In fact his book is made up mostly of case studies. He goes into the details of how he bought hundreds of his houses. You can find the book right here.

I will be at the IMN conference next week!

Next week (December 5-7) I will be at the IMN 5th Annual Single Family Rental Investment Forum. If anyone else is going let me know and I would be happy to meet up.

Transcript

[INTERVIEW]

 

[00:00:58.8] MF: Hey everyone, it’s Mark Ferguson with Invest Four More. Welcome to another episode of the Invest Four More Real Estate Podcast. I have a very cool guest on for today’s show. I’m very excited to talk to him. David Krulac, who’s very active investor, he’s bought over 900 properties has over 20 different ways he finds properties; MLS, auctions, tax sales, all types of acquisition methods. He’s also a real estate broker, has a lot of different strategies for renting, selling. I’m really excited to talk to David.

 

David, how are you doing? Thank you for being on the show.

 

[00:01:31.0] DK: I’m doing very good, thank you for having me.

 

[00:01:33.2] MF: No, I appreciate it. I know David and I have talked and emailed over the years. This is the first time we’ve actually talked with our voices, we always use emails. So it’s good to put a voice to David. So tell us, from the very beginning, what first got you interested in real estate?

 

[00:01:48.7] DK: I saw that a friend of mine was having success in real estate and that inspired me. I bought my first property at an auction. I have never been to an auction before, I never bought a piece of real estate before and it was an auction being held by the state highway department, which is kind of an unusual way to buy a property. The highway department had bought some properties to expand the highway and build an interchange off a four lane limited access highway and the people that lived in the subdivision that was next to it protested the root of the interchange because it was going to empty it right into the middle of the subdivision.

 

The state had already acquired some properties and then they redesigned the interchange so that it skirted the perimeter of the subdivision and they ended up with three other houses that they didn’t need to tear down. They rented them for seven years at the below market rent and then they decided to sell them. They needed an act of the state legislature and they needed the signature of the governor and had to pass a law in order to sell these properties, which were considered “excess state properties”. I had been looking for a property for quite some time, hadn’t found anything that was satisfactory. Things that I liked were too expensive, I couldn’t afford. Things I could afford, I didn’t like.

 

A co-worker of mine told me that they were having this auction on the street where he lived, which was a cul-de-sac street so there was no three traffic there. I went and took a look at the property, it was really nice. It was nicer than other things that I had looked at and so I went into the auction. I prevailed at the auction and got the property and one of the interesting things that happened after the sale was, we signed the contract that I was going to settle and take possession within 30 days. Well 30 days came and we hadn’t had settlement.

 

I had already given notice at my apartment that I was going to be leaving, they re-rented my apartment and so I went over to the state, to the attorney general’s office where they were handling the sale and I said, “You know, I am going to be homeless. I’m not going to have a place to live. Is it possible that I am going to move into this house before settlement?” And the deputy attorney general said to me, “Well no, we can’t do that. We don’t carry insurance.”

 

I said, “Well that’s not really a problem. I already got an insurance policy because I thought we were going to settle in 30 days,” and he said if I showed him proof of insurance that they would give me the keys and I could move in. So I did and I moved in. During that whole discussion, we never discussed rent. I never brought it up, he never brought it up. I thought we were going to settle within a few days or a week.

 

Well it ended up that I lived there for six months without paying any rent or any mortgage payment. The state took care of the sewer and the trash because they were the deeded owner. They had already contracted for lawn service so every week, somebody would come and cut grass and I got somebody to move in and rent one of the rooms and pay me rent. So this was a really great deal, it was unbelievable. I was living there basically for free, collecting rent and not having to pay a rent or a mortgage. I decided at that point that real estate was great. I think I’ll try to find some more of this stuff.

 

[00:05:13.6] MF: I imagine that’s a pretty unique situation and an amazing thing to fall into for your first house, but I’ve never heard of a story like that, I can tell you that. That’s pretty crazy.

 

[00:05:24.2] DK: It is, and 900 deals later I’ve never been able to duplicate it.

