All Forum Posts by: Jake Tovey

@Ryan Alexander Yeah the biggest thing is the taxes from my experience- Absolutely crushed my numbers on the few deals I looked at. But the city side of Regent Square is an area I’d invest in which is right next to Wilkinsburg. I believe East End Ave is the cut off, and the taxes are double on the Wilkinsburg side compared to the City Side.

I personally would recommend you go the multi family route and aim for a fourplex. But focus on the cash flow above all else, not the number of units. Work with an investor-friendly agent (PM if you want a recommendation), network, and consider driving for dollars. 

Also, I recommend you focus on cash flow instead of the purchase price for this property. I.e. if a fourplex for $400K will cash flow $1000 per month, and you have duplex for $150K that will cash flow $100 per month, I'd go for the fourplex. You're 3.5% downpayment will go much farther due to larger equity pay down and cash flow. If it is because you've only been pre-approved for $150K purchase price, then explain to the lender you will have cash flow from other units/ bedrooms each month. Lenders will factor in the income from the other units and as long as your credit score is solid, you'll be able to qualify for a much larger loan if the cash flow is there. I was confused on that when I first started because my pre-approval amount was low, but PM me if you want a recommendation on the lender I used. 

Also- unless you are planning to live in this property for a while, value the property based on cash flow once fully occupied. Don't get too caught up with the numbers while you're living in the property and think longer term. Focus on getting into a cash flowing property by putting in a low downpayment, living there for a year, add as much value as you possibly can for that year, and then move out for maximum cash flow. Personally, I am planning to move out and repeat each year following this plan. But if you are wanting to live there for a while, make sure the numbers work there too. Regardless, make sure you can handle the numbers if you were to move out and put property management in place to protect yourself as well. 

Welcome to BP, Bob! To all investors out there looking for a great contractor in the Pittsburgh area- I can vouch for Bobs quality work. Great guy, and did a fantastic job on a kitchen remodel in one of my units last month at a very reasonable price!

My recommendation for you is the same as we had talked about when I saw you last - Continue reading the forums on here and listening to the podcasts! The BP books are also great and would recommend all of them at some point. 

If I were you, I would set aside 30 minutes a day to learn about creative financing methods to help you gain ideas - Either through the creative financing forums or books (Maybe start with "Low and No money down" - Turner or "Raising Private Capital" - Faircloth). Spend another 30 minutes a day on real estate strategies as a whole. If you don't think you can commit to an hour every day, figure out how much time you can reasonably commit to every day and stick to it. With your skill-set, you'll no doubt be able to find a partner who has the cash to invest, but not the skills or time required like you do. 

Well, there is a good amount of hate going on this thread regarding rental arbitrage haha. Is it better to own the property that you are renting on airbnb? Well, yes. You have complete control over the unit and you get more benefits to it, namely appreciate and principal pay down, in addition to the cash flow.

The difference is that it is much easier to get into an arbitrage unit for dirt cheap compared to a property, and sometimes just for the cost of a security deposit/ first months rent. Personally, for my first one I opened up a 0% APR credit card for 15 months to cover the furnishing expenses ( And even my rent payments) to get in for nothing down. My goals are to take the cash flow I make off my arbitrage unit(s) to funnel into properties of my own. I think it can be a great way to build a small business for yourself, and then you can take the cash flow to put towards more stable investments to build wealth (If you want to).

I highly recommend the Airbnb Automated youtube channel to learn what it takes to be successful in this business model. It's all free and he puts out some incredibly useful advice.

I am house hacking my first property in Bloomfield. When I was looking to buy last summer, the areas that I found the best deals in included Highland Park, Regent Square (City side), Bloomfield and Southside.  Some in Squirrel hill south/ greenfield area. I didn't look much in Mount Washington, but since I work in Monroeville I didn't want to look in that area. 

My recommendation is to determine what neighborhoods you'd be willing to live in (And be flexible), and then take the best deal you can find in any of those neighborhoods. The more flexible you are, the better. Analyze every deal that comes on the market so you understand what a good deal looks like when you come across one. If you don't know what rents to expect in an area, take a day and tour several units in a certain market to get a feel for what you can expect to make. Or analyze available units on hotpads, zillow or craigslist to get rough estimates.

Unless your intentions are to live in this property for an extended period of time, don't concern yourself too much with year 1 numbers while you're living in it. Focus more on the cash flow potential when you move out and have it fully occupied. I encourage you to self manage while you start, but also make sure you can handle property management fees/ costs. Also, the more work you can do in your first year to improve the property, the better. 

Best of luck. Feel free to reach out if you need any advice!

