All Forum Posts by: Account Closed

@Rob Beardsley

I sold everything I had in Athens, Greece and moved out of that city in September 2007. All my Greek friends told me to stay. They thought I was stupid for getting out. Now they think I'm a prophet.

I would really, really like to be completely wrong about a city for once. It would be a nice change.

I think certain areas of McCandless on the MFs will give an investor the kind of tenants I was talking about in the North Allegheny School District. You have to look for them, but they're certainly there in that township.

As far as pocket commuting neighborhoods go, of course I'm not going to tell you where I think my best buying prospects are in the near future. But finding possibilities is simple: you go through D-class neighborhoods and look for the nicer pocket neighborhoods/street segments within those. Then you try to understand WHY those streets are nicer than others. Finally, you make sure that there are external factors that are going to keep those pocket neighborhoods nicer than the rest of the area.

Special enough to be a good-sized part of the reason why the former owners just took one look at the place and sold it to me as is. Three or four coats of Kilz2 special.

I spent the day in a new investment property priming a bedroom that was originally painted pink, then "retouched" and "textured" with a sponge and globs of prostitute-passion red latex paint . The tenant painted all the wall edges in this color with a 2-inch brush, lining out out all the walls, corners AND of course the crown moulding in this 90-year-old property. She didn't of course paint behind the gigantic flat-pack particle-board chifforobe she left behind when she skipped out on her lease.

This is what can happen when a tenant tells you, "I just want to do something special."

@Mike Pastor
When it comes to public education facts, Pittsburghers tend to be fuzzy about embarrassing realities.

REALITY 1: Pennsylvania public schools at the secondary level are terrible, as a general rule. In state-by-state rankings, Pennsylvania never makes it into the top 25. As far as I know, this is how things have stood without exception since desegregation.

REALITY 2: Some of the worst public high schools in Pennsylvania are concentrated in Allegheny County. There are only a few standouts. Those standouts are concentrated in the far north suburbs and the far south suburbs. Moon Senior High School is the only exception to this general rule. However, it is still on the eastern perimeter of Allegheny County. Fox Chapel Area High School, and Mount Lebanon Senior High School are more centrally located than the others, but still part of the north and south blocks, respectively.

REALITY 3: The very worst public high schools in Allegheny County are concentrated in the center of the city, in urban residential settings. The big exceptions for this are Pittsburgh Perry High School, Sto-Rox High School, and Penn Hills Senior High School, all located in traditional African-American neighborhoods.

It's a shameful series of realities and by simple geography invites us to contemplate the shameful heritage of systematic racism in this city. So proud white locals tend not to talk about it and try not to think about it too deeply.

Multi-family units are concentrated in those urban-residential areas that have the worst school systems. There's been a shared understanding among middle-class college-educated individuals in Pittsburgh for quite some time that if there's any way to afford it, you should get out of whatever neighborhood you're in and buy a SFH in the far north or far south suburbs with the better public schools before your kids start high school. The commute you make for your job is your sacrifice for your children's education, for their shot, ultimately, to get the best mediocre Pennsylvania secondary schooling they can get. And especially in places like McCandless to get into North Allegheny, the cheaper SFHs aren't all that expensive. It's not like the minimum bar to entry is being able to put a down payment on and get a mortgage for a $350,000 SFH. The median home value of McCandless is $239,000.

So when you talk about investing in Pittsburgh multifamilies, you're almost always talking about investing in areas that have lousy school districts. This narrows your tenant pool significantly. Your potential tenants are not going to be white Generation X'ers with good credit ratings, mid-to-high-level incomes, and children at or near secondary-school age. Take that to its logical conclusion, that means your potential multifamily tenants will not be motivated to live where they are living in order to help their children succeed in life. This understanding can be really difficult to wrap your head around if you come to real estate investing from a traditional sort of middle-class American family background, where that was the unshakable core reality of your own upbringing.

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So take a discussion of "good schools" out of the way, and why else do Greater Pittsburghers reliably decide to live in a certain neighborhood? An easy commute to their steady jobs, easy access to a perceived way of (fun) life, access to family members. Among those, of course, the commute is the strongest argument. That's what I look for in multifamily investing in Pittsburgh. And that's not a generic neighborhood issue. That's determined street-by-street, and pocket neighborhood-by-pocket neighborhood.

If I were completely focused on buying multifamily rental properties in Allegheny County, I'd put a premium on cheap, rundown two-bedroom MFs in the top-rated secondary school service areas. Get in, fix them up to rent them cheap in comparison to local rental prices, and you'll have a steady stream of 4-8 year lower-income tenants with passable credit ratings who are desperate to send their 2.1 kids to the best school they can. These people will do anything to stay in your apartments during the time their kids are in the highly-rated local high school. Demand will be high, vacancy will be low, management will be easy, and eviction will be a very powerful threat.