 

[00:05:29.7] MF: When you bought that property, did you have another career? What were you doing for work at that time?

 

[00:05:36.3] DK: I had a full-time job, I was a computer systems analyst. I just started working — when I bought my first house, I only worked on the job for nine months. So I hadn’t been there for very long and I had a low paying entry level job at that point. Money was a consideration and I didn’t have any savings and I got into real estate and it kind of became a for savings plan particularly at the beginning. I never saved any money but I was putting money into real estate and real estate became my savings account.

 

[00:06:10.0] MF: Right, that makes sense and so how did your real estate investing progress? I know eventually you got into your career as an agent/broker; how long did that take to get to that point?

 

[00:06:20.8] DK: I got a real estate license as an agent within maybe a year or so after I bought the first property. My former landlord was a real estate broker. He suggested, “Well why don’t you just get a license?”, that he would sponsor me. So I took the courses and he sponsored me, I got a license and I was working very scatteredly just part time because I had a full-time job and I continued to buy real estate.

 

The second property I bought was a small multi-unit. I continued working a little bit on the side doing some client work for real estate. Eventually I got a broker’s license. I worked at another brokerage company and then in 2007, I decided to set up my own brokerage company and I’ve been on my own ever since.

 

[00:07:11.8] MF: So I know there’s a lot of real estate agents who listen to the show, a lot of investors and real estate agents as well, like yourself, what made you want to set up your own brokerage and what have the advantages been of doing that?

 

[00:07:23.3] DK: I like being my own boss. I had a lot of freedom and independence at the brokerage I worked at before I set up my own independent shop. They pretty much let me do whatever I wanted to do. I was doing a lot of subdivision work then too and so I was bringing a lot of listings in to the company. It was a small brokerage company, there was only about 30 agents there. I was salesman of the year several times.

 

I had more listings than all the other agents combined a couple of years. Because I was doing all the subdivision work and development, so I had a lot of those kinds of listings coming in that I controlled. I decided that rather than splitting with the brokerage company, that I could do better having my own brokerage company and not doing a broker split. I could afford to do a lot less business and still make more money as a broker.

 

[00:08:20.0] MF: No, that makes a lot of sense. I’m curious, how did you get into that subdivision work and get all those listings? What do you think helped your success with that?

 

[00:08:29.3] DK: I’ve done a lot of tax sale work. Tax sale here is kind of unique and that it’s a deed state, they don’t have tax liens like a lot of other states, and there’s no redemption period. So once the sale happens, you get the deed to the property and there are no redemption rights for the former owner. I went to a bunch of these sales and I’d be buying property and you’d see some of the same people at every sale, even with different counties and different years and all of that.

 

So I saw this one guy who seemed to be in every sale that I went to and sometimes, he was bidding against me. So after this happened for a while, I just went up to him and I introduced myself and I said, “We seem to have the same interest in properties, that we’re going after the same properties, maybe we should work together rather than competing against each other?” He agreed and so we started working together. He wasn’t a real estate agent and he worked at real estate full-time.

 

He had some buy and hold stuff and he had done some subdivisions and he had a license to do the percolation test for septics and he encouraged me to take the courses and get licensed also, so I did. I became state licensed that I could do percolation tests for septics anywhere in the state. A lot of the property, when we first started out doing tax sales, a lot of the stuff was vacant land and a lot of it needed to be septic approved and then bought some larger tracks and land and they needed to be septic approved. It seemed that almost all the properties that we bought were in areas that weren’t public water and public sewer.

 

So both of us being knowledgeable in the rules and regulations and how to do all the testing helped us to get into the subdivision work and we actually bought the land and we owned the land and we ran the subdivision through all the approval process and then we sold the properties. We sold the properties to both builders as well as and used people who wanted to build their own home. He didn’t have a real estate license and he wasn’t interested in selling the properties. So it became my responsibility to sell the properties and so I would get all of these listings, but I was creating the listings because we are buying the property and doing the subdivision.

