All Forum Posts by: Tim Rostro

Apologize for the typo everyone.  I meant to say I was working in my "fifth" property, not my "first".  This fifth property, despite several years experience, still feels like I'm doing my first property all over again.  The paperwork is finally submitted, then resubmitted again, and again.  I'm hoping that the sellers will fix some of the deficiencies that were addressed by the home inspectors.  And, I'm hoping that I don't have too many problems once I take possession of it.  Adn there are no tenants in there yet.  There's always that possibility that, "WTF have I done?  I'm just wasting my money on this."  This is the risk we all take as real estate investors.  

I've got a duplex with a Section 8 resident in the down unit.  She's been there for 8 years prior to me buying the property and has been with me for the past 2 years.  Upon taking receipt of the property, I had paperwork that had to be filled out in order to receive payment.  I've been receiving payments every month on time from the Cleveland Municipal Housing Authority (CMHA) as compared to my OTHER tenant in the up unit who always had an excuse on why she couldn't pay rent (she was finally evicted).  The new up unit tenant is on a housing assistance program like Section 8 but called differently.  I can expect payments to be on time every month from both units and actually be profitable for the first time in months.  

@Jesse Rivera

Thank you for this article and reaffirming my decision to invest in Pittsburgh! I just got my preapproval letter today on a duplex in McKeesport and working on the process of getting the first of many properties in the Steel City.

I have a property in Cleveland that I bought in 2017. It was a great bargain at the time and now, I can’t find anymore like it. It’s fully rented out and appreciated by close to 40%. Buffalo was also on the radar but again, 2 years too late. I decided to look south and Pittsburgh, which I never considered, popped up. I did my research and decided to invest at least one property there. However, the more I researched on Pittsburgh’s future, the more I felt confident I made the right decision.

Hopefully, I’ll close on this property by the end of the month and by next spring, have some funds for another. My cousin and sister are both interested in real estate and we are going to make a trip out there when I return to the East Coast.

@Carmela Cirilli

I inherited a Section 8 tenant when I bought my property in Cleveland. She had been there for 8 years before I took possession and has been with me for the last 2. I’ve had no problems from her after having to do all the necessary paperwork. But I do have an inspection every year and make minor repairs afterwards. The payment comes in on time and it’s good hedge should the economy tank and people lose jobs.

@Bijou Diaou

I’ve got a few of them.

Not shopping for rates. Despite a great credit score, you still have to shop around for interest rates. I’m working on my first property right now. I got a preapproval letter a couple days ago but wasn’t satisfied with the results including the closing costs. Today, I talked to another lender and the results were way better: less monthly payment and closing costs. I’m waiting on a third but the second one is the one I’ll probably choose.

Give your tenants an inch, they’ll take a mile. They’re like sharks, they smell blood in the water. I tried to help one tenant who was behind on rent due to an injury. But she couldn’t keep up and kept giving excuses. Finally, she left (eviction) and I’ve got someone who’s actually paying rent. What did it cost me? $2200 in back rent I’ll never get back, twice having to get an exterminator to kill bed bugs, and no income for one unit for 15 months.

Stop over analyzing and just pull the trigger on a property. If the numbers are great and it’s going to turn a profit, go for it. There were a few that I wish I did go after but I was hesitant to do it. There is no perfect property. I just recently looked at those properties again and they appreciated a ton. And that was just a few years ago.

Repairs and turnover are constant. That’s real estate. Make sure you have extra funds on hand to weather repairs and no rent for weeks or months.

Happy Labor Day to everyone! So here's my situation and I'm looking for guidance. My very first property that I've bought, a single family home, is about to be paid off by early next year, April 2020. I'm working on property #5, a duplex in Pittsburgh, PA using my own funds, stocks, mutual funds, and some cash for a down payment. However, with that SFH being paid off, I want to use a HELOC to fund my next property and future properties. Doing my research on the internet concerning HELOC, I can get a loan of up to 80% of my property. This SFH is a starter home and it's worth almost $100,000, so, I'm looking at close to a $80,000 HELOC.

