Investor from a small town in Southwestern PA
Real Estate Investor · Erie, PA · Member since 2008 · 38 posts · 4 votes
Hello all. I'm from a small town in PA about 60 miles south of Pittsburgh. I've been reading about real estate investing for about a year now and made my first purchase about 2 months ago. My dad, my brother and I started a business through which to do our investing. Our first purchase is a commercial building (maybe a little too much for just starting...) with a VERY old apartment above it that I'm hoping to fix up and rent. The area around here is looking pretty good. Lots of cheap houses, lots of businesses (high-tech and retail) moving into the area and not a lot of investors. Anyway... I'm a complete novice, learning as I go. My full-time job is as an electrical engineer, so I understand the numbers... if only that were all I had to know!
Well, I'll be around. I've been reading posts daily and would like to thank all of you for your input. The discussions are tremendously helpful. And thanks for starting this whole thing, Josh!
Welcome, this site is the NUMBER 1 source for all things REI!! Enjoy!
Marv
:superman:
Welcome to the site, Josh. Please tell us a bit more about your 1st purchase. I'm guessing it is mixed-use retail/residential. What made you decide on that for your 1st investment?
You mentioned that you made the purchase a few months ago, but say that you haven't yet started to fix up the apartment. What are you waiting for? Time is money in this business.
I do want to welcome you to the site and hope that we can help you with your investments and real estate education.
:welcome:
I'll try to answer the three questions that I remember...
(1) Is the first purchase a commercial/residential?
Yes, the building is currently a commercial property that needs a little fixing up with a very old apartment above it. The apartment will need a lot of work (wiring, plumbing, the whole 9 yards) while the commercial area is in fairly good shape. Some drywall and new flooring and we should be good to go.
(2) What made me decide on that for our first purchase?
We basically made a low-ball offer on the place after running some numbers. I'm a numbers guy and had been looking at the properties around town and evaluating them. We got the place for $65000. Other similar properties have sold for over $100,000. They actually had an offer for $112,000 a few months before we made the offer and declined it. They thought they could get more and then they ended up going into bankruptcy. It is 2000 sq. feet of office space and rents in the area for similar properties are between $1600 and $2200/month. I think it's a decent deal... but... again... I'm very new so I could be wrong. It should take about $5000 to get the commercial area ready to rent (based on a quote from a contractor/friend that can do the work for us). We got an estimate of about $50000 to fix up the upstairs and downstairs. We can get between $600 and $750/month for rent from the apartment.
(3) What am I waiting for on the rehab?
I don't know! Actually, there are a few reasons... most of which deal with my inexperience. The people that we bought from were going through bankruptcy. We didn't know this until after we made the offer. When they left, they left EVERYTHING in the building. There was literally still change in the cash register. So, we are working on getting everything out of there. I made the mistake of trying to do it myself with help from a few friends but realized after a couple of weeks that there was WAY too much stuff in there to try to haul out with a pickup truck. We are getting a dumpster this week. I have NO idea why it took me that long to realize that I needed a dumpster, but I won't make that mistake again. Secondly, we are having a hard time getting a good quote on doing the work required to make the apartment habitable. There is a ton of demolition to do in the apartment and we need to do that before we rent the downstairs because of the mess that will be caused from the demo and the noise that will be made... we don't want to make our commercial tenant unhappy. And, we have to get all of the junk out before we do the demolition. We also don't want to spend a bunch of time/money doing demolition upstairs if we decide that it's going to cost too much to redo the upstairs. So, again, it comes down to indecision... do we fix up the upstairs and downstairs or just the downstairs?
So... in summary... I'm in a little over my head! Haha. And I've been a little indecisive in making repairs on my first property. I need some help and that's why I ended up here! Any advice is greatly appreciated.