All Forum Posts by: Account Closed

@Jody Schnurrenberger

Find the tradesmen, find the agents.

Save the cheerleader, save the world!

All right, fine. I live in Pittsburgh, PA. I'm a home improvement contractor. I buy and manage my own properties. I make all-cash, no-contingency offers. I've been burned by this. I expect to be burned again. I mitigate this risk as much as I can by work and study, but I do not take risks I cannot cover. I only invest in a property what I could theoretically put on the ground and burn and still have my business survive. I use my own cash or secure my loans with my own property, so it's mine to win big with or lose big with.

If you're relying on the MLS in this town to find deals, you're at least two steps behind your competition. Easily the best source of cheap leads in this town are distressed properties, and the easiest way to find them is on the monthly sheriff's sale lists. When you buy them at the auction, you have to be sure you've done a competent title search. If you don't know how you've got to pay someone to do it, and that costs money. No title search is ever perfect, and so there is some risk involved. Thankfully, doing a title search in my county is reasonably easy once you learn the process. There are plenty of people who make money off this who flutter their hands and insist it's incredible dangerous to bid on properties at a foreclosure auction, but really, it's not, once you've spent a few months learning the process and the law in your state and county. Most investors shy away from this kind of buying, and so the old adage that opportunity is often missed because it goes around dressed in overalls and looking like hard work is proved out yet again.

In an aging community like this, the second-best places to find properties right now and for the next twenty years are agents, specifically agents who are deeply embedded in their communities and have thousands of contacts. Those agents who have stuck with the game for twenty or thirty years, patiently building up giant networks. These are the agents who read the obits every morning and make notes. They always have a contact who can introduce them to the next of kin if they don't already know them. They have enough suits to get through six or seven funerals a month. They are specialists in pocket listings and sales of the estates of the dead.

These agents are always looking for cash buyers who make firm offers and close quickly. They'll take any offer to the kids of the deceased (who very often live elsewhere), and convince them that they can trust Uncle or Auntie Agent who they met when they were still kids that this is a perfectly fair price for their parent's place as-is for cash, no home inspection, no contingencies, no paint, no renovation, cash on the barrelhead in 30 days or less...because who can stand to come back to western Pennsylvania and sift through Mom's towering piles of crap, excuse me, collectibles?

How do you find these agents? That, ladies and gentlemen, is a real trick in this day and age. Because nobody calls them off an ad. They find their own business. Typically, they work for itty-bitty independent agencies, if for anyone. Don't expect to find their email addresses online, maybe as the listing agents on Zillow.com. They're definitely not here on BiggerPockets.com. They are in their 50s and 60s, members of the last vestiges of the analog world. This is their last hurrah on the American real estate scene.

One way to find them is through tradesmen. These agents know every independent plumber and electrician in their operating area. They've called all of then at some point during their careers to fix something wrong with a house for sale. So if you can find a list of licensed plumbers or electricians in your area, you can find a referral to the kind of agent I'm talking about.

An experienced agent like this is solid gold for a real estate investor, and you should make contacts with two or three in your target areas at least.

All of this of course means you had better be able to do solid home inspections yourself, because you'll never afford to pay a home inspector for all the places you look at. That means there's no hand-fluttering and mincing around about piles of junk, stink, missing appliances, busted doors and windows, ugly popcorn ceilings, damaged floors, possible asbestos, OMG, is there is mold on this wall? BLACK MOLD??? Are those RAT DROPPINGS??? You've got to actually know the product you're buying if you're going to successfully pry houses away from the clutches of the dead and their even more grasping adult children.

Now I know at least 80% of the people reading this think they're going to get into real estate as some kind of investment strategy or magical get-rich-quick endeavor and never get their hands dirty in the ways I'm describing. They want "Real Estate Sanitized For Your Protection." Let me ask you something: if a dude with a perfect manicure and bleach teeth came up to you and promised you that you could make huge money renting out portable toilets for construction sites and outdoor events, you might believe him if his numbers were convincing, right? But would you believe him if he promised you you'd never have to smell crap?