My concern is I'm taking a loan to purchase another loan (HELOC to fund a mortgage) and I still have to pay for both the HELOC and the mortgage for the new property(ies). Of course, I'm going to do my research and make sure the numbers add up to where the rental income from each property can pay for the mortgage and into the HELOC. Paying off the HELOC should be the number one priority which could take several years by which time, I'm not able to receive any income from those properties.

Is this fiscally sound? A loan for another loan? I'm taking a loan to fund another loan. I could go into my savings and investment and cash them out for the down payment and don't have to worry about a second loan (HELOC). However, used in the right hands and not mismanaged, a HELOC is another avenue or tool in which I could tap for capital for major purchases.

Anyone have any experience using a HELOC to purchase investment properties and did it work for you? Or is this something to be avoided?

Thanks.  

V/R, Tim Rostro   

I inherited a Section 8 tenant when I bought my duplex in Cleveland.  A fellow real estate investor had a bad experience with Section 8 tenants and refused to ever deal with them so I was a bit apprehensive about it.  However, the lady (Section 8) had been living in that unit for 8 years and been a great tenant for the two years I've had the place.  I have a property manager who does all this and they usually don't take Section 8 tenants but they made an exception for my property.  She has never been a problem for the property manager or me.  Just make sure you screen your tenants thoroughly.  

Pros: I get an amount not equal to the full rental amount but it's there at the beginning of the month.  This has helped me immensely in paying off my mortgage as my other tenant is always behind on rent.  Could it be higher, absolutely.  I raised the rent this year to reflect rising rental rates in the area.  

Cons: The initial paperwork which I thought was a bit excessive.  Then, the yearly inspection which might cost a couple hundred dollars to fix the deficiencies they find.  They were repaired last year so now, it's not to their standards again?  SMH.  Whatever, I fixed them and I don't see them for another year.  Raising the rents, again, is more paperwork.  It's a hassle, but once it's over, it's over.  

Oh man, I had to reply to this after talking with my property manager in Cleveland.  My upstairs tenant, a single lady, is sooooo behind in rent.  She still owes $2200 in back rent.  We have been very patient with her for 6-8 months after her back surgery.  She kept saying that she would pay the balance off piece meal which she did but it just wasn't enough.  We gave her so much time to catch up.  Basically, the downstairs tenant, Section 8, is paying off the mortgage of my property and I haven't received any income at all.  So, we gave her a three day notice to vacate but she'll be out by the 30th Apr.  She said she had nowhere to go but, again, she had her opportunities.  I hate to do that to her but I'm in real estate to make money.  There's a balance between profitability and being a responsible, compassionate landlord but I need to make money off this property.  This is just my business philosophy.  It's us (real estate investors/landlords) vs them (tenants) and I choose us.   

@Kiera Underwood Tell me more, I'm listening.  This is well within my price range and exactly what I'm looking for.  What are the average rents?  

@Shawn Ackerman There was several factors leading to this, but most of this was a hunch and some luck.

Since it was hard to find any property within my price range, I went south and east and Pittsburgh was right there.  I then did some research on the area and it proved positive.  I also figured the tech boom and maybe the medical field would end up filtering to secondary locations.

One article led to another and I decided to jump on board.  This is a small list of what I had gathered considering the Pittsburgh real estate market:

https://www.housingwire.com/articles/47756-these-real-estate-markets-are-projected-to-dominate-in-2019

This article listed Pittsburgh as number 8.  

https://www.geekwire.com/2018/ready-not-tech-boom-brings-complex-changes-pittsburghs-real-estate-market/

This is a really good article on the tech boom landing in the area.  This is only a year old.  It felt like when I first bought my property in Cleveland, just at the beginning before it started taking off.  

https://newsinteractive.post-gazette.com/blog/pittsburgh-area-housing-market-continues-strong-performance/

This is an article from the Post Gazette concerning slow but rising real estate market.