All Forum Posts by: Jeremy Lee

Hi Zach,

Welcome to BP. I think the short answer is "it depends". Pittsburgh is a very diverse area with different types of properties and different markets. Yes, the area (in general) is great for cashflow, but depending on your appetite for class of area (A, B, C etc) will determine how much cashflow you actually get.

A few quick pitfalls are:

1. There are 100+ year old houses, they are bound of have issues, the question is what and how much will it cost.

2. When working in lower price points, one or two miscalculations on the amount of repairs needed will put your underwater. 

3. Pittsburgh is street by street in some areas, for example wholesalers will advertise marshall shadeland as brighton heights, despite the fact that the property is no where near BH.

You can DM me and we can continue the conversation there.

Best,
J

Amàlia, welcome to BP.

I think its possible to find great stable tenants anywhere around the city, I think if you are into nicer and larger properties in suburbia you may have some better luck in finding tenants who like to stick around. Some populations are very transient, students, young professionals, etc; however you can find long term tenants all around the greater area. Perhaps, if you'd like your tenants to stay without any headaches, look into rent to own deals. Typically the purchaser is responsible for all repairs and maintenance while you'd collect checks for a couple decades.

Best,

Jeremy

Hi Savannah,

Thanks for posting on BP. I looked at this "deal" a while ago, basically I think the general consensus is that the ARV is not necessarily what the market will handle. There is no address, so its not possible to know for sure, but particularly the northside of Pittsburgh has drastically different prices street by street.

I would not count on appreciation and utilities are not accounted for and it is unspecified who pays.

There will be some closing costs in there and the period of rehab could take a while, so account for those holding costs plus PM companies increase repair costs if they manage the project. Again, since I haven't been there/haven't seen pictures I can't speak to the accuracy of the estimated repair costs. It also occurs to me that tenants may not like to live there while the upstairs is being worked on, its hard to say.

If you have more info, I'd be happy to further comment.

Anyhow, best of luck!

@Savannah Lewison, its nice to meet you and it sounds like you are on the right track by studying different markets and analyzing different properties. It may be very difficult to initially start investing remotely if you have no previous experience in real estate or rentals. Books, podcasts, mentors and training are a great way to get initial knowledge, but without understanding how to find/id deals, PMs and contractors in the specific market that you are targeting, there is still a large knowledge gap. If you are looking to live there for a few years to establish a network and hands on experience, that would be a great way to get started. Also, when identifying markets to have your rentals in, I would suggest finding somewhere that you don't mind visiting.

If you have specific questions about my experience, feel free to send me a PM. 

Best of luck, 

Jeremy

Liam,

I think the laws are borough by borough; however the level enforcement can vary. 

Jack,

Hi, and welcome to bigger pockets. It sounds like you've already done quite a bit with real estate already. Believe it or not, there are quite a few individuals who are under 25 and are doing very well in real estate. I think you are on the right track finding individuals and mentors who can help you on your journey and learn what you need to know, however it is important to figure out what you want to do and pick a mentor based on both of your interests. Personally, I went through a couple different 'mentors' before finding someone who's interests aligned with my own. Unfortunately, building these relationships doesn't happen overnight, they take time and trust to form. After initial contact, I've offered to take people out for lunch or property/project tours to network and build a relationship. Often, these contacts will then introduce you to other contacts who are legit players in RE. I've found almost all my contacts through meetups on meetups.com or through a local REIA meeting. I've found it very difficult to get to know someone online without any face to face contact. I've had maybe a 1:10 ratio of people who are legit in RE to people I don't want to network with. Many of these people aren't flashy and don't need to advertise who they are and what they do.

Since you mentioned you are in school, it may be worth trying to find a group of students to start a RE investing club and bring in speakers from the industry to give talks. It helps if you can leverage your school's name to meet new speakers and will also grow your network. I know someone here who runs one of these clubs very successfully.

I've never attended a RE guru seminar, but from the snippets I've seen, its the same content as in the books and the BP podcasts, but dressed up in a funny story or some other fun form. I haven't spent a dime on RE education other than paying for meals as networking events are sometimes hosted at restaurants. 

Best of luck, this game is persistence and hard work!

@Mario L. Yes, for a $100k loan interest for the year would be between 10k and 15k, divided by the number of payments per year. For example if you have a monthly payment with 10% APR, you would pay $833 per month plus the cost of the points upfront. When your loan is up you are on the hook for the original $100k.

One strategy is to refinance the house with a bank to get a lower interest rate and pay off the hard money lender. Hopefully after you renovate the property will apprise higher than the original cost, interest and renovation costs. Keep in mind that it may be difficult to refinance with a conventional bank if you do not have a W2 job. For each success story there are more than a handful of failures. The other strategy is to sell the house (eg: a flip) and recoup the money, plus interest and your earnings. Again, it is important to run your numbers and account for contingencies in the event projects run late and over budget.

Essentially what you are paying for the speed, convenience and possibly expertise of the hard money lender. Good lenders will research your project and not lend to you if these large profit margins do not exist, but unfortunately not all lenders are this savvy. 

Best of luck!

Honestly it varies neighborhood to neighborhood and the types of properties you are loooking at, eg: a sfh vs a 10 unit apartment building. 

I've heard of people who only buy 20%+ CAP rates in Allegheny county, but that can go down to just a couple percent, eg: shady side. I think most deals in B areas in Pittsburgh should be able to cash flow and at the end of the day that is what really matters. Also, since it looks like you are out of state, I would also consider the management headaches if you choose an area where clientele may be more difficult to manage. It's not always worth the extra profit for the headaches.

I think at the end of the day, if you can get about 10% CAP in a B area you are doing well.

Best of luck

@Tyler Mau

Welcome to BP. I think Phil hit the nail right on the head - there are just too many niche areas in Pittsburgh to categorize neighborhoods into broad categories. I'd just like to note that with the exception of extreme cases, investors can make it work in any neighborhood and still 'cash flow' for the most part. It comes down to your level of comfort and expert knowledge knowing a specific area. Pittsburgh is an ever growing, ever evolving market - its hard enough to understand the area if you live here, probably harder as a remote investor. 

DM me if you are interested in PM recommendations. I know a couple I'd consider using and a bunch more I'd never go near. 

Best

Jeremy

I believe historically Almaden always has had higher prices than Fremont. Up until recently, Fremont has not seen this kind of appreciation. In terms of schools, when you get to the top couple Bay Area high schools, it’s difficult to measure the difference in quality of education. Honestly it’s up to how much you put into your education to what you get out of it. 

If you are looking for appreciation, checkout the Mountain View Area, I believe you could still get in for this price range, and the schools are good, but not often considered to be part of the top Bay Area high schools. You may also want to consider west San Jose - homestead, Lynbrook or monta vista.

Best of luck