The second thing I'd look for an easy commute to a major employment center. In the past, when many Pittsburgh suburbs were steeltowns, there were businesses on businesses that catered to the dominant industry and their workers. Half the multifamilies in this town were built to handle high population densities for steelworkers. All the grocery and department stores took credit until payday at the mill. Landlords put in basement potties to given the returning workers a place to shower. What is the major industry of Pittsburgh today? Who is the largest employer? Is this likely to change in the next twenty years?

Anyone who lives here immediately knows the unpleasant answers to these three questions. Yet as far as I know, I am one of a very, very small number of landlords consciously trying to attract geriatric health care workers near geriatric facilities as tenants by targeting them in my advertising and giving them what they want. Allegheny County and the five counties that surround it form the oldest major metropolitan area in the USA. Taking care of old people until they die is what's going to dominate Allegheny County's economy until the Baby Boomers all go. And when they Baby Boomers are all dead, the main employment reason to stay is going to disappear. The city needs to reinvent itself some more in those twenty years and find other reasons to exist. Pittsburgh does not have an exceptional past record of nimble, forward-thinking change. It has instead only been dragged into change by its chains as it screamed and kicked all the way, moaning out its pathetic nostalgic dreams of bygone glories. I know guys who voted for Trump because they really thought he was going to bring big steel back here, with zero understanding of the current scale of steel production and going steelworking wages in South Korea and China. Soft in the head? Sure. But oh, so Pittsburgh.

So my money's on geriatric health care dominating the industry until the pitiless demographics of this area change.

So in the end, my answer to the OP's original question, which is what are the three best defined neighborhoods to look for MFs in Allegheny County, is to think up a better question. How can I isolate the best areas to invest in multifamilies in Allegheny County? It's not by neighborhood. Look for secondary school service areas. Look for traffic patterns and major traffic corridors. Look for nearby employment centers. Look at setting up apartments so that they appeal to the legions of workers who go to work wearing scrubs in this county. Look for pocket neighborhoods kept from sinking into a war-zone abyss by various factors that are an easy commute to nursing homes and care centers. TRY TO FIND VALUE WHERE OTHER PEOPLE AREN'T LOOKING, especially the legions of turnkey investors who goggle at the general cash-flow potential of MFs in this county and think that they can get some of that with minimal actual knowledge of this complex area and its difficult history

My wife uses Excel. She plugs everything into a massive spreadsheet. We use three credit cards to help break down our business expenses at the point of sale and two more for our personal expenses. These are all paid off in full at the end of each month -- we have not paid anything in credit card interest fees in five years of operating like this thanks to her financial discipline. The separate bills from the cards are to help us immediately target what we're spending too much money on. We have almost daily discussions on how well we're meeting our weekly and monthly expense goals and targets.

It is much easier to make money and spend what you make than it is to steadily accumulate wealth and not let it slip through your fingers. There seems to be an awful lot of people who get into real estate with the belief that they'll be happier if they make more money because it will allow them to become more extravagant spenders. This is the core of what these people call "financial freedom." In other words, there's no real "why" to amassing wealth other than to spend it in greater amounts with less discretion and care.

In our experience, that puts the cart before the horse.

They're out. Any stuff left in the apartment belongs to you. Drill out and replace the locks with a cordless drill. Leave all their stuff on the corner and send them a phone message saying, "Your Stuff Out On Corner. Come and Get It." Hang up on them if they call. If the stuff is still there after a week, put a sign on it that says "Free Stuff." Put an alarm system in the house that calls you if someone kicks the front door in.

The power is in your name now. Turn it on again, or buy a generator to work on repairs.

Consider all the money you're spending on security as basic investment for the professional landlord dealing with rough trade tenants in C and D-class rentals. At least you don't need a Kevlar vest and a firearm yet. Do you have a short-barreled 12-gauge self-defense shotgun for your home? These people sometimes get drunk or high and do stupid things.

OK, fine...that's a bit much. But if you go on in this life, you're going to run into a lot of people who have trouble telling the difference between kindness and weakness. Know the law and follow it. Don't allow tenants to threaten or blackmail you. It is better to be feared than loved.

I know a guy who operates a rooming house. His answer for #3 is miniature security cameras. He has them recording all over the house in the common areas. Anything breaks, and he just speeds through the file and finds out what happened.

@Isaac El

The bad news is that this probably isn't going to be your first deal. This is complicated and is going to take a lot of knowledgeable work. There may be a serious bargain lurking in this. There probably isn't.

All three siblings would have an interest in the house if the parents died without a will. 

The heir you contacted sounds like a classic opportunistic grifter. Sure, he's willing to profit from the sale of his parent's property but he's not willing to pay the existing liens on it. Wouldn't we all like to be paid for doing nothing but having the right parents?

Here's the basic scenario: you call up the reverse mortgage company and state that you have an interest in the house. Get to the right person to talk to about it. I believe the easiest scenario in something like this is to let the reverse mortgage company take possession of the house at the auction and sell it to you later as a REO with a title insurance policy. That way when one of the other kids pops right up out of the woodwork and demands that the foreclosure sale be set aside, you're not screwed.