What I mean by that is pretty straightforward. Again, in Allegheny County there's a remarkable tendency to talk about the larger neighborhoods of Pittsburgh into homogeneous units and even turn large municipalities into easily-digestible chunks of sameness, it's not the truth. There are always nicer areas and dodgier areas in a municipality than most people who do not live in that area know about. Is every street in Shadyside like Shady Avenue? Of course not, since Shady Avenue also runs through Squirrel Hill and the mansions on it don't start popping up until Squirrel Hill. Well, is every street in Braddock like Braddock Avenue? Well no, especially since North Braddock Avenue starts in the Pittsburgh neighborhood of Homewood and goes through the municipalities of  Wilkinsburg, Edgewood, Swissvale, and Rankin before it actually touches Braddock.

In a city as confusing as this one, you have to get out there and walk these streets and look at these neighborhoods. Block by block, you'll find differences, sometimes enormous ones. There are huge sections of this city that have been written off by many investors as a solid block of D-class neighborhoods. "I don't buy anything in Swissvale!" "You gotta stay away from Hazelwood!"

And again, the local rental property investor gets the cash flowing in C-class neighborhoods, not B's and A's.

If you are a local investor, and if you are the sort of small-time mom and pop outfit that handles most management and maintenance by itself, there are enormous opportunities lurking for you in Pittsburgh in what most agents and investors take for full-on war zones. You have to investigate the boundaries between what are considered solid C-class neighborhoods and D-class neighborhoods. You have to learn a target area block-by-block. Once you find the right places, you also need to convince potential tenants to go look at them. It's not particularly difficult if they already know you by a word-of-mouth network you've built up and come to you, while it's enormously difficult if you put an anonymous ad online, another advantage of being a local investor.

What makes certain areas of a D-class neighborhood better than others? There are often very good, clear reasons. A school district line is always one of them, and this becomes more obvious when it's the specific service border area of one higher-rated high school than another. Another reason is a nearby medical facility. This is where we've really tended to make our money here. Health care professionals very often have far less leeway in calling off sick or showing up late than the rest of the population that makes as much money as they do. They work longer hours. They will pay a premium to be within an easy commute of their job in an apartment run by a landlord they feel they can trust and who's prompt and professional on maintenance, even in a poor neighborhood.

A top reason a pocket neighborhood forms is a police station. Residents always feel safer around a police station. They are far less likely to leave and go elsewhere as a neighborhood slides downhill than their neighbors a few blocks off. And even in the worst places, you can trust that casual criminals will make far less obvious trouble right next to the cops and make them look bad.

There are multiple other reasons. Various public buildings, community centers, schools -- they all help.

But the strangest pocket neighborhoods in this town sometimes seem to form and endure for no visible reason at all in areas that were previously C-class and slid slowly into D-class ten or twenty years ago. The greatest cultural weakness of this city, in my view, is that the residents refuse to change and let go and embrace new things. Perversely in real estate, it's sometimes just this thing that forms pocket neighborhoods here. A group of people in a place just refuse to change. They get out there and they mow their lawns, they have the brick repointed when the mortar wears out, they get guys up on their roofs to replace their shingle, they get on the municipality to redo the sidewalks, and they resolutely hang out their decorations for Halloween and Christmas every year (look for dedicated efforts block-by-block during the holidays). Doesn't matter if the mill closed down, doesn't matter if the shops moved away, doesn't matter if the neighborhood turns into crap three streets off.  They ENDURE.

In these cases, it's sometimes an ethnic thing, and has to do with a local ethnic church. These people may be two generations off from speaking the language but they still go to the same church their grandparents built. You'll find pockets of Lithuanians, Poles, Hungarians, Bohemians, and Ukrainians throughout the Mon Valley.

In one case I know, the neighborhood's in a short, straight cul-de-sac. There are four families at the head of the dead-end street that are huge on civic participation in the neighborhood watch program. It apparently started off with one family, and just grew once they figured out the benefits. No one gets in or out of the street without being recorded by multiple cameras on private property. You just can't rob a house successfully on this street and get away with it. So no one's been robbed in forever, there's been no violent crime, nobody causing trouble and getting away with it, no drug traffic -- and so, pocket neighborhood. Kids running around and having fun, they learn your car and call you "sir" as you drive through and wave at them.

Hope this helps.

@Jeremy Taggart

It's often been said here on BiggerPockets.com that the best cash-flowing rentals are C-class properties. B-class properties have appreciation potential, and D-class properties often have high costs, iffy tenants, and additional headaches that negate the potential profits you might find there.

