How much per unit is considered good cash flow in Pittsburgh,Pa

Question

I am looking for my first property. I want to know how much cash flow I should shoot for? At worst is only living for free considered a base hit, obviously I should shoot for positive cash flow, but how much per unit (considered all expenses are taken care of). Any help would be greatly appreciate. Anybody in the Pittsburgh area or anywhere, my ears are open.

Corey Drexler · Answer

thanks @Chris Policicchio for your response. Im hoping to get into a triplex or a 4plex so i have a better cahnce of cash flow. A duplex using an FHA wont leave me room at all for cash flow. Worst case scenario I'll do the duplex just to get in the game till I can refinance and if the numbers are right. And yes this would be an owner occupancy investment. The time frame i kind of want to happen soon. I feel like I'm educated enough to atleast get a property as soon as I find a good deal. How do I know Im finding a good deal?

Chris Policicchio · Answer

Hey @Corey Drexler, welcome to BP! I agree with @Chris Mylan, the $ per door will depend on the area and your own specific goals. With an FHA loan, if you are putting less down, you are going to have a higher mortgage payment, so it's going to be tough to generate a lot of cash flow. I haven't targeted investing East of Pittsburgh, so I can't speak to the specifics out that way too much. I'm more familiar with the North Hills area. So you are looking for a duplex and you are going to live in one side and rent out the other? Is that your plan? In the $100k range? Do you have a time frame in mind?

Chris Mylan · Answer

Hi Corey,I think you should aim to be more specific with where you're looking to purchase and what your overall budget looks like. In the city (ie. South Side, Oakland, Lawrenceville, Mt. Wash, etc), you probably should aim for $100 - $200 per door, but you should get some nice appreciation in the coming years. In general, I have seen people hit the 1% rule and be successful - for example, $100,000 purchase/ remodel and you get $1,000 in rent per mo. Outside of the city in the smaller communities, you should be getting a little more cash flow per door, maybe $200 - $400, but will not see much appreciation. For example, there are duplexes in my hometown of Ambridge that sell for $40,000 and rent for $1,000 per mo, but will be worth $45,000 in 20 years. Hope this helps!

Ian Hoover · Answer

There are so many factors that go into your question that it would be hard to determine how to answer this for you, I shoot for $200 per door but I am leveraging my properties. If I was buying with cash it would probably be double that.If you ever want to chat sometime and break down things let me know.

Corey Drexler · Answer

@Chris Policicchio I definitely see what your saying. This is my my first property so im not playing the appreciation game, obviously that would be the bonus but Im shooting for living for free and covering most of my own utilities on that but i do include all of those expenses and cap ex and repairs when I do the numbers and came out of some cash flow. When I find the property I really want I'll share the numbers. Thanks again for responding back to me.

Chris Policicchio · Answer

@Corey Drexler Whether or not you are finding a good deal can only be answered by you, unfortunately. :-( I think if you can purchase a multifamily and have the other apts cover your mortgage (so you can live for free) and benefit from some other tax benefits, that's a really great start. But as far as appreciation and/or cash flow goes or what CoC (cash on cash) returns and other metrics you should shoot for, it's really up to you as to what is good or not good.

Chris Mylan · Answer

I do not with foreclosures, just be mindful of any tax liens. Be sure to do a thorough and realistic evaluation and you will be alright. Numbers don't lie. Good luck!

Corey Drexler · Answer

Chris Mylan and my budget all in is 100k...do you have any experiences with foreclosures?

Corey Drexler · Answer

Chris Mylan glad to see and an out towner know his sub markets. But I have been looking in forest hills, turtle creek (closer to monroeville), Brookline and overall just somewhere close to where I live now since I'll be doing an owner occupancy fha ..the numbers I have been running I have been averaging about 100 per door. Just wanted to make sure this was a good "rule of thumb" if you will. Since this is my first property...it's need to be a good deal so it doesn't screw me in the long run