 

[00:10:56.1] MF: Okay, no that makes sense and just for people, I don’t know if we mentioned it, you’re in Pennsylvania, right?

 

[00:11:00.5] DK: That’s right, I’m in Pennsylvania.

 

[00:11:02.2] MF: Okay, yeah. No, the tax laws — I had a tax expert on for the tax sales earlier and in Colorado, I never was interested in the tax because the laws are different here and I learned that Colorado has probably the worst tax laws in the state and that’s why no-one buys them here because we’re a tax lien — you have to get three tax liens and if you pay more than what’s owed, you get that back. There’s all kinds of crazy stuff, so really makes a difference where you are when you are buying tax deeds or tax liens. It sounds like Pennsylvania is pretty friendly on that side.

 

[00:11:35.9] DK: I’m not sure friendly is the right term, but every state is totally different and if you are familiar with the state rules and regulations in one state, it’s not really that translatable to other states. So it’s something that is very specific and it’s hard to be like a national expert, expert on all the tax sales and all the states because every state is different even the ones with the tax deeds states have a lot of different rules. The tax lien states, they have a lot of different rules. They pay different interest rates over different periods of time, and the rules were very different so you need to know the specific rules in the area that you are working.

 

[00:12:15.9] MF: Yep, for sure and then there’s a few states that have tax deeds and tax liens together, which makes it fun. But doing these subdivisions, did you keep doing them through the housing crisis? Did Pennsylvania get hit as hard as the rest of the country?

 

[00:12:31.0] DK: We kept doing subdivisions. It’s a long process, our business plan is that we want to take no longer than a year to get approvals and then three years to sell out the subdivision. Well that’s not always possibl; the market conditions dictate that. In the years between 2000 and 2008, there was a big run up in prices here too. Some of the areas doubled in price, some tripled in price or even in some areas that quadrupled in price over that eight year period, which is a remarkable high growth for this area.

 

There was a lot of inventory created of lots and we still haven’t eaten through all that inventory. There’s lots that were created 10 years ago that still has never been sold. So there was a lot of lot inventory and when the 2008 recession happened, it had a more drastic effect on lots than it did on houses. The bottom fell out in the volume of sales and also in the prices of sales. I had a property that I sold in 2008 and I sold the identical property next door in 2013. Five years later, what I sold in ’13, I got 60% less than I got in 2008 for the identical property.

 

[00:13:51.1] MF: Wow, so that’s a pretty good hit.

 

[00:13:52.7] DK: It was a pretty good hit, but you know we had bought right and I didn’t lose a lot of sleep over it, but it’s been a big erosion in price is particularly in lots. More so in lots than they were in houses. It depends on what areas there are. It was kind of a severe case that is not really a general case everywhere. Some areas had less impact and some had greater impact in this area. The area that I am in is around the state capital area.

 

The number one employer here is the state government and then the number two employer here is the federal government. So the jobs aren’t as economically driven. They don’t have the fluctuations and layoffs and industries closing and moving out of state and that sort of thing that you might have in some other areas.

 

[00:14:41.7] MF: No, that makes sense. I think you said something interesting, even though prices dropped that much and especially with the lots, the things you are dealing in, you still made it through okay. You still did all right because you bought them right. You weren’t speculating or hoping for prices to keep going up and I imagine that’s a pretty good lesson for other people in the market we have now where prices are again going up quite a bit.

 

[00:15:05.8] DK: Yeah, we haven’t seen as much of a run up here as you have in Colorado. This year was better than last year, and last year was better than the year before. But it’s a more modest growth here, 3% a year or something like that. So it’s not a tremendous run up. I think that probably contributes to the fact also that when it went down, we didn’t go down as much because we hadn’t gone up as much.

 

[00:15:32.3] MF: Right that makes sense. I get a lot of people who email me or message me saying, “What happens if housing prices dropped, and am I going to go bankrupt?” And there’s a lot of people who made it through the housing crisis okay because they bought right, they had exit strategies, they didn’t over leverage themselves. I think there’s a misconception that every single real estate investor lost everything during the housing crisis. But there’s a lot who did really well too.

