Rental Property Investor · Oceanside, CA · Member since 2019 · 121 posts · 58 votes
Bought my first investment property last September in Pittsburgh, PA. I reside in San Diego, CA and never set foot in Pittsburgh so it seemed a little weird.
Details:
SFR 4/2 on the MLS
Asking: $50K; Offered: $40K And ultimately agreed and purchased for $44K
Used conventional financing with 20% down
Rehab cost was $36K
Total money in including rehab, down payment, closing costs and holding costs: $55K
Rented 4 months after purchase for $1275
Refinanced into a new 30 year fixed at 4.5% and was able to get $53K cash out after an appraisal of $125K
Currently looking for the next deal to finish out the "Repeat" phase of the BRRRR; hence the almost.
Definitely learned a lot through this process everything from financing to working with contractors to property management companies. Biggest piece for me would be perhaps developing a contractor agreement on my end that could have prevented some hiccups down the road; ultimately the work was done well but drawn out and demands for payment outside of the quoted schedule.
I’m looking to use hard money for my next deal in order to learn the ins and outs of doing so.
@Kevin Wilson that makes sense - appreciate the insight.
Thank you for asking. As a super new investor, I'm not 100% certain at this point. I know I want to buy a multifamily but I'm not sure which market at this point.
My wife and I own a 2-family home in Brooklyn where we reside in one unit and Airbnb the other. We had a tenant the first year, but we were able to nearly triple our income by Airbnb-ing it since.
At the same time, we have friends that bought a vacation home in St. Petersburg FL where their Airbnb income is higher than ours and their mortgage is 30% of ours!
So knowing that some markets could be much more profitable than others, I'm leaning toward conducting a broad nationwide search. But my goal is to learn as much as I can over the next few months to get to a decision around where to invest and whether to do a traditional rental vs. Airbnb.
@Kevin Wilson congratulations!! I’m assuming you purchased in your personal name given that you were able to refinance into a 30 year fixed at 4.5. Is that correct ?
I'm currently working on a BRRRR which I purchased in a entity . Now that I'm on the refinance stage lenders are giving me a hard time
@Mahauijue Mack that is correct. I have an umbrella policy for the liability and figure once I push past 3-4 properties I may begin to establish LLCs. Seems to make the most sense for my situation.
Bought my first investment property last September in Pittsburgh, PA. I reside in San Diego, CA and never set foot in Pittsburgh so it seemed a little weird.
Details:
SFR 4/2 on the MLS
Asking: $50K; Offered: $40K And ultimately agreed and purchased for $44K
Used conventional financing with 20% down
Rehab cost was $36K
Total money in including rehab, down payment, closing costs and holding costs: $55K
Rented 4 months after purchase for $1275
Refinanced into a new 30 year fixed at 4.5% and was able to get $53K cash out after an appraisal of $125K
Currently looking for the next deal to finish out the "Repeat" phase of the BRRRR; hence the almost.
Definitely learned a lot through this process everything from financing to working with contractors to property management companies. Biggest piece for me would be perhaps developing a contractor agreement on my end that could have prevented some hiccups down the road; ultimately the work was done well but drawn out and demands for payment outside of the quoted schedule.
I’m looking to use hard money for my next deal in order to learn the ins and outs of doing so.
Congrats Kevin, this is basically an ideal scenario apart from the issues with rehab time.
Did you fund the rehab with cash out of your pocket or a rehab loan? I'm pre-approved for a 100k rehab loan, but struggling to find houses in my target market near where I live now.
Also did you have any issues getting an accepted offer with conventional financing on a house priced so low? Maybe Pittsburgh isn't as competitive as other markets, but 44k seems like cash only territory.
@Jack Plantin I did a cash out refi of my primary so obviously some costs there for the initial cash. No issues with the conventional loan but I was right at that bottom limit of what they would lend on.
It’s crazy looking back how it all came together; definitely not perfect but I’m glad I had relative success for my first one as it gave me the confidence I need to push ahead!
@Jack Plantin I did a cash out refi of my primary so obviously some costs there for the initial cash. No issues with the conventional loan but I was right at that bottom limit of what they would lend on.
It’s crazy looking back how it all came together; definitely not perfect but I’m glad I had relative success for my first one as it gave me the confidence I need to push ahead!
Great man, sounds good! I checked out the houses in Pittsburgh and there are definitely a lot of affordable, older houses. Best of luck with future projects.
@Jack Plantin I did a cash out refi of my primary so obviously some costs there for the initial cash. No issues with the conventional loan but I was right at that bottom limit of what they would lend on.
It’s crazy looking back how it all came together; definitely not perfect but I’m glad I had relative success for my first one as it gave me the confidence I need to push ahead!
Great man, sounds good! I checked out the houses in Pittsburgh and there are definitely a lot of affordable, older houses. Best of luck with future projects.
@Jack Plantin I did a cash out refi of my primary so obviously some costs there for the initial cash. No issues with the conventional loan but I was right at that bottom limit of what they would lend on.
It’s crazy looking back how it all came together; definitely not perfect but I’m glad I had relative success for my first one as it gave me the confidence I need to push ahead!
Great man, sounds good! I checked out the houses in Pittsburgh and there are definitely a lot of affordable, older houses. Best of luck with future projects.
@Kevin Wilson, great job!! I've started looking in the Philadelphia area for my first deal.
Question regarding your refinance, was it prior to COVID? I'm curious how cash-out refinances are going for BRRR deals with more stringent lender terms.
@Jeremy Levine smack dab in the middle of COVID. It ran a little long as I think they were looking at a lot of owner occupied as a priority. Also I think because of the demand the closing costs were a little higher than normal.
@Alice Huang Thanks and good luck on yours, Contractors are my biggest challenge so far but not impossible.
I’m pretty conservative so definitely factoring in repairs and cap-ex at a combined 50% of cashflow. Also putting the rest of my cashflow either directly back into cash reserves or future investments. Figure I’ll pay myself later!
A trick is to find a HML who will finance up to 75% of the ARV at purchase. Then you can use rate and term refinancing with the new appraised value right away. No waiting to season the property 6 months like cash out. Plus a rate and term refinance is cheaper and easier to qualify. We have closed loans like this in Colorado for 12 years running. A HML will be more likely to go that high if you are already approved for the perm loan. The average close to close is under 90 days.
@Mike Bonn mike, love this feedback - do you have some time to talk financing with me? Have a unique opportunity and looking to navigate my financing in a saavy manner. I’ll connect.
Wow, great post. So you have $2K cash net invested ($55K less $53K cash out)? your yield is crazy high. Curious how confident you were in the 125K appraisal? that is impressive.
I think i like your strategy but i am considering going hard money on my first one. What are you all seeing for terms from HMLs now? I have seen some advertise 90% loan, but not sure that is reality.
Great to see this. Thank you for sharing! Currently working on the first BRRRR and struggling finding GC in San Antonio.
Are you budgeting CapEx and maintenance every month as well?
My plan was to buy a home warranty for my rental. Is this a decent option or are their too many strings attached? i know this won't cover all capex, just trying to prevent too many surprises.