All Forum Posts by: Jason Milko

We recently purchased our first rental, and are approaching our first tax season as landlords. I just learned about the cost segregation study, and how it can save an investor a lot on taxes. From my research, I see that there are differing levels of detail and support available for these studies. The primary categories are 1) DIY, 2) hire someone for a virtual evaluation, and 3) hire someone to walk the property and evaluate. 

Obviously each of these 3 come at different price points and different levels of security. What is the sweet spot for someone just starting out with little cash at their disposal? I would prefer to save money but understand the long term trade off of a more expensive option. Is the added cost of option 2 or 3 worth it? How much risk is taken on by going with the cheap option?

I love Drew's comment above.

When we bought our first property, I had a similar urge to fix everything and make it perfect. After some thinking, I adopted the mindset of "if the tenant doesn't care, why should I?" We were fortunate to already have satisfied tenants at the time of purchase, but this mindset saved us some money and a lot of stress.

@Jeremy Taggart I would do some work on one of the units if the tenant were to leave, but they seem to be ok with the current condition. I'd prefer to keep them for at least another year to build up some cash, so maybe a smaller increase is better for my current situation. 

@Matt Dingus I like this idea, thank you. One of the units does need some new appliances so I can use that to my advantage 

@Jason Zundel thanks for the comments. This is in Pittsburgh, and I did double check to make sure I was following all laws and following their old lease. They've been living there a little over two years, and are great tenants from what I've been told. When I spoke with one of the tenants, they did seem concerned when I mentioned a rent increase. I'm confident I could fill the unit quickly, but that would obviously be more work/stress than keeping this person. I would break even at the old rent prices, so I definitely want to increase. 

I'm thinking that I just need to stick with my plan because I've done research to confirm it is fair, and I need to worry less about the tenant potentially moving out. 

We just recently bought a duplex, and are planning to keep the current tenants, but I want to know the right way to approach the rent conversation. The old owner was charging $825 and $850, which is way below market. I want to go up to $950 and $1100, which is what the appraiser recommended and is still below average for the area. At the end of the day, this is a business, but I still want to do right by these tenants. I heard on a podcast about increasing incrementally, but wasn't sure if that was necessary for this increase. 

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Up/down duplex in Brentwood. The lower unit is 2BR/1 bath and the upper unit is 3BR/1 bath. Both units have air conditioning, and both have a private storage space in the basement. Each unit has separate laundry in the basement.

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

This property was already occupied and didn’t require a lot of work. We wanted this due to our lack of experience, and are looking to gain that experience through this property.

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

I have been looking through MLS listings for a while, so I had a good idea on what prices to expect. This property seemed to have a little more potential than others in this price range, so we jumped on it.

How did you finance this deal?

Conventional 30 year mortgage through the bank

Lessons learned? Challenges?

Financing through the bank was simple and easy because they were able to explain everything clearly to us. In the future, we are looking to get more creative with financing and investigate options that require less money up front.

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

Our agent Elisa Varotto was a huge help during the search. She was able to explain everything that we should be looking for as new investors. She also referred us to a great company for the inspection, Round Tuit Home Inspection.