 

[00:15:58.8] DK: I think a lot of builders were hurt in the recession. Some of the builders that I know went bankrupt and went out of business. We had a lot of dealings with builders because we had subdivisions, we had lots available. We sold, in one subdivision, we sold two lots to one builder and I suggested to him that he build one spec house and then show it to people and if they say, “Well I don’t want this, I don’t like that,” he’d say, “Well I have another lot down the street. I’ll build you exactly what you want.” But he didn’t do that.

 

He ended up building two spec houses. He said it was economy of scales having the framers do both houses at the same time, the dry wall, do that both at the same time, etcetera. Well he ended up, he didn’t sell either one of the houses and he ended up going bankrupt. I think that he could have been a little bit more cautious and probably prevented going into bankruptcy.

 

[00:16:54.3] MF: Yeah and for those who don’t know, a spec home is basically a builder builds a house without having it sold before he starts. So a lot of spec homes builders will build them and assume that someone would come along and buy it while it’s being being built. The other builders will wait until someone comes along and says, “Hey, can you build me a house. I want this and this,” and they’ll put a deposit down and they’re more secure when they don’t do spec houses. Yeah, there are a lot of builders around here as well who went bankrupt, just built and built like crazy and then the markets started dropping and it was just too much inventory here for the demand.

 

[00:17:30.5] DK: Yeah, if I was a builder I wouldn’t do spec houses at all. I’d only do custom houses, but I am a little bit more conservative than some other be.

 

[00:17:39.0] MF: Yeah, well we’re seeing that now here. Like you said, Colorado’s had crazy price increases and most of that is due to low supply. There’s just no supply of houses and the builders are building very few spec homes. Like you said, most builders who are building now are doing high end stuff, custom houses, pre-bought properties and they’re not doing the volume, they’re doing more of higher price, lower volume. So it’s really made it tough. I think I read an article who said Denver needs 67,000 new houses to meet demand and they’re not even close to reaching that. So it’s made it a different market, that’s for sure.

 

[00:18:23.4] DK: I think regulations have also contributed to new houses being higher end. Every year it seems like there’s more and more regulations, you know, as a land sub-divider and developer, I know that subdivisions that we did in the past, we had less regulations and less requirements than we do today. And since it’s cost more to develop the land, when it gets to the stage of being in the building mode, the builders want to build a higher end property because they have so much tied up in the land developed.

 

[00:18:56.8] MF: That’s exactly the case here too. I don’t know if you pay attention but, I was thinking about creating a minor subdivision earlier in the year. I was going to take 35 acres, make it into state lots, it would be out in the country where it’s not in the city, it’s in the county. So more relaxed codes, and it was crazy the process we had to go through to do it. In the end I’m like, “It’s just not even worth it.” There’s so many rules and regulations now and it’s even worst in the towns. They make it — raise all their fees, they make a jump for all these hoops, it’s like the government wants cheaper housing, but then they’ve put up all these roadblocks for the people who want to create that cheaper housing. It doesn’t make much sense.

 

[00:19:37.8] DK: Yeah, their actions don’t fall in line with their words.

 

[00:19:41.9] MF: Yes, exactly. Awesome. So, what are you doing right now? What’s your major specialty? What are you working on at the moment?

 

[00:19:51.3] DK: I still have lots that I have from subdivisions that I did in the past. I have one subdivision where I have intentionally never sold any lots and I’m just holding it. It’s kind of like my version of a land bank, literally and I’m doing some HUD acquisitions and I acquired a couple of HUD properties this year. Plus I had some clients who acquired a couple of HUD properties. Sort of a niche within a niche with HUD properties that I see.

 

One of the niches that I see in HUD properties is properties that were renovated probably extensively in the run of 2008, 2010. They had extensive remodeling done to them, renovations and updates and then they went to foreclosure after that and so now they come back on the market as HUD properties and they’ve had the bulk of the major work already done. Bought a property that was like that. Someone bought it, they renovated in 2009, put in a new roof, a new windows, new siding, new flooring, two new full bathrooms, a new kitchen, new electric, new central air.

