All Forum Posts by: Sharon McCants

Hey Sharon - I hope you are well!

I'm originally from Western PA as well (Slippery Rock) and now reside in Atlanta.

Here is how I am looking at it along with the assumptions I am making:

1) I think the growth prospects are better in the Atlanta market than Pittsburgh from a pure demographics standpoint.
2) I estimate your return on equity at 7.2% currently

3) Over the long haul appreciation is going to take you further when it comes to net worth than cashflow will

4) Doubling of the roofs is doubling the expenses

Things to consider:

1) What is the year built of your Atlanta property vs. what you could replace it with in PGH?
2) 7.2% return on equity is pretty decent in today's market. Can you go out and increase that comfortably in pittsburgh?
3) Do you think you would like owning rentals in Pittsburgh more than Atlanta? The emotional / confidence factor does matter when it comes to conviction to hold over the longhaul.
4) Are you improving or decreasing in the quality of area you are going into in order to acheive this cashflow in PGH?

Would love to chat through this situation with you as I am always pulled to invest in Western PA when student rentals pop up near SRU. Shoot me a DM!

There's definitely a lot of cheap multi families in the Pittsburgh area. Obviously, the condition of these varies with price, but if you're willing to put the money into them to update them, this could be a great strategy. A hard money loan with 10-15% down may also allow you to keep the Atlanta property, if you have the reserves to do it. Happy to connect if you need help finding multi's in the Pittsburgh area! 

@Sharon McCants

Why not cash out refi to a 30 yr fixed where you can still cash flow at a decent amount?

The house is re built (low cap ex) and it seems like you have a great tenant.

@Sharon McCants - I lean toward the advice from @Jonathan Greene on your question.

Years ago, I made the mistake of forgoing quality for quantity, which led to headaches and a fundamental change in the way our company operated and in the way I personally invested. If the primary goal, and it should be, of every investor is a return of capital and the secondary goal is maximum return on that capital, then you are in a great position.

The real problem you need to solve, as I see it, is taking advantage of the unused equity in your Atlanta property. I suggest you look for clarity on what resources you can use or companies can assist in using a small piece of that equity as a downpayment on another high-quality asset like the one you already own.

Hey Sharon, As an investment agent here in Pittsburgh, the market is booming! I love your plan and thing that it is well though out. If you need any connections, like property managers and contracts, let me know. or a bigger source of properties, please don't hesitate to reach out! I will help you any way possible!

Never sell a high-performing property with no cap ex and low maintenance to buy another rental. It sounds good in theory to split one into more, but you want to keep banking equity on this one as it requires nothing from you and pays you money which is the whole goal of real estate investing. You are trying to move too quickly. Use your savings and equity to get the next one and keep this one.

Hi there...you're definitely on the right track with your investment strategy.

Selling your Atlanta property might be a smart move, especially considering your ARM and the potential for rising interest rates. While the property has good cash flow now, locking in your gains and reinvesting could be beneficial in the long run. It's also important to remember that low maintenance costs don't last forever, and that will an increase expense item as time passes. Using the 1031 Exchange is THE way to defer capital gains taxes and use your equity to purchase additional properties.

re: the Pittsburgh market...it can be a good choice. The lower property prices mean you could buy multiple properties, potentially doubling your cash flow. Just make sure to do thorough research and fully update yourself on the changes in the local market to ensure strong rental demand and solid market data.

Diversifying your investments by owning multiple properties spreads the risk and helps maintain cash flow. Multi-family units are particularly good for this, providing consistent rental income and reducing vacancy risks. With your current tenant moving out, it sounds like it could be the perfect time to plan your sale and exchange.

@Sharon McCants If you are working with ~$235k in equity I probably wouldn't be buying 100k homes in Pittsburgh. That's enough that you can use for a down payment on a multifamily in a nice area here. More efficient from a management standpoint and should cash flow just as much. 

I'd start by talking to a bank about loans if you're DTI is already high-ie how much can you borrow? As Nathan said, what are the $100K homes like? Is that an average home in the city or is that a cheap home in a not so great area? The cheap homes may look great on paper, but the costs are always higher and tenants more problematic.

Selling one property to buy two can make sense when you have equity built up and room to borrow more money.  I did that and while I wished I did one thing a bit differently, it worked out. What would I have done differently?  The second of two homes I bought when I sold the rental, I would have bought a more expensive one as the one I got was close to the university and tended to attract students which had higher turn over (though it may also be my local market).

I'd also look up how to do a 1031 (I think that is what it's called, I'm not in the US) where you defer capital gains taxes on rentals by buying another within a set period of time.