First BRRRR deal in Pittsburgh

OP

Investor · Pittsburgh, PA · Member since 2020 · 23 posts · 34 votes

5y

@Shai Flax Hi! Thanks for your interest! This was technically my 3rd rehab. I did a live in flip in 2017 and rolled the equity over into my current house. Sweat equity was definitely the main reason I was able to keep rehab costs so to low. I put about 300 hours of my own time into the property. The only item I outsourced was electrical updates ($2,100 to remove knob and tube and update everything to current code). It also helps that my father-in-law is a skilled contractor and has showed me a lot along the way. I know this isn't the ideal way to operate when scaling, but I wanted to hedge my bets in a way to keep costs as low as possible for my first BRRRR deal. I would imagine the rehab would be twice as expensive if I had contractor out all of the work I had put in.

Shai Flax

North Richland Hills, TX · Member since 2019 · 156 posts · 80 votes

5y

@Camden Kelly That's great for you! I'm OOS investor so I'm not able to do all that...

Keep us posted on your next BRRRRs

OP

Investor · Pittsburgh, PA · Member since 2020 · 23 posts · 34 votes

5y

@Shai Flax Absolutely! Please reach out if you ever have any questions or would like to connect.

Elise Bickel TauberBusiness Member

Real Estate Agent · Cranberry Twp · Member since 2017 · 384 posts · 198 votes

5y

That's a great deal! I keep telling out of state investors of the potential in Pittsburgh. A lot of our investors have similar numbers for their brrrs. I'm curious, unless I missed it, what area did you purchase in?

OP

Investor · Pittsburgh, PA · Member since 2020 · 23 posts · 34 votes

5y

@Elise Bickel Tauber Hi, Elise! Thanks for your interest. I purchased this property in New Kensington. The Mount Vernon area of New Kensington still seems to be a decent area to invest in, maybe not in terms of appreciation as much as cash flow, but nonetheless the numbers worked! I've looked around for quite some time before I pulled the trigger on anything and this seemed to be a pretty good deal all things considered.

Shai Flax

North Richland Hills, TX · Member since 2019 · 156 posts · 80 votes

5y

@Camden Kelly I will! Thanks!

Elise Bickel TauberBusiness Member

Real Estate Agent · Cranberry Twp · Member since 2017 · 384 posts · 198 votes

5y

New Kensington is a good area for high cap rates but you are right, it does take a fair number of applicants before you find the right tenant there. If you just take anyone you will end up with high turn over costs and a lot of evicitons. Excited for your deal!!

OP

Investor · Pittsburgh, PA · Member since 2020 · 23 posts · 34 votes

5y

@Elise Bickel Tauber This is exactly the mindset I tried to have going into it. Thank you! I'm excited to prepare and search for the next deal!

Boone Tyson

Real Estate Agent · McAllen Texas · Member since 2018 · 188 posts · 186 votes

5y

@Camden Kelly Great BRRRR dude! I love that you used a HELOC as well. I think thats the best way to go without a doubt! Any more deals in the pipeline?

OP

Investor · Pittsburgh, PA · Member since 2020 · 23 posts · 34 votes

5y

@Boone Tyson Thanks man! The HELOC was absolutely the way to go. I'm a full time special education teacher, so having the capital for the first deal was made possible through the fruits of my own labor fixing up my personal property. In terms of a second deal... still looking. I'll be sure to post about it once I do. Appreciate the love!

Boone Tyson

Real Estate Agent · McAllen Texas · Member since 2018 · 188 posts · 186 votes

5y

@Camden Kelly Love that! Great job man! Keep up the good work.

Kwame Amoako

Real Estate Agent · Columbus, OH · Member since 2019 · 82 posts · 133 votes

5y

Great numbers, how does the refinance work? Do they just give you up to 70% in cash? Does that mean that it has to appraise for over 140% the cash invested in order to get all your cash out?

Bernadeau C.Pro Member

Rental Property Investor · Orlando, FL · Member since 2014 · 540 posts · 230 votes

5y

@Camden Kelly what bank did you use for the HELOC?

OP

Investor · Pittsburgh, PA · Member since 2020 · 23 posts · 34 votes

5y

@Kwame Amoako Hi! Great question. The bank I used gives you 75% loan to value. It’s pretty much the same process as taking out a traditional mortgage. The only difference is that, after the loan closes, the money is paid out similar to a cash payment. The money is then available for the next real estate transaction; allowing you to recycle the same money over and over while still holding the original property. Hope that’s helpful!

