Below is a brief walk through of my journey in purchasing my fourth deal, a duplex in Pittsburgh. I made plenty of mistakes when I made my first 3 purchases. So, I just wanted to share my experience to help others. This purchase was possible because I sold the property from my 2nd deal at a decent profit and used a 1031 exchange. The details regarding my second and third deal are in links below:

Second deal: https://www.biggerpockets.com/...

Third deal: https://www.biggerpockets.com/...

To provide some background, I began purchasing single families in memphis back in September 2019. I then became interested in small multis because of the possibility of higher cash flow. I know there's a difference of opinion on this, but I've always had a bias towards cash flow over appreciation--but i digress. As we all know, the market has been crazy hot. Shortly after purchasing my third deal, I asked my agent to list my second and third deal (that I just bought a month earlier), just to see what I'd be offered. I got all cash offers on both. I bought the 2nd for $52k and was offered $111k and I was offered $144 for my third deal, which i Paid $105. The offer was from a Hedge fund. I decided not to sell the third because I had it only for 1 month and it was ineligible for the 1031 exchange ( you need to own the house for over a year). While in the process of securing this sale, I was researching markets to purchase a duplex or triplex, and came across pittsburgh.

Property Search

The process of searching for a property was neither quick, nor was it easy. I actually began looking for a new market since March 2021. I started with a google search of agents and property managers. After speaking with numerous agents, I found a group I thought would be helpful. I then asked the agent to set a criteria of duplexes and triplexes below a certain price. I spent a few months looking at the properties she sent me. I then asked that same agent to send me a list of property managers. She sent me a list of about 20-30. I spent a few days calling and researching the PMs. I went with the one she initially recommended. After speaking with the PM, they recommended an agent from the same real estate company I had been speaking with. It turns out the agent I had been speaking with was the assistant of the agent the PM recommended. After seeing various properties, I made a short list of 5 and scheduled a weekend with my wife to Pittsburgh to visit the properties. Some of them were---rough. The one we chose was fully occupied. first floor is a 1 bedroom and the apartment was in good condition. The second unit is a 3 bed 2 bath that takes up the 2nd and 3rd floor. A single mother with 3 kids lived there. The apartment was in terrible condition. COmpletely packed with junk, smelly, dirty, etc. It was listed for $155k. First apartment rented for $650 on a one year lease and second for $850 month to month. Given the condition of the apartment, we offered $135 and they countered with $140k. I asked for seller assist with closing and they accepted.

Financing

I planned to use the funds from the sale of my Memphis property as the down payment for this purchase and traditional finance for the rest. Luckily the strict timing constraints in a 1031 exchange werent an issue because I already selected the property. I initially asked my Memphis agent to recommend a 1031 intermediary. I spoke with the two he recommended, but I went with another that was recommended both by a real estate attorney in my firm and a friend who is also a real estate attorney. Their fee was about $1,200 and they were very professional. The bank made me jump through hoops to close. After the appraisal, they had a list of repairs that had to be made to allow the appraisal to hold. After getting it done, we were finally able to close

Post Closing

I closed this purchase in November the day before my wife and I left for our honeymoon ( i forgot to mention i was doing all this while getting married in September lol). As I said earlier in this post, the tenant of the second apartment was a hoarder to say the lease, and market rent for that apartment (once renovated) would be about $1200.. Due to the holidays, I did not want to give a 30 day notice to evict, so I waited until march. I then asked the PM to do a walkthrough of the property and give me an estimate. The estimate I received is over 2.5 times what I thought it would be--$50k or so to get it in good condition. This was based on a very brief walk through and the apartment was uncleaned and filled with junk. The tenant was then given notice. I plan to obtain additional estimates from other contractors once the tenant clears out, and decide what to do. The renovations might be prohibitively expensive, or it could be worth it since I initially planned to hold this for the long term. Stay tuned!

Pittsburgh, Pennsylvania

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