Hey DeAndre - I would be happy to meet up and talk! I am house hacking my first property in Bloomfield currently and also in the process of getting first unit up and running on airbnb (Arbitrage on a unit in Shadyside). I know several people who have been very successful with airbnb in the area and think it has the potential to be a great way to bring in more cash flow. Send me a message and we can find a time to connect!

To project your worst-case scenario annual tax on a property in Allegheny County, take 2.3% of the purchase price to get a good estimate. This doesn't usually kick in for 2-3 years, but when evaluating properties, make sure your numbers work at this full tax assessment. Also, when the property is re-assessed, you can usually fight it and pay about 75-80% of that value.

Example: $300,000 purchase price would be ~$6,900 annual taxes as a worst-case scenario full assessment. If you fight the assessment value and get it down to 75%, a realistic projection for this example would be $5,175 annual tax.

I just bought my first property to house hack this past July (In Bloomfield) and aiming to repeat this year- Feel free to reach out if you need any help/ contacts!

One big tip I have to help you save on the down payment costs (If you have tenants in the property that you are buying and it is currently cash flowing): Negotiate 6% Seller assist and close as close to the first day of the month, regardless of the month.

Example:
Triplex is cash flowing $3000 per month. You negotiate 6% seller assist and closing date of April 1st. This will allow you to collect the full $3000 in April rents at closing. Additionally, your first mortgage payment isnt typically due until the 3rd month, or in this example, June 1st. So you will be able to collect the full $3000 for May rents as well before the first mortgage payment is due, totaling to $6000 in cash in the first two months of closing.

In the same example, if you closed on April 20th, you would only receive $1000 for April rents (April 21 - 30), plus the $3000 for May, and have 20 less days of free rent payments off the bat totaling to $2000 lost.

Not worth losing the deal over, but keep it in mind when scheduling your closing date. The only downside to this is you'll have a full month of pre-paid interest due at closing, but you're able to count that in your 6% seller assist at closing and have the seller pay that.

Welcome man! I highly recommend you continue to read/ listen to podcasts in this stage. You'd be surprised at how much you can learn just by putting in the work yourself through books and podcasts and is ultimately one of the best ways for you to separate yourself from others. Although I agree with Clayton that it is possible to over self educate. I spent a ton of time reading/ doing research which helped immensely, but when I started working with my real estate agent (Also investor) as I got ready to buy, I started learning everything much more quickly. Just because he already knew so much it really sped up my learning curve. So once you start to get a better understanding of real estate and what you want to do, begin networking with other investors. It will help you tons. Definitely continue reading/ learning as much as you can, just don't isolate yourself the entire time and network with other investors too because that will really help you out.

Few books I recommend:

- Rich Dad Poor Dad (Kiosaki); Mindset book to help you get started. There is a reason everyone recommends it, excellent book!

- Millionaire Real Estate Investor (Keller); Great for beginners, shows you several different options you have and a good overview for investors

- Set For Life (Trench); This does an excellent job outlining the steps to take if you are trying to house hack. Just about minimizing your personal expenses, living frugally and setting yourself up well.

- Book on rental property investing (Turner); Also a good overview of Real Estate investing, but dives into a lot of specifics. Long book but all great stuff with a lot of action items you can take from it.

- Landlording on Autopilot (Butler); Excellent book for systematizing the management of your properties. If its not for you, you can always outsource property management. But this book does a great job of showing you how you can do it yourself and still scale without having to outsource if you're up for it. Better to read this as you get closer to buying, though.

- Book on estimating rehab costs (Scott); Good for renovations and estimating rehab costs, although double check the numbers in your area and dont rely on his in the book. Does a good job of showing you what to look for. You can always call up contractors/ visit home depot to build a list of costs for yourself but this does a good job showing you everything you need to know. Finding an agent who understands these numbers well will help SO much because estimating rehab costs is so crucial.

- Wealthy Gardner (Soforic); This isnt real estate specific but it is my favorite book. Just great principles to live by for building wealth. 

*All of the BP books are good though, and there are tons of others but as you read you'll get recommendations for other books too. 

Hope this helps! I am house hacking my first property and I am definitely happy that I went for it. I also spent countless hours before buying to learn and understand this stuff. And it was all totally worth it. So just keep learning as much as you can and know that it will pay off for you (Just dont expect it immediately) and make sure to keep building your network along the way!

I highly recommend Dustin Nulf with Full House LLC. He is very experienced in the Pittsburgh area and also a fantastic agent. He will be able to help you assemble the rest of your team in the area if needed. Message me if you'd like to get his contact info or any other help, best of luck!

https://thefullhouse.managebuilding.com/Resident/public/home