The City of Pittsburgh proper has 91 separate neighborhoods that mostly correspond to 32 wards. Some of the separate geographical neighborhoods are incredibly tiny, like Four Mile Run. Some are much larger, like Carrick. The perimeter of the city proper is bordered by a very large number of politically separate boroughs and townships. In general, these tend to be a bit geographically larger than many of the City neighborhoods, although some are quite small (Millvale) while others are larger than any city neighborhood (Penn Hills).

These boroughs are in turn surrounded by other boroughs and townships that are generally geographically larger still. Findlay, Plum, West Deer are three of the largest, although there are still tiny ones like West Elizabeth, Pitcairn, and Bradford Woods out there. Overall, there are 130 separate municipalities in Allegheny County.

There are 43 school districts whose boundaries are drawn generally along the lines of but independently from the neighborhoods, the wards, or the municipalities.

-------------

I firmly believe a non-local can only realize the full gibbering insanity of the naming situation after a decade here.

West Elizabeth is on the western bank of the river that borders Elizabeth. All's well and good.

Sewickley is down by the Ohio River, Sewickley Heights is located further up the bank -- that makes sense, sure. But why is Sewickley Hills located even further away than that? Hmm.

McKees Rocks is to the west of the City proper and McKeesport is to the east of the City. That makes no sense unless you know they're named after different McKees. OK...this is a bit weird.

At least 95% of North Braddock is geographically not north of Braddock's northernmost point. Braddock Hills is north of either of these municipalities. Wha???

One must not confuse Mount Oliver the independent municipality with Mount Oliver the City of Pittsburgh neighborhood that borders it. The crest of the actual Mount Oliver runs smack down the middle of these areas.

West Mifflin is in the eastern part of the county and there is no Mifflin, which again, only makes sense if you know that originally it was named Mifflin Township and only became West Mifflin due to a Commonwealth naming dispute with a town named Mifflin far to the east of Pennsylvania.

The aforementioned West Deer is another one of these, located in the eastern half of Allegheny County -- named so because Little Deer Creek runs through the eastern part of the municipality.

I will close this with the singular case of Versailles, South Versailles, and North Versailles, none of which share a common border.

-------------

Go through this forum and just count how often each borough, each township, each third-class city, and each neighborhood is treated casually as a single, unified, homogeneous unit. "Yeah, uh-huh, yeah, that Penn Hills is pretty interesting, but I don't like most of Ross, that Greenfield is good, but not like Squirrel Hill. Yeah, uh-huh, yeah."

Talk to the locals in situ and as long as you can keep your sense of humor, you'll be mightily entertained. "Yup, yup, go pas' uh redlight 'n uh neighborhood gets worse, but yer fine 'nuff up 'fore 18th. Now unnerstan', nuh burah lahn run bertween 17th 'n 18th as yer comin' uppa Hill. Gotter ruhmemmer 'at."

And I'm sorry, Jeremy, but we both know 99% of the real estate agents in this town are totally fully of crap when it comes to running comps. We both know the general problems with inaccurate appraisers are worse here than anywhere else in Pennsylvania. When it comes to accurately pinning down real estate values for duplexes and triplexes, oh, you're on your own, baby.

The minimal, almost laughable requirements necessary to become a licensed real estate agent here do not help matters at all. And just in case you think I'm picking in you unfairly, I'll mention the truly ridiculous requirements necessary to become a home improvement contractor like me -- no competency test or exam, have a general liability policy, good to go!

There is always going to be room in this town for the investor who stubbornly walks the streets taking notes and pictures and keeps a big map on his wall. There is always going to be room for the local agent who has spent decades getting to know everybody and everything that happens in her or his his target area. There is always going to be room for the contractor who buys his own properties and does his own management. Finally, on every economic upswing there is always going to a pack of real estate poseurs who ride into this town all big-shotting it up with their universally applicable get-rich-quick systems and leave in the very early hours grimly resolved never, ever to talk about that shaved orangutan they woke up next to.

Pocket neighborhoods are everywhere in Allegheny County. You just have to go looking and learning.

Take the money and shut the door behind this mess as it leaves your property. You lost money on this deal. At least he didn't go upstairs to the bathroom, close the popup drain, stuff a rag down the bathroom lavatory drain overflow hole, and turn on the water just before he left in the middle of the night.