 

They basically rebuilt the whole house, they sold it at the top of market and somebody lived there only for a year and then lost it in foreclosure. They had sold the property top of the market for $141,000. It came back on the HUD list and it was on the HUD list for a long time and I ended up buying it for $51 and most of the work was already done. So it’s a really nice niche to buy some properties that have been already been renovated and don’t need extensive renovation. It only needs some minor work and some tweaking in order to bring it back into living condition.

 

[00:21:44.1] MF: Wow, that’s great and are you holding most of your properties right now?

 

[00:21:47.4] DK: I do a lot of buy and hold. I also do some flipping and renovating. I’ve also done some flipping where I did no renovation. I bought a HUD property and I didn’t do any work it. I didn’t even turn the utilities on or cleaned it and I only owned it for nine days and I sold it to a rehabber and then he rehabbed it and I got the listing from him to resell it and then we sold it quickly and so I ended up getting three commission on the same house in three months. I got a commission when I bought it, I got a commission when I sold it, and then I got a commission when the rehabber sold it. So it was a sweet deal.

 

[00:22:27.7] MF: Nice, I love it when that happens.

 

[00:22:30.9] DK: I love it too, it was great and the rehabber was very happy and if I could find properties that meet his criteria, I am sure he would buy more for me.

 

[00:22:41.4] MF: So David you’ve bought houses using HUD, what are some of the other strategies you’ve used to acquire properties?

 

[00:22:47.9] DK: I buy extensively at tax sales and I’ve been doing it for a long time. At one point, my office was co-located in an attorney’s office and he did primarily title settlements, real estate settlements, it was probably like 90% of his business and he had five abstractors on staff. I asked them if I could go out with his abstractors when they went to the courthouses and learned how to do title search and he said “sure” and so I went out with some different abstractors on his staff. We went to a different county, I learned how to do title search.

 

Title searching is a key component to working at tax sales particular here because some of the tax sales here, you’re buying the property and the liens transfer with the sale. We have other tax sales where the liens are wiped out, and they are different sales totally, they have different names for them. But if you go to sale where the liens transfer with the property, you need to do a title search before we go to the sale in order to know what the liens are against the property.

 

Some of the properties have no liens on them whatsoever even though it’s at the sale where the liens are transfer if this specific property doesn’t have any liens when you get it, it still doesn’t have any liens. So you look for that sort of thing and back in the day before 9/11, there was a lot less security at the courthouses and one of the court houses where we did tax sale, if you were in the courthouse at 4:30, they lock the doors and they wouldn’t let anybody else in, you could stay there as long as you wanted and work in the courthouse doing title searches. But once you left the building, they had a guard there and the doors there were locked, you couldn’t get back in.

 

Well my partner and I, sometimes we’d be working at the courthouse doing title searches until midnight and sometimes, we would even hire a professional abstractors to help us. One year, we had two abstractors that were working with us. Me and my partner were doing title searches, they were doing title search, we worked after midnight doing title searches in preparation for tax sale. Our research I think was better than anybody else’s at the tax sale and we ended up buying a bunch of properties, many of them we got at the minimum bid and they didn’t have any liens on them whatsoever.

 

Tax sales have always been good to me from the very beginning when I started buying them and I bought a couple hundred of them over the years and I went and bought some this year. One property that we bought this year was a four acre track that was off of a subdivision. So it already had been survey and permit, all that sort of thing. The owner lived out of state and had paid $140,000 for it, peak of the market and there is no liens on it. We ended up buying it for $7,000.

 

[00:25:47.3] MF: Wow.

 

[00:25:48.1] DK: So we bought it for pennies compared to the last sale price. It’s not worth a $140 today, the price has come down. But it’s still worth a lot more than seven. There’s a big spread between seven and a $140.

 

[00:26:02.5] MF: Yes.

