All Forum Posts by: Andy Sabisch

Wanda, How did you select Pittsburgh?  DO you have family / friends / other investors you can use for boots on the ground there to look at a deal before you buy?  We have seen some killer properties online and when we looked at them, yikes, not sure how they took the photos they did.  

Have you engaged with wholesalers in the area you are looking at?  While their repair costs and ARV numbers might be overly optimistic, they are often local and can get you the information you need to make a better decision.  Look at using the calculators offered here and use your numbers to see what the deal looks like.  They cost you nothing and will do the bird dogging for you . . . then you can choose which property is for you.

We are in Mississippi but have bought the last few properties in PA but we have friends and family in the are that can do the legwork for us as well as agents we can trust for ARV values.  I would be happy to discuss some areas that are a lot closer to you that might fit the bill in terms of what you are looking for . . . feel free to message us.

Finally, don't forget the family you have here on BP . . . we can look at a deal and give you feedback from our experience on repair estimates, time line, etc.  We have found that there are a lot of really savvy investors here and have always gotten great advice when asking questions.

Think you will be hard pressed to find a market that is not saturated with investors (or want to be investors) anymore.  If you do, it might be that the market is not supporting investors.  With the online tools, one can invest anywhere the deals are right.

What is your experience level and where are you located . . . . there are likely great deals in your backyard.  One thing to keep in mid is that as interest rates go up, the hot pool of buyers will start to shrink and the sales prices will not be climbing as they have been . . . avoid getting pulled into a deal which you might not realize on the back end.

We are in the process of selling a property in Mississippi that we want to use a 1031 Exchange on with a property in Pennsylvania.  We had two questions that I wanted to pose . . . .

1) Is there an issue with doing a 1031 exchange with a property in one state with one in another state?

2) Can you recommend an entity that we can use for the funds?  The one our title company recommended seems to be impossible to get in touch with.

Thanks in advance

Andy

We purchased a property that was listed as vacant and driving by seemed to be vacant.  The bank had foreclosed 18 months earlier.  Guess what . . the original owner was still there with shades drawn.  We had to go through the eviction process and luckily the individual left the day the sheriff was going to remove him.  Thankfully there was no damage but that can easily go the other way.  Friend of mine also bought an owner occupied property and when they got in, there were holes kicked through most of the walls and cement poured in the toilets . . an expensive addition that was unexpected.  If you buy an occupied property, be prepared for the worst and bid accordingly - you might be pleasantly surprised but better then find yourself underwater.  The COVID moratoriums have ended but there is a line of evictions to process so check with a local real estate attorney that handles evictions and see what time you are looking at - in our case we bought the property in August and did not get access until October which impacted the planned timeline to flip it.

Be happy to share lessons we learned the hard way . . . message us

Quick question . . . . we picked up a fix-&-flip in late 2021 and am putting it on the market this coming weekend.  How do we handle the money invested in 2021 (purchase, eviction cost,  renovations through 12/31, etc.) on our 2021 taxes?  Do we simply hold everything until we file in 2022? 

Thanks in advance

You will get 100 ways to find a property ranging from retail to wholesale to off market to driving for dollars to bandit signs . . . . the list is endless but many rely on the area to work. The bottom line is that the numbers have to work to make a flip doable. How you find that property where the numbers work depends on your area and what the profit you are looking to make. In our area you can find properties for less than 100K all day long . . . the problem is that putting $20K into it will leave you barely breaking even.. Be careful with wholesalers who offer you a property with an inflated ARV and an under estimated repair cost just to get you to take the assignment. If you have not down flips before or not in the area the wholesaler is offering you a property, tread carefully as there are areas where block can make a huge difference in the payoff.

Remember the saying, You make money buying not selling . . . . so buy right and the rest flows on a flip.

We have purchased our last few properties from 1) an auction (Hubzu), 2) a FSO and 3) an under priced retail sale which had been on the market for months and all it took was elbow grease (and a better listing agent).  There are deals out there . . . but for a flip make sure the numbers work especially if you are new to the flipping side as prices for material and now labor is going up and down  every day.

Hope this helps

Hate to say it but without a track record with a specific HML or PML sources, you will need to have skin in the game which means 10% as a minimum.

Tread carefully as you will find that flips usually have unexpected surprises, cost more than the estimates and take longer than projected.  See if there are any REIGs in the area that you can join and ten find others that are flipping and see if you can tag along and see some of their properties.  You can get all the how-to guides and spreadsheets but those unseen gotchas can break a deal once you are already neck deep in it.  You are close to Philly (we know the area as we have property north of you) and you will be paying top dollar for flip properties plus the rehab costs.  

Financing the flip will be your biggest hurdle initially.  Look into HMLs in advance of making an offer.  We have seen people that made an offer, had it accepted and then freak out trying to find financing before their window closes and the property is sold to someone who thought that through in advance.  With no experience you will be paying more for money (interest and points) than if you had multiple flips behind you.  When we started we were challenged, now the HMLs contact us looking to see if we have a deal that they can fund. Consider a partner for the first one and share the profit - a win win for both of you.

Finally, if you are considering a property, use the tools here and don't be afraid to post the details on the forum and see what the BP family can provide in terms of input to make an informed decision.

Remember, it is not as easy as it is often portrayed to be.

I agree with Michael having done both.  Unless you are in the know when it comes to permits and zoning and inspections, urban projects can take on a life of their own and cost you money.  We have run into issues where you almost need to say how much is this going to cost me to move forward especially when you get an inspector that is clueless yet can hold you up for something he thinks is a big deal.  Often the rural projects are discussed with the zoning people and a green light given with far less aggravation.

But it also comes down to how much meat is on the bone so to speak.  Is the spread there on rural properties?  It all depends on the demand and just how rural you are talking about.  A short drive from urban conveniences versus a two hour drive to get groceries.

Run the numbers and see where you stand in terms of possible profit

We are renting one unit in a building we have and the person looking at it has a German Shepard that she said is a service animal.  We have a breed / weight limit on dogs based on our insurer (Steadily) which would negate our liability coverage.  We also charge a $200 non-refundable deposit for the dog and $25 / month additional on the rent.

We did a quick search and it looks like we can not exclude someone with a service animal nor charge for a deposit or extra rent.  We cant exclude the tenant based on breed or weight even though our insurer will cancel coverage.

Is this a correct interpretation of the law and have you run into this before.  We have a number of people interested in the apartment but wanted to know about this issue which can impact us both in terms of insurance and damage to the property.