All Forum Posts by: Joe P.

@Kasay Mardis Ok - and keep in mind, I'm an amateur investor just trying to point out what I think could be wrong. My advice should be taken with a grain of salt. That all being said...

• You're in the middle of nowhere. I had to zoom out on a map way way way back to see that you are somewhere in the vicinity of the Pittsburgh area. There isn't a strong rental market there. This is not a today problem; it's a problem that you will deal with until that area develops.
• You have competition with more pictures (better pictures) and they are probably still trying to fill the vacancy: https://pittsburgh.craigslist.org/apa/d/large-2-or-3-bedroom-apartment/7047360490.html
• Your pictures aren't very good and don't showcase living, dining, bedroom, or amenities. Improve both the quality and quantity of your pictures.
• Wallpaper. Yuck. Peeling wallpaper at that.

So to recap, you're in a no-name town, trying to rent a mediocre unit, with not many pictures to boot. I bet you don't even have a lot of folks reaching out to you, right?

I hate to say it...this is the ultimate "if I build it, they will come" rental I've ever seen. This place is nowhere and the rental is probably "satisfactory", but honestly...yeesh. You have a lot of things preventing even nibbles on this property. You could market the hell out of it, but you can't fix the location, you can't fix the rental market, and for a place renting for $550 a month, the improvements you can make are limited.

Do you have equity in the place you could tap into via sale and buy somewhere where there is a stronger rental market?

I'm sorry if this is too strongly worded. I'm from Philly and I tend to say what I'm thinking. Apologies in advance if any of this is hurtful information - I'm just trying to point out my opinion as a big city jerk amateur investor...

Both have happened to me. I had a SFH (previously my primary residence) in South Philly rented to a nice couple with a dog. They were FANTASTIC tenants, when they said they wanted to renew 9 months in I said sure, we'll wait for this current lease to expire and we'll sign you up another year. Never bothered me for anything, always paid on time.

Then the rent started coming a few days late - within grace period to start. Then late. Then significantly late. Then I filed for eviction. They paid to vacate before