Starting out - go big? Pittsburgh

[Alexander Russell]

So this is my first post on BP but i've been reading topics and stories for months now and have found this community to be very helpful. Just finished up Rich Dad/Poor Dad and now on to Cash Flow Quadrants. Once i'm done with that i plan on reading a few of the Brandon Turner books to get into specifics of real estate investing. My goal is to ultimately build a portfolio of rentals and outsource the management to a PMC.

I recently came across a post from a seller who has 4 properties all on the same street on Pitt's campus that has 25 total rooms. He's listing it for $900k or best offer, says it brings in $100k per year and has 10 years of rental history. Although students might not be the best kind of tenant, i know that the university isn't going anywhere so there should always be a healthy flow of new tenants every year. All of the units are rented out for the next year.

I'd love to go big on an investment like this to start out, but the problem is i'm so early in the process and don't know how i would bring value to an investor. I don't have a team yet (i.e. PMC, accountant, contractors, etc.). Any advice on how i would find an investor and bring value to this? Thank you all for the help.

[Josh Caldwell]

@Alexander Russell yes bring the deal to the next Pittsburgh REIA meeting and will help you from there.

since it is still weeks away, Let me jump in and help now.  at 900k with 25 total rooms and bring in 100k there may be a couple of problems here, maybe not, we need to dig a bit deeper.  

When he says he brings in 100k is that gross or net, potential huge difference. If that is a gross number and he only nets 50k then it is not a good deal at all. 

Also in Oakland there are a number of bad landlords who rent out to more people than they have bedrooms, this is a violation of City Code and the city of Pittsburgh has targeted these guys. One guy just got a 150k fine. This is no joke, so you NEED to make sure that his rental numbers are based upon something that the next buyer can sustain. 

If all of this checks out then get it under contract and wholesale the contract to another investor and make yourself some cash.

To your success

Josh