Irwin, PA · Member since 2015 · 152 posts · 52 votes
SO.... after reading countless posts, listening to EVERY single BP podcast, joining the amazing Bigger Pockets community, I finally took the leap:
I just closed on my first RENTAL PROPERTY!
1. How I found it - I found it after networking with one of my local REI Groups (Shoutout to Otis DiCerbo!)
2. The numbers - It is a Duplex in the area of Pittsburgh known as Wilmerding. It's a D-class neighborhood sandwiched between Monroeville, North Versailles, and East McKeesport.
Former owner has the downstairs 1-bed unit renting for $400/mo. and the upstairs 2-bed renting for $400/mo. Purchase price: $20,000 Anticipated ROI = (Income: $800*12) - (Expenses: $500 taxes + $245 trash + $700 minor repairs) / $20,000 = 38%
3. Negotiation - He wanted out badly, and it was too good of a deal to pass on. I walked the property twice, had a home inspection, and took the leap!
4. Outcome - I bought it and I'm in the process of setting things up the way *I* want things to run!
Biggest lesson here is: There are owners who want out of their units. NETWORKING made this deal happen!
On a longer term horizon, I'm setting aside 60% of income for CapEx/Repairs ($500) to get the building up to MY standards. I've told the tenants I'm willing to honor their old Lease ($400/mo) if they follow my rules. Market rents in the area are $545 and $700 respectively, so I've got some room to grow. Haven't received a cent in rent yet but have documents ready to mail to correct. Word from the previous owner is they are also habitually late on payments. I gave them both a rental application to fill out, neither have done so yet :) Should make it easier to evict them since they are only month-to-month. This is a great learning experience so far. Seriously!
I do a lot of deals like this. Couple pointers:
Send them your lease, but keep it month to month for now, or at least wait 3 months before signing on a long term lease. You will likely evict 50% of tenants within 12 months for non-payment, or they just up and quit to avoid court.
I would not hold your breath on them sending your lease back, they are watching you to see if your going to be lazy on late rents, or hit them hard and fast.. do the latter. Notice and certified out the door asap. Once one gets kicked, everyone talks, and starts performing better.
@Dominic Lucarelli very awesome! High 5! I am also looking for our very first rental as well. We can never find a duplex here in ca for 20k but I am hoping we can get some rentals refi and get s multi family!
@Anthony Angotti
On a longer term horizon, I'm setting aside 60% of income for CapEx/Repairs ($500) to get the building up to MY standards. I've told the tenants I'm willing to honor their old Lease ($400/mo) if they follow my rules. Market rents in the area are $545 and $700 respectively, so I've got some room to grow. Haven't received a cent in rent yet but have documents ready to mail to correct. Word from the previous owner is they are also habitually late on payments. I gave them both a rental application to fill out, neither have done so yet :) Should make it easier to evict them since they are only month-to-month. This is a great learning experience so far. Seriously!
Dominic Lucarelli Nice! Looks like a good deal. What was the owners original asking price? Also, were there any extensive repairs that needed to be done?
On a longer term horizon, I'm setting aside 60% of income for CapEx/Repairs ($500) to get the building up to MY standards. I've told the tenants I'm willing to honor their old Lease ($400/mo) if they follow my rules. Market rents in the area are $545 and $700 respectively, so I've got some room to grow. Haven't received a cent in rent yet but have documents ready to mail to correct. Word from the previous owner is they are also habitually late on payments. I gave them both a rental application to fill out, neither have done so yet :) Should make it easier to evict them since they are only month-to-month. This is a great learning experience so far. Seriously!
I do a lot of deals like this. Couple pointers:
Send them your lease, but keep it month to month for now, or at least wait 3 months before signing on a long term lease. You will likely evict 50% of tenants within 12 months for non-payment, or they just up and quit to avoid court.
I would not hold your breath on them sending your lease back, they are watching you to see if your going to be lazy on late rents, or hit them hard and fast.. do the latter. Notice and certified out the door asap. Once one gets kicked, everyone talks, and starts performing better.
@Levi T. I am a new up and coming land lord myself. And these are very great points and statements. I read you have to be stern with your tenants let them know your in control and that's your property. I need to start studying screening tenants!
@Chris Chesser
Asking price was $20k.
Home inspection revealed that the front porch needs additional bolstering. A minor repair roughly $500. A small adjustment to the venting of the hot water tanks. Cost: my personal time :) Adding in some minor plumbing in the laundry area: $100 Weather proofing part of the back porch: $100
Hello fellow investors! It's been awhile but I've got some great updates for you:
Property #1:
Spent my first year after my purchase learning the ins and outs of being a new Landlord. I evicted my first tenant in the lower unit for non-payment. The second unit up and left about 2 months later, leaving me completely vacant. My wife and I struggled with cleaning up the filthy units and getting them up to specs: new paint, new carpets, and a few minor repairs. Code Enforcement came along and beat me up pretty good. Repairs and updates totaling $12k. Moved in my first tenants on my own, then got a property manager on board. So much easier to pay him to worry about things! These tenants came and went. Property manager moved in 2 new sets of tenants. All in all I'm happy I made the decision on hiring a property manager. He's worth much more than the fee he makes every month just off his connections alone! Current rents are $550 and $595 = $1145/mo
Total investment: $20k purchase price + $12k updates and inprovements = $32k
Property #2
Another duplex in Wilmerding! Purchased this one about 6 months ago. One block down the street in Wilmerding. Separated the water lines (since they were all on one meter) to the tune of $1000. Replaced the flooring in the upper vacant unit. Minor repairs for the lower occupied unit. Just recently had a water supply line burst at the curb. Water company turned off water to the building until the issue was fixed. Obviously the tenants were none too happy. $5k later and one week later the water company turned the water back on, good as new. Property manager handled all contacts with the water company, placing a tenant in the upper unit, and coordinating the emergency water line repair. He got a case of his favorite beer this past Xmas for his efforts. Current rents are $600 including water (from Section 8) and $595 = $1195/mo. Total Investment: Purchase price of $28k + $5k rehab + $5k emergency water line break = $38k
Property #3
Closed on it this past Thursday. Another duplex, but in a much better location: Irwin, Pa! Very very rough property. Listed by the bank for $24,900. We offered $10k. The bank countered back at $20,900. We countered at $12,000 and they accepted! We've got a lot of rehab on this one, however: needs all new plumbing, all new HVAC, updated flooring, updated kitchen cabinets, and a whole new bathroom in one of the units. Total rehab budget of $56k. Should appraise at $120k+ once the work is done. Expected rents in this area depend on fit and finish. Upper unit is either a big 1-bed unit or potentially a cozy 2-bed unit (estimated rent @ $650) and the lower unit will be a big 3-bed (estimated rent @ $900). Total Investment: $12k purchase price + $56k rehab budget = $68k.
Killing it! but I need a bit of help on the rehab money. If you know of anyone who has private money that needs put to work, I'm your man!