 

[00:26:04.5] DK: Big spreads, I bought a house that was 12 years old that is four bedrooms and three full baths and a two car garage on two acres. I paid $30,000 for it at tax sale. The first tenant that I’ve rented it to paid $2,050 a month in rent. So the first year’s rent was almost equal to my total purchase price. The house is worth maybe $330 and I paid $30.

 

[00:26:33.8] MF: Wow. No, there’s definitely some opportunity there. That’s for sure.

 

[00:26:37.3] DK: You know, it’s a needle in a haystack. Every deal is not going to low like that. A lot of the deals are much more modest, but you have to be there in order to find the needle in the haystack. If you don’t go to the sale, you will never find the needle in the haystack and if you never do your research, you’ll never be able to distinguish the needle in the haystack from something that is no deal at all. Some of the properties I see that sold at tax sale are sold for the market value because people run up the bid and they’re paying the same price that the bid could have in the market, but there’s a lot more liabilities by buying at tax sale.

 

[00:27:13.2] MF: Right and I’ve seen that at the local trustee sales here where the foreclosure sales, we used to buy 90% of our properties there and then other investors started bidding up their prices so much that I could get better deals on the MLS and there’s so much less risk with your title commitment, maybe do an inspection, maybe not. But just didn’t make any sense to me the prices that they are paying at those sales.

 

[00:27:37.0] DK: Also the houses that are on tax sale you can’t get inside so you can’t see what the inside looks like, and I also buy at mortgage foreclosure sale too. One year, we bought a whole subdivision that was at the sheriff sale, and that worked out pretty good for us too.

 

[00:27:55.3] MF: Nice and you’ve also used like you mentioned, you still buy properties from the MLS, for sale by owner. Are you still getting most of your properties now from the tax sales or are there others or is it HUD?

 

[00:28:04.9] DK: It’s from neither. When I wrote my book, I analyzed what the source of the sales were and at that time about 25% came from the MLS and the remainder came from other sources. I do a lot of word of mouth. When I buy a property, I’ll introduce myself to the neighbors and one of the things I will often say is, “You have a really nice house here. If you ever decide to sell, give me a call.” Well I’ve bought neighbor’s houses multiple times just by telling them that I’d be interested in their property whenever they wanted to sell.

 

And I’m in it for the long term and I own property for a long time so sometimes the neighbors life changes and they decide they want to get into a smaller house or they’re going to do something else in their life and if they remember that I express some interest in it and I will remind them over the years that I am still interested in buying the property and I’ve gotten a bunch of the properties that way. I have done letter solicitations in the past. I haven’t done any recently.

 

I was kind of surprised the first time this happened, I got a call from somebody. They said, “Our mother passed away and we were looking through her papers and we saw that you sent her a letter saying that you’d be interested in buying her property.” I had sent the letter five years early and they said, “Well, are you still interested?” and I said, “Sure, I would like to take a look at it,” and I’ve ended up buying property — this has happened multiple times now where I sent a letter five years ago — and the heirs contact me after their relative passed away and I’ve ended up buying the property. People hang onto the letters more so than emails or a phone call. Those kind of things get lost but lots of times, letters get saved and I’ve gotten calls years later off of letters that I’ve sent.

 

[00:30:06.3] MF: That’s pretty crazy and I’ve seen that too, where they’ll hang onto those letters. You think marketing didn’t do any good and then years later you get the call and it ended up working. So tell us more about your book, why you end up writing it, and what you wanted to provide with it?

 

[00:30:23.9] DK: My book is entitles, How I Started With Nothing and Made $12 Million in Real Estate. And I’ve read maybe 300 real estate books, maybe more. I have probably a thousand books at home on various subjects. So I’m a very avid reader. I didn’t always want to write a book, that wasn’t a lifelong ambition. But I felt that a lot of books are lacking. A lot of books have little substance in them, it’s a lot of motivational substance and then some of the books that have substance, they talk about a certain deal. But there’s not enough detail that you could possibly duplicate that deal.

