Help me analyze this deal

10 Replies

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*This link comes directly from our calculators, based on information input by the member who posted.  Hi there, in addition to this Rental Property analysis, I also posted a BRRRR analysis earlier today.  I did the second report because there were some important details of the deal I didn't understand on the BRRRR report.

Hi Nuhan and thanks for your reply.  This is my first posting on the BP forums, so it looks like I missed one or two details!!  One of which is that this property is a duplex.  The two units will rent for 1650 and 1850 for a total of 3500 per month and 42,000 per year.  The property is located in the first ring eastern suburbs of Pittsburgh along dedicated rapid transit line just four stops and 25 minutes from downtown.   B class residential older homes with light mix of multi-family (mainly duplex or triplex). 

Hello Christopher!

Thanks for posting this deal. I always enjoy analyzing specific deals to get the opinion of everyone else on this site. In this case, I have to think you need to rethink the numbers a little bit. As a realtor in the area, I can speak to the Wilkinsburg market and I believe you have both the rent and the ARV overvalued. I have run a quick search out of curiosity on the local MLS, and there has been only 1 multi unit building that has sold for over 100K in Wilkinsburg over the last 6 months...and that was a fourplex. There have only been 2 single family homes that sold for over 100 in the last 6 months.

While you did not mention how many bedrooms or baths each unit is, so I cannot properly speak to the approximate rent, I am confident that it would not be near as high as 3500 a month. My advice...stay far away from this deal. 

Do you live in the Pittsburgh area?

@Christopher Berggren

Your numbers are off. This property sold for 47k in 2016 so, unless there were repairs done (even taking a profit into consideration) the price is grossly inflated.  You will never get 3500/mth. Did you check rentometer?  I have very very limited knowledge of Pittsburgh but my guess would be closer $1800-2000 for both.  Do some more digging the numbers must be accurate.  Good luck with everything.

Hi Max, and thanks for your perspective on the deal I posted. My agent sent me a list of comps today for the area, which was helpful since before I had been relying on and other 'sites' that aren't the best for reliable data. The comps show a few MFRs in the range of $170,000, still a far cry from the $280,000 my earlier data had shown. So yes, the ARV is wrong and I will re-analyze this property. About rents: there were many Wilkinsburg/Regent Sq 2/1 and 3/1 units in the 1400 to 1600 range on rentometer, so I felt justified in my income projection. Yes, I live in the Shadyside district, although I am new to the area. I'd like to meet you and learn more about your perspective on Pittsburgh's eastern areas.

@Christopher Berggren seriously think about working with a couple agents in different areas so you can get a perspective on what a good real estate investor friendly agent looks like. This person is helping you buy one of your largest investments so its critical you get good solid advice and information from this person. Start building your team which includes insurance, attorney, accountant, mentors, contractors etc... A good team can make you wealthy and the wrong team can be your demise. 

@Christopher Berggren on the rent side you may want to look at the median instead of the top. With rentometer you also have to be careful about where it is pulling from. Wilkinsburg and Reagent Square (at least what some people on the MLS call Reagent Square) can vary wildly from street to street.

Sounds like good advice, Anthony, and I can say I've been learning more about the area every day, as I spend a lot of time on foot or on bike to learn all the streets.   If you are an agent and investor, I'd like to meet you.