But this is a mortgage foreclosure in Queens County, New York. I'd know how to handle this if it were in Allegheny County, Pennsylvania. You need to find someone who knows the laws and court procedures where you are -- that's sometimes an attorney, but more frequently someone who specializes in buying properties like this, a wholesaler who focuses on auction buys. Of course, if you bring this foreclosure to their attention, you're basically alerting your more capable competitors that there's a deal to be had here.

Again, this probably isn't going to be your first deal, and if it is, it won't be a bargain. You're going to need plenty of specialized local knowledge to make this sale happen and not bite you in the butt. But if you treat it as a learning opportunity, there's a chance that you'll learn a lot that can be applied to the next property with a dead owner and grifter kids you'll find.

@Lara N.

So here's how it was: imagine a one-bedroom apartment in Athens, Greece. Imagine the young, teenage owner with no experience in real estate lived in another part of the city and rented out the apartment with the help of her father. Imagine a seamstress who took in work lived in that apartment, and that she spent 8-12 hours a day in the bedroom working, smoking two packs of Greek cigarettes a day, for eight years.

When the walls and ceilings got covered with nicotine filth, who should the tenant call but the landlord. She had two guys she knew who could paint it up quickly with this cheap paint they had lying by. The tenant would pay them. All she needed was the landlord's approval. So she got it from the teenage landlord who didn't know better. And the two guys came in with this watermelon-colored paint and painted it up quickly.

Four more years passed. 12 years of smoking all those cigarettes all those hours in that little bedroom. The seamstress finally up and left. The landlord found someone to rent the place to, an old lady who promised to be there only a year. The old lady moved in, and complained about the state of the room. And it turned out the old lady had another two guys standing by who would paint the whole apartment for peanuts in two days. It was cheap. The landlord said yes. Beige paint went on in two days.

Two more years passed, and the old lady decided to leave. The landlord decided to move in herself. So in she came, a attractive young woman, now all grown up. And guess who lived in the apartment next door? Me.

Yes, I had a relationship with the girl next door. And ultimately, her apartment destroyed our young and stupid love.

Because when I got in there, the beige paint had bulged and cracked all over the walls. The stink of nicotine was everywhere. It was worst in the bedroom, so I started there. I took my trusty scraper and spray bottle, wet down the latex beige paint, swiped at it with my scraper, AND IT CAME OFF IN A CONTINUOUS STRIP IN MY HANDS, revealing the nicotine streaks and watermelon-colored paint underneath.

I removed every bit of the latex paint on the bedroom just like that, peeling it off in long strips almost like it was cheap wallpaper. You see, the watermelon paint underneath was not actually paint, it was calcimine, a mix of chalk dust and glue that hasn't been used to quickly cover sooty interior areas in the USA since the 19th century, but make it through the 20th in Greece for cheap applications by con artists. TSP was not available as a residential cleaning agent in Greece, so I made due with soap, all-purpose cleaners, laundry detergent, and scouring pads. It took me weeks to get the nicotine stains off the wall. And then I had to soak and chip and scrape the thick layer of the calcimine off. And then there were MORE nicotine stains under that adhering to the original oil- based paint on those masonry walls.

I didn't have a respirator there. I had no gloves. I didn't understand what that concentrated level of years of nicotine residue could do to me back in those days. I was sick for days. At times I would get dizzy and have to sit down. And after I sat down, I REALLY wanted to sleep. The job took a week of my spare time. I couldn't scrape at night or the neighbors would complain, and I worked all day, so I had limited time per day to devote to cleaning calcimine and nicotine residue off those walls. My girlfriend, completely oblivious to the fact that this was ultimately the result of her bad judgment in the past, nagged and nagged and nagged me to finish up, just finish up and stop playing around!

But I finally got it all off, and rolled on a coat of oil-based "styrene and acrylic resins copolymer" primer called Monox that stinks worse than Kilz Original. The VOC content of this primer in the version sold today is currently 349 grams per liter. It's likely that back...what, fifteen years ago, it was up in the 500s both for Kilz and for Monox. After the first coat of Monox, I repaired the wall with acrylic-modified concrete stucco, and then the second and third coats of Monox went on. Then I could finally paint with a quality latex paint.

Listen to an old, bitter man and don't let this happen to you. Keep an eye on that smoking tenant who promises he'll always smoke outside. Run regular inspection visits. Clean those walls before you paint. Never allow a tenant to hire their own painter.

@Aaron Phillips

Please accept my sympathies on this, the first time in this business that a snake swallowed up your time and toil only to slither out of a verbal agreement on you.

I can promise you that it won't be the last time.

As far as legal options go, you have none worth pursuing.

If you should take it into your head that extra-legal options are the way to go...my advice is to wait six months and see how you feel about it then.