 

Or the other thing I see in a lot of books is “my student did this”. Well I am not really interested in your student, I’d be more interested in you. If you’re the teacher, or if you’re the guru, I’m interested in you not what your student did. I’m interested in what you did. So I felt like a lot of books had short comings. So I wrote this book, it took me about a year I had it professionally edited, twice, and I had a professional graphic artist to cover and plus there’s photos on the inside.

 

I set it up as case studied and I went through on each property and I put down what I paid for it, what the source of the funding was, what was the source of the deal, what I did to the property, what I rented it for, what I sold it for and what it’s value is today. And in the book there’s about 270 case studies of different properties that I personally have bought. Not properties that I heard somebody else had bought, or not students of mine, or not the neighbor, or anything else. These are all my properties.

 

My goal was to give the detail so that somebody could possibly duplicate it and I put into the book the properties that I did very well, the properties where I didn’t do very well, the properties that were so-so. The book is divided into three sections. The first section is houses and apartments, then I did a section on land subdivision and development, and then I did another section on scattered lots. So I cover the gamut, the categories of properties that I have personally bought.

 

[00:32:45.6] MF: That’s pretty interesting. I haven’t heard of the book with that many case studies and I kind of like the way you set that up. I may have to check that up. So what’s the best way for people to find that book if they want to check it out as well?

 

[00:32:57.3] DK: There’s a website, 12milliondollarbook.com and it’s also a lot of other places. It’s on Amazon.com. I have over 50 reviews on Amazon that are all positive. I’ve been selling the book at various places where I’ve gone to speak. I spoke in August at the San Francisco Bay Summit. I’ve spoken at the Western Landlords Convention twice. I’ve spoken in Manhattan, I’ve spoken in Richmond, I’ve spoken in Indianapolis, Nashville. So I have spoken in a lot of different places around and I do speaking at local career groups too and at all the venues, I always have the book available for anyone who wants to buy it.

 

[00:33:46.7] MF: Very nice, very cool. David I think those are all the questions I had for you. Before we end here, do you have any advice for someone looking to get started and the risks and what to focus on, the things to avoid, anything to help them out get started?

 

[00:34:00.2] DK: I think that you need to take action, is one of the things. A lot of people talk and have a hard time buying the first property, they have concerns, they have fears. I started with nothing. The first 11 properties that I bought were all essentially 100% financing because I didn’t have any other savings. So I was forced to heavily leveraging properties and doing different alternative financing in order to purchase the property. The reverse of that, I always caution people not to get into too much debt that it’s more debt than you can handle.

 

You don’t have to buy 900 properties. For the average person if you had a handful of properties that would be great. If you have five or six properties, as investment properties, that would probably be great. That might last you a lifetime. I know investors that have two, three, four properties and that’s all the properties they have over their lifetime, and that’s all you need. You don’t need 100 properties, you don’t need a 1,000 properties. Just a couple of properties can help in big ways.

 

It can provide income for your retirement. It can provide income for sending your kids to college. It can provide you with extra spending money, you know, to supplement your salary. There’s lots of good things about real estate and it’s the type of investment that even a small investor can get into. You don’t have to be a big investor. I think it’s a lot better.

 

[00:35:30.6] MF: Oh yeah, I agree completely with that and I think a lot of people may have the goal of buying a couple or five and just buying that first one or the first couple makes it so much easier to keep going bigger and bigger, and like you said, you don’t have to start out with a goal to buy 900 right away. But just buying a couple or a few can give you an idea if you like it and then hitting those first ones under your belt will teach you so much about the business and give you more opportunities to buy more and more, if that’s something you want to do.

 

[00:35:59.7] DK: That’s exactly right.

 

[00:36:00.7] MF: Cool. All right David well I think that is everything I had today. Thank you so much for being on the show. I really appreciate it. Thank you for your advice. I will definitely post some links to your book at well in the show notes when those come out and yeah, thank you again and I hope you have a great holiday season.

 

[00:36:16.6] DK: You too. I appreciate it and stay in touch.

 

[00:36:20.1] MF: I will for sure. All right, thank you David and have a good one.

 

[00:36:23.3] DK: Talk to you later Mark, thank you.

 

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