All Forum Posts by: Patrick Kane

Just chiming in that 25% is pretty typical for 2-4 unit investments. However, if someone finds a lender comfortable with 15% in Pittsburgh, do not hesitate to send me their number!

Yeah, post the property. It sounds odd, because the multi market in Pittsburgh is reaching/at the point where warren buffet's famous words haunt me when i submit offers. Ive looked at maybe 4-6 duplexes in the last 2ish months and if they were clean and produced a 8% cashflow then they were gone in 48 hours. There was a duplex that hit the MLS last week or the week before in Dormont. An hour after it was listed, it already had 11 showings scheduled. It was under contract in a day or two. Keep in mind, this property was maybe a 6% return after expenses, maybe. I didnt even tour it, because i knew i would need to knock 10%+ off list price to make it work, which wasnt going to happen with a dozen people frothing at the mouth. Not that im the most experienced person in the world, but if i owned small multi's in Pittsburgh, i would be looking to unload in the next 12 months. There are a lot of people with eyes on Pittsburgh looking at a tiny supply.

Run the numbers on your place from the outside perspective. What would your future buyer make on his money? 2%, 5%, 8%, 10%?

Meeting with my first lender tomorrow to get pre-approved. Anything to keep in mind when sitting down with these people? Things to say, things not to say, questions to ask? Obviously, I am most concerned with rate, term, and LTV, but i dont want to overlook something early on. Conversely, is now the time to discuss future plans for growth with this lender, or keep your mouth shut and be conservative? The phone conversations ive had with the office were great--as they should be, my wife and i have a fair amount in the bank with great credit and DTI--but i dont want to be blindsided with a series of unexpected questions during the face to face. Im pretty strong on the deal analysis and renovation side of REI, but green as grass when it comes to financing. Interested in others' experiences with lenders on their first investment loan.

Andrew,

That is very helpful, thank you. I wanted to allocate the correct timeline for financing. Is it typically 6 months from closing, or is it 6 months leased?

As an aside, i suppose i dont understand why a lender needs 6 months. In the event i default two months after closing and rehabbing the property, what is their exposure? The loan is only for 70% of their appraised value, which leaves quite a bit of head room to make them whole after they foreclose on me. I understand the regulations for REfinancing, but i am slightly confused about the lender's time constraints on free and clear properties. 

I would need to hit the higher range of my ARV comps to be able to pull 100% of my cash out of the deal. It was more about forecasting how long im going to be without 75% of my liquid savings.

I know everyone talks about lenders wanting seasoned MFH that is rented for 6-12 months before refinancing; however, are there rules of thumb for cash out financing/home equity loan on a cash purchase SFH? Looking at a SFH to rehab and rent out, but im wondering how long i need to assume before i go to the bank with my hand out. Logic would say the day i finish my renovations and the bank appraises the property is the day i can take out my money. Im banking on 70:30 LTV after i finish up my work, and would prefer to have my cash back with a fixed interest rate sooner rather than later. Thanks for the consideration.

Looking to introduce myself to one or more local lenders in the Pittsburgh area. I have a fair amount of liquid cash and home equity that i could start with cash deals, but i would prefer to use financing on 90% of my deals moving forward. Listening to the podcasts, and common sense, i want to start things right with one bank and continue to grow with that same individual/organization. Any leads would be appreciated, thanks.

Im finally in a financial position to do my first deal(not counting my inadvertent successful house hack flip I currently live in), but im struggling to focus my efforts. One day I hope to have a solid feel for all of the Pittsburgh Metro area, but to start out i need to focus on 2-3 areas. What are criteria initial investors use to focus on? My first thoughts were to draw a 30 min driving radius around my house, and start there, but even then that is quite a large pool to draw from. 20 mins and i am in downtown Pittsburgh, or in rural burbs. Im inherently drawn to a higher density for buy and hold strategy, but this might be an ill informed preconceived notion. Appreciate any advice on narrowing the field of vision that worked for others. 

So far, I want to be under 225k, decently close to my current address, preferably multi-family C+/B- class properties. 

This is exactly the question i was going to pose to the community. I am getting ramped up to do my first deal in 2017--if you dont count my unintentional house hack im currently living in--and thought a REI club would be a good way to learn more about my area. Im wary about walking unknowingly into shark infested waters. What is the typical format for these meetings? Things to look out for? Finally, how effective are they?

This is actually the reason i joined the BP community. How much can you really help someone when they are to become your immediate competition? For example, i run a part-time woodworking business aside from my office job. Even with my limited experience, i share tips from my success with people online all the time, but im very wary of locals asking my advice. If they are in a completely different niche market from me i.e., they make cabinets, i make butcherblock countertops/furniture, then i am very open with them. There are a lot of business related topics that are the same for a guy making cabinets as a guy making furniture, but they do not compete with one another for the same clients. The flip side is a recent discussion where a guy is getting started and wanted a carbon copy of my business. I found myself immediately withdraw from sharing anything worthwhile that could help this guy. I actually point blank told him i was not interested in discussing specifics related to my products. We still discuss shop setup, tools, etc, but this analogy seems to carry over to local REI. Is it wise/best to have a local mentor, or should i look for someone outside of my circle of local competition? It could just be that im a selfish jerk, but it goes against human nature to help direct competition.

Wow, thanks for all the responses. For some reason I didnt expect so many active people from the area. Pleasant surprise. 

Hello, my name is Patrick, and I've been a listener of the podcast for the last year. Unfortunately, It has taken me this long to post an introduction on the forums! I'm 28, and I'm at the point where i am ready to buy my first investment. REI changed my education and career in a profound way. I was a junior in a landscape architecture program, when I decided to take an intro course in real estate finance and development. The two courses changed the rest of my education, and subsequently my career. I wanted to go into development after graduating, but that was easier said than done in 2011. I ended up taking an entry level position doing graphic work for a retail real estate department. I'm now a manager of development at that company. For the last 3 years I have also run a part time woodworking venture. Finally, I have my salesperson license in the state. I handle 2-3 transactions a year, and recently put my license in escrow preferring to refer deals. Between the three jobs, I feel I have enough cash to enter the game of REI. I perpetually used my lack of cash as an excuse for not getting involved earlier. Well, now it is only my lack of education and courage preventing my involvement. I look forward to remedying the former with this community's help.

Patrick