All Forum Posts by: Jay Belcher

Hello BP community,

I'm looking to find basic house design / layout software. I'm currently looking to layout kitchen cabs & wanted something a little more than just doing it on paper. I'm looking for something that does basic layout - plans & elevations - just basic stuff I can hand to a contractor. I don't need to move through the plan in 3D, I don't need lifelike renderings. Simple is much preferred.

Does anyone have any suggestions? I don't want anything complicated like AutoCAD or SketchUp. But I also don't want some toy software for rough designing w/o accurate dimensions, etc. 

Best bet is to read up on things on Bigger Pockets and attend the local REIA meeting - just search Pittsburgh REIA online and you'll find all the info on the meetings.

Start by learning the concepts, etc. so you know the right questions to ask. There are plenty of local investors who can help once you understand the basics. Networking in person at the REIA meetings is a great way to meet those folks.

Welcome! Be sure to check out the local REIA group - Pittsburgh REIA.

BP is a great source of information - you'll find more than you can image here.

Can I suggest you have someone independent run comps for you? Just make sure you really are buying under market. Since you're emotionally invested in the deal, it's good to have someone with no interest do comps & see if they come out the same.

What I'm saying is if you aren't buying below market a decent amount, you erase your exit strategy of putting it back on the market. Don't forget transfer taxes, title insurance, doc fees, recordation, etc. are all real costs. If I buy I house for $X & sell only 5-10% higher I would lose money.

Pittsburgh is one of those cities where there are sooo many little neighborhoods. It's difficult to list a few good and a few to avoid and feel like it's in anyway helpful. Sometimes the difference of a block or two can really change value.

I think you should be able to beat 7% CAP pretty easily.

You would really benefit from having someone on the ground who can look at things. Are you planning to visit potential places or are you hoping to do it all remotely?

I see two primary concerns:

First your property is assessed at $117K. It may well go up. Could be a while until they catch up with you, but the government wants their money and if you buy at $285K, there isn't much way to deny that it's worth that amount and that a reassessment at that number is valid. If the numbers only work at the current assessed value, you could be in for a most unpleasant surprise.

Even at $117K, the taxes should be around $2600 less a homestead exemption - maybe $2100. Your owner could be forgetting all the tax amounts - three separate numbers - city, schools, county. I'm finding your millages to be 8.06, 9.84, & 4.73 respectively. You should do your own research and verify that for yourself.

The other issue is that you're renting by the room. If the house rents for $2600 on the open market, you're good. So I'm saying if you rent it as a whole & most perspective renters are good with the $2600, then you're in the clear. However if you really need 4 individual roommates who are each able to pay $650, it's a little more shaky.

I also look at opportunity cost. I could probably generate $2600 in rent from $100K+ less of investment elsewhere. However weighed against this is the owner-occ financing that this deal affords you (e.g. less money down, lower rate). However it is possible to use creative financing elsewhere and do very well with very little of your own money. But that's a whole other topic.

You have a good handle on the numbers. One red flag is taxes seem low - are you counting city, school & county? A property assessed around $200K in the Southside by my accounting should have more like $4500/yr in taxes.

Yes I would include your share of the rent in the analysis.

If I'm right about taxes, it still cash flows, but it's tight. You can get away with it because you're getting owner-occupant financing, but it wouldn't make sense to anyone else. Also 30-year payoff is not so good, from an investment standpoint. By that I mean 15-year is not an option - it would ruin your cash flow.

Also don't forget the cost of property management. It's not costing you much since you're doing it yourself, but your time is still a real cost.

Like @Anthony Angotti said - you can check with the city regarding what permits were pulled. But what difference does it make now? Better to have a home inspection if you aren't fairly knowledgeable about construction.

The 3 unrelated rule is real though rarely enforced. However, it could be enforced tomorrow if you had an issue with a neighbor, etc. Also renting by the room is sketchy. That works with guys you know, but if you move out, I'd want one lease w/ 3 names on it.

Show us the numbers that make up your cash flow. It seems awfully tight to me. 

Unless that's a giant room, 3 patches aren't going to be cheaper than the depreciated cost of the carpet (the 25% you were going to charge them). In my area a patch is $40 or so (per patch). So for me 3 patches = $120 will cost more than the 25% of replacement.

I would agree w/ @Bill Gulley that you need to repair if possible, but when the repair cost exceeds the depreciated replacement cost, it's a no brainer to replace.

Also before you can repair, you must have carpet to repair with. That means some left over from the initial install or pull it from a closet, etc. If you don't have the carpet then forget it - no installer will either. Also carpet has a "grain" to it, so you can't take a length of carpet from say, a closet, and then patch it in rotated 90 degrees.

Take pictures, document things by showing you looked into repair cost (e.g. call a local company to get a patch number over the phone). But your thinking is clear about charging a depreciated price. Plus if your lease requires carpet cleaning cost to come from the security deposit (it should), the tenant recoups a few bucks there as well if you replace.

Welcome! You're in the right place - there's a lot of information to be had here.

A great way to start out is to buy a duplex or triplex and rent out the units you aren't living in. Just don't let your neighbors know you own the place - you want to position yourself as someone who helps out the owner, not the owner yourself.