The Numbers and an Introduction!

On April 28, 2016 my girlfriend and I closed on our first rental property in Pittsburgh, PA! We found a great property in the neighborhood I grew up in (on the same street I grew up on!) with the help of our realtor @Gary Swank and many others! I'm a scientist at a biotechnology company and she is a receptionist by day and is starting an artisanal soap/candle company (https://www.thebarofsoapmarket.com/). That being said we make okay income, but nothing earth shattering. If I can afford to do this so can you! We decided to house hack and rent the nicer more finished side while we fixed up the side we are living in. The goal of this first place is to buy and hold for a long time! After about a year we are going to move into our second place and repeat the process.

I'll give a little bit more background of our decision making process and the journey to closing in other posts, but I wanted to make the first post about the property itself!

The property is in Dormont which is a South Hills suburb of Pittsburgh, PA. Middle class area with good rents for Pittsburgh and good access to public transportation. It is a relatively safe neighborhood with quite the eclectic mix of people from all walks of life!

I knew that I was looking for a deal, but wasn't necessarily looking at one strategy to obtain that deal. We settled on a foreclosed property. I'll talk more about how the deal went down in later posts, but since this is about the numbers and property details let's dig into that below. All of my analysis is based on having both sides rented.

Property Details:

• Side by Side Duplex, each unit is 3 beds, 1 bath.
• Each unit is approximately 1,500 square feet.
• The property is 100+ years old, but that isn't uncommon for Pittsburgh.
• Boiler heat and no AC. (Thankfully, Pittsburgh doesn't have long summers so the market doesn't necessarily demand air conditioning. )
• 2 detached 2 car garages included in property
• Rents in Dormont: $0.80-$1.20 per square foot but it declines as you go up in size because the market doesn't necessarily reward larger properties after about 1200 square feet.
• Projected Rent: $950-$1200 per month per unit.
• Monthly Utilities: UNKNOWN (The bank didn't disclose)
• Projected Immediate Capital Expenditures: $5000, within three years about $20,000 for roof/gutter repair/replacement.

Property Analysis (Monthly):

• Income: $2300 (low end estimate, $1100 per unit, $100 in garage fees + $50 pet fees)
• Expenses:
  • Annual School Tax, Property Tax, Etc.: $416
  • Electricity, Water, Gas: $0 Tenant pays
  • Trash, Sewage, StormWater: $60
  • Insurance: $80
  • 7% Vacancy: $154
  • 10% Repair/maintenance: $220
  • 8%CapEx: $176
  • 10% Property management (We will do our own, but still calculate this!): $220
  • Monthly P&I: $770
• Monthly Cash Flow: $204, this is a pretty conservative estimate in my opinion, but you can see how things add up fast! We plan to increase rents and charge more for garages, but right now we are just trying to get the first tenant in there fast!

I will give more details on how we got financing, how we looked for places, how we fixed things up, and way more of what we did to make this deal happen and how we keep it going!