Next time, you'll be better prepared. You'll learn how to screen tenants here with the BP community. You'll have a better lease. I hope this convinces you to start researching the eviction procedure in your county, so you'll at least have the start of preparation for that eventuality.

One thing, though...you make all kinds of relationship value judgments when it comes to your tenants' relationship(s) in your post. What's it to you? They're either money or a hole in your pocket. Where is the value in figuring out who's taking it and who's giving it to whom? Don't you have anything better to do? The fact that you were all up in their business like that is straight-up creepy. You want this kind of drama, put your tenant's rent into dollar bills and ask strippers down at the club to tell you their life stories.

@Rob Beardsley 

Again, it would be so nice to be wrong.

@Rob Beardsley

1. Google Maps Street View is an invaluable ally in what you're trying to do.

2. To help you understand how segregated this town still is, the physical evidence of it, the Racial Dot Map is invaluable. You have to see it to believe it.

https://demographics.virginia.edu/DotMap/

3. Google Earth will help you understand the land -- how the ravines and cliffs force physical separations and limit traffic routes.

4. There's a general  interactive county municipality map that you'll need to study. You can get a good physical copy at the courthouse.

http://apps.alleghenycounty.us/website/munimap.asp

5. There's a great Wikipedia guide to the neighborhoods of the City proper:

https://en.wikipedia.org/wiki/List_of_Pittsburgh_n...

6. This SNAP data is a great way to get a lot of information together on the City neighborhoods:

https://docs.google.com/spreadsheets/d/1fp94gJxmO2...

7. I would highly recommend that you study Allegheny County's master interactive bus map.

https://paac.maps.arcgis.com/apps/webappviewer/ind...

8. Then there's this.

http://www.penndot.gov/ProjectAndPrograms/Planning...

Each of the boroughs and townships has its own website where you can usually get access to even more specialized maps.

"God made men, but Sam Colt made them equal."

Get a gun, get a taser, get pepper spray. They all help. The gun helps the most. Kathleen said it well.

You're not going to shoot anyone if you can help it, you're not going to keep it in an unsafe place, you're not going to let anyone else use it, and you're not going to use it to threaten anyone who is not obviously committing an illegal act. You are exactly the kind of people who I would want to be armed in our society for the obvious benefit of all, in a society that refuses to be disarmed. Should the terrorist, the criminals, and those eager to bully others be the only people who have access to the guns in moments of crisis?

I am a large, obviously strong man. I'm looking at these comments and I feel ashamed.

Kathleen -- "I don't go into the basement on a showing." Well, I'm pretty good at wiring and plumbing. The first place I head for is the basement to check the panel and the stack. So if Kathleen doesn't come down with me to talk about how the panel was just upgraded, or listen to me talk about the condition of the stack, is she risking losing a possible lease?

Linda -- "I don't do showing unless I verify the prospective tenant." Well, what if you don't have time? Do you pass up the opportunity?

By what moral imperative are you constrained to have these worries about meeting and working with strangers and I do not? Because genetics handed me a bigger body and you a smaller one? If I can't believe in "the mere primitive doctrine that might is right," I can't believe that.

@Arnie Guida

4th DUI. I see.

He's only a felon because the law refuses to accept that he's an addict.  

@Ihe O.

I would pay lots more in taxes to care for the weakest members of our society. I would pay lots more for everyone to have a basic level of health care regardless of income. Most of all, I would pay lots and lots of taxes for prenatal care to reduce infant mortality to European levels in the USA and finally eliminate the racial implications in that American statistic as it stands today.

I think you've nailed it on the head, Ihe. Smallholder landlords and homeowners in inadequate neighborhoods are forced to pay a good part of the price for the deficiencies of our public health care system in the way you have described. It's a hidden tax on us. Through inflated insurance costs, we are unfairly targeted as a group and forced to subsidize the ineffective mental illness and substance abuse programs that exist in this country, to pick up the tab for many of the costs that are left on the table by these systems. So we are effectively subsidizing both the poor, who cannot pay, and the very wealthy, who do not as a rule own and operate SF or MF properties in C and D-class neighborhoods and therefore do not pay as well.

The only practical solution to this and many other dilemmas like it is to become richer and transition out of the C and D-class neighborhoods, or to become poor.

It was Thucydides who pointed out thousands of years ago that questions about what is "Right" and what is "Wrong" only really matter between people who are equal in power. In this world, the strong do whatever they want and the weak suffer what they must.