All Forum Posts by: Chris Mylan

@Chad Reed

Hi Chad, check in with the many local/ smaller banks and credit unions in the area. Some are portfolio lenders who can be more flexible and will count your income from these properties to bring your DTI ratio back into check. You may also be speaking with the "wrong" person at the bank. Finding a good/ creative lender who knows their underwriter's guidelines can be more important than finding a friendly bank.

I've used Beaver County Credit Union in the past and it has worked out well - one of a few dozen examples in the area I'm sure.

@Bill E. Seems like $1400 per month is pretty generous rent evaluation for a 2,1 for the greater Pitt market. What are comparable rents on CL in that area? Also, how long has it been in the market - if a few months could you get a better price? It may not work at $107k, but offering $80k and settling at $90k makes the calculations look a lot better. Run those calculations through the BP rental calc and see what works for you. PS. Don't forget about the PMI extra closing costs, which will be roughly $2,000 at that price. Good luck!

@Lino Pizzonia

Hello Lino, great that you're getting started. My two cents on your opportunity--

As a new investor in this market it would be risky to try to sustain your lifestyle off of just flips with your current funds. Unless you hit a home run in Lawrenceville or Shady Side by putting all of your eggs in one basket, there is a big risk of turning a profit with your first flip - especially with the tight buy/ sell margins in the area.

For my money, I would much prefer to buy/hold and build your monthly cash flow income. Sure, it takes a little bit longer to sustain $5,000 plus a month from cash flow, but it's much more sustainable than flips, especially to someone just getting started out.

Also, as you may have discovered with B/H, you are able to leverage your equity in your initial investments and purchase more with HELOCS, various refinances, and low money down loans (FHA/Veteran/USDA).

With flips, if you lose money on a deal and have no other income you're SOL. Not to say that many people don't make money this way, but they've done countless deals and have systems in place to fall back on. And of you succeed - you'll have to get right back on the horse and do it again.

Good luck and let us know how it goes.

@Anthony Angotti Sure, would be happy to speak with you. Let's chat on messenger. 

Thanks @Damian Brown and @Jay Belcher! - This is my first place and I've already spoken to a few banks about cash out refi options to repeat the process (even though the numbers are a little too close right now to make it worthwhile, but soon though). Now that I have some experience on my record, I'm more comfortable with approaching partners and/or hard money lenders on the next deal. The bigger plan is to use the BRRRR strategy to increase the cash flow.

Hey BP Community,

I‘ve seen a lot of people looking for success stories, so here’s mine… This is a buy and hold property in the South Side area of Pittsburgh, PA that I purchased in March. Please feel free to comment or message me. It’s always nice to hear feedback for improving the next deal.

I was targeting a SFH in the South Side area of Pittsburgh, an up and coming area where many college (Pitt, Duquesne, and Carnegie Mellon are all a 5-10 minute drive away) and young professional people live. I took the "funnel" approach that many of the posts and podcasts speak about. Reviewing/ running numbers on roughly 100 properties, touring ~30 properties, and eventually making offers on three. As a side, I currently live in Washington, DC (originally from Pittsburgh). The DC market is too rich for me, so I went back to a more affordable market that I know.

I toured over a three month period – coming to Pitt on a couple of different occasions to view. In the end, there were three in which the numbers made the most sense.

With a partner, I eventually ended up purchasing a 3 bed 2 full bath single family home two blocks away from the main road where restaurants, shops, etc. can be found.

Working with my partner, we put down 20 percent - borrowing $120,000 (on a 30 year fixed) from a traditional lender and we put down a combined $30,000 into the mortgage. Closing costs came out to roughly $7,000, and we put roughly $5,000 into renovations - out of pocket. These renovations included painting all six rooms of the house, significant landscaping and installing carpet in the three bedrooms upstairs. I did the painting and landscaping myself to save on labor and hired a company to install the carpeting. I believe these simple renovations increased the value of the property significantly. ARV is now roughly $180,000.

The house currently rents for $1,500, so I’m very close to the 1 percent rule. I pay water and the tenants pay all other utilities.

How I acquired these tenants is an interesting story for another time, but the property management – that do myself – has been worthwhile learning experience. I would recommend all newer people manage their first few properties.

Now, on to the next deal…

@Jeremy Taggart Hey Jeremy, I'm from the area and just now getting back to investing in properties in Ambridge, specifically multifamily. Where are you looking to grow your portfolio and in what type of properties? 

@Marcus Auerbach Thank you! The small detail I was missing is that the bank giving the refinance will do the new appraisal. Also, I've been reading that banks are reluctant to give investment properties HELOCs that's why I assume I would have to go the refinance route? I guess the only way to know for sure is to call and ask. Thanks again all for the great advice!

Thanks for the clarification, Anthony. I haven't considered that, but just briefly looked it up and this is a very viable option.

Thanks,

Chris

Hi BP Community,

I have a question about the BRRRR strategy that many investors are now using to build their portfolio. Specifically, I have a few questions on the refinance portion of the strategy. Broadly, what are the mechanics that make this work?

A little about my opportunity – in March I purchased a 3b, 2b single family in the Pittsburgh, PA area (let’s say for $140,000, 20 percent down) that I refurbished (let’s say for $10,000) and now rent out to college students. Everything is going great - nice cash flow, very few issues, but now I am looking to refinance and repeat.

Can someone please painstakingly walk me through what would need to happen to get the cash out refinance?

I do not understand the mechanisms of going to another bank (I know, only a select few banks will do this anyway under a year) asking them to appraise the house at $175,000 ARV, for example, and getting a cash out refinance, which I assume is the $28,000 in equity I originally put in.

One issue I cannot get my head around is the property “conveniently” appraised at $140k at closing. How do I have another bank come in and say – “Wow, this person put work into this place and the comps are $180k for similar houses/ finishes. We’ll appraise him at $175k.”

I was hoping someone could expand on the example above or provide a case study where this strategy has worked for them.

Any and all advice or links to posts that already covered this are much appreciated.

Thanks BP community! You guys are the best.