All Forum Posts by: Jason Hsun

@Filipe Pereira. I don’t think many people have used the term “former architect” and “regret” in the same sentence.  Haha.  But the low turnout on this really has proven my point.  I think they’re all too busy drawing toilet details while sheltering-in-place!

Totally agree with Jonathan on all points.  Four units and less don’t appraise using income approach.  They will likely go off of square footage and/or per unit cost.  I would have to agree on the rent comps too...A multi-unit residential property isn’t going to have the same amenities as larger apartment buildings with facilities.  Your rents are going to be in alignment with the rest of the neighborhood, with the only legit way of getting a bump is to renovate and/or provide central A/C.

@Stephen Brown @Stone Jin. You guys are absolutely right about killer taxes.  No way around it but to avoid investing in these areas.  Where I invest in PA, you can count on paying anywhere between $2,200-3,000/door per year...and these are not SFRs.  These are <1,000sf units in a duplex set up.  Despite high taxes, no negative cash flow.

I will start off by disclaiming that I cannot take credit for the idea behind this post.  I recently read and responded to a post initiated by @Adam Zach surveying all members wanting to see who in the real estate investing world came from an engineering background.  I posted a reply mentioning that the ironic thing about this topic was that the group of people who should know THE MOST about real estate (minus the investing part) were architects!  And then went on to say that it was likely because of an architect’s (low) income versus an engineer’s which prevents architects from investing.  But then I gave it more thought, and what’s even more ironic is that...most architects are so preoccupied with their craft that they fail to see the what their clients are doing right under their noses...Developing buildings to make money!  I know there’s at least a couple of us out there...let’s represent!

The funny ironic thing about this conversation (for me) is that the group of people who should know the most about real estate (note I didn't say real estate 'investing') are architects!  But in the end, it's really a testament to the income of architect versus engineers (and the rest of the professions)!  As an architect, I am so glad to have found finally found real estate investing, but often wonder why the light bulb didn't go off earlier...when I was helping all my clients design apartment buildings, I was there just taking a paycheck...Still, never too late.

Congrats on the search.  Assuming this is for a personal single family residence and not a commercial multi unit? If it’s for the former, you can PM me for the details on a potential lender.   Also if that’s the case, you’re going to be getting a CP loan - construction to permanent loan and the loan amount will be capped around $485k (I think they may have raised it a bit this year).  You can go higher, but it will be a JUMBO loan I believe.

I agree wholeheartedly with Matthew’s last paragraph.  Hypothetically if you were in the price point that he mentioned, you would for sure want at least 10% of the value of that home in reserves for vacancy, repairs and capex.  A new furnace, a new roof, even turnover for a new tenant will severely eat into your cash flow.  It’s easy for newbies to forget that capital is needed to operate and maintain a property for the first few years when you haven’t had the time to accumulate a lot of cash flow.

But to answer your question, I invested where I went to college because I knew it to a certain degree.  Next thing I did was go on to BP and researched the hell out of that market.  I was very lucky to find an agent on there that was in complete alignment to my mindset as a new investor at that time and she has been my agent since.  She is absolutely awesome and the only reason I haven’t spread into other markets is my inability to find someone else like her.  Matthew mentions about having the right team and I believe this is so incredibly important to being an out-of-state investor.

@Alex Deacon. Would you like to chime in?  Haha.

I can totally appreciate what @Keith Leckey @Austin Mountain have described regarding their personal experiences and the fact that the three of us have given you very lengthy responses to the realities of Section 8 should tell you alone the complexities that you will no doubt be dealing with if you care to enter into the program.  Unless you really are dead set on going into this type of area for your first time purchase, I would recommend you save up more and get yourself into a slightly better location.  I don’t know your background whatsoever, but if you are a first time with not much experience, you should think twice about entering into an agreement where you are at the mercy of two entities (the program inspector & the tenant) that determine whether or not you are fit to get paid by them.  If you don’t pass the stringent inspections (at least in PGH), then you’re not going to get paid.  Didn’t pass the program inspection?  Then the tenant has the right not to pay  their portion of the rent.  And who potentially caused you not to pass?  That’s right...the tenant.  

The only reason I can see you going into the program is if (1) you definitely want to invest in this area and (2) the rent you’re getting from Section 8 is more than you would get from the open market.

@Serena Tillman And to answer your original question - I find the Midwest and the southeast to be where the cash flow and price of entry to be at a good balance.  For either of the coasts, unless you have a ton of cash to work with, you don’t want a majority of your capital to be tied up in one or two properties making no cash flow.  It defeats your purpose.