2 Reply

OP

Investor · Pittsburgh, PA · Member since 2020 · 23 posts · 34 votes

5y

@Bernadeau C. I used keybank. I wasn’t thrilled with their process. However, I was given a better rate because I have my business account set up through them as well as my personal checking, savings, etc.

OP

Investor · Pittsburgh, PA · Member since 2020 · 23 posts · 34 votes

5y

@Kwame Amoako the property appraised for $140,000. $140,000 x 75% = $105,000. Original cash invested = $88,000 cash vs. pulled out = $105,000. I Hope that makes sense!

2 Reply

Felipe Stefanoni

Investor · MD FL WV · Member since 2020 · 38 posts · 21 votes

5y

@Camden Kelly contragtz for your first BRRR . . . I'm looking forward to do my first one using the same strategies as yours, pull the money from the HELOC from my first house and use to work on my next deal!

Kwame Amoako

Real Estate Agent · Columbus, OH · Member since 2019 · 82 posts · 133 votes

5y

@Camden Kelly Ok thanks I appreciate it. So from what I understand it needs to be an amazing deal to brrrr properly. Great job and best of luck on your next investment!

OP

Investor · Pittsburgh, PA · Member since 2020 · 23 posts · 34 votes

5y

@Kwame Amoako I would be hesitant to say it has to be a great deal to be able to BRRRR. Some people don't mind leaving money in the deal if it cash flows, appreciates, etc. It really just depends what your goals are. BRRRR is more of a strategy for houses that need a lot of upgrades which fits my business model because I enjoy value adding.

OP

Investor · Pittsburgh, PA · Member since 2020 · 23 posts · 34 votes

5y

@Felipe Stefanoni Thank you! If you have any questions feel free to reach out. I’d be happy to talk about my experience if it helps. Good luck!

Angela Palchowski

Pittsburgh, PA · Member since 2018 · 7 posts · 0 votes

5y

That is awesome! I am from the other side of Pittsburgh and it's good to hear that people are getting deals around the city! Congrats!

Anthony Angotti

Real Estate Agent · Pittsburgh, PA · Member since 2015 · 1k+ posts · 846 votes

5y

Originally posted by @Camden Kelly:

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $53,000
Cash invested: $36,000

This was my first experience with BRRRR. I secured a line of credit against my primary residence for $85,000. I took the full amount out and purchased a single family home for $53,000 and rehabbed the whole thing top to bottom. This included, plumbing, electrical, a retaining wall, HVAC, flooring, kitchen, bathroom, paint, fixtures, ETC. My total invest in the property, including holding costs, is just north of $88,000. The house recently appraised for $140,000.

What made you interested in investing in this type of deal?

The numbers made sense. I had looked at and analyzed over 50 deals. This one fell into my lap (the seller had reached out to me). I was able to get the property at a premium do to the scope of work (80% of which I could do myself).

How did you find this deal and how did you negotiate it?

My father-in-law is a contractor. He was working on the house across the street when the seller approached him and asked if he wanted to take a look. He called me to let me know it could be a pretty quick turn around (2 months).

How did you finance this deal?

HELOC

How did you add value to the deal?

I updated everything in the house. Although I ended up spending a little more than I had originally wanted to, I feel that the extra money spent allowed me to ask for a little more in rent.

What was the outcome?

Felt like a fairly successful BRRRR. I didn't have to leave any money in the deal and I now have the capital to inject into the next deal.

Lessons learned? Challenges?

Finding the right tenant is a process. We had 75 applications come in when we posted the property. It took an extensive amount of time showing the property, vetting potential tenants, and drafting the lease (thank you BP for the PA lease package!).

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Anjelica Kopsahilis. Would highly recommend her to anyone who is getting started.

Congrats on the deal! Doing all the work yourself probably taught you a lot that will help you in the future when dealing with contractors yourself

OP

Investor · Pittsburgh, PA · Member since 2020 · 23 posts · 34 votes

5y

@Anthony Angotti Thank you! There’s a ton of good content out there in terms of estimating rehab costs. However, in my opinion, one of the best ways to learn is doing the work yourself and seeing how things can add up. It was absolutely a good learning experience.

OP

Investor · Pittsburgh, PA · Member since 2020 · 23 posts · 34 votes

5y

@Angela Palchowski thank you! If you’re ever interested in connecting let me know! Always happy to meet with another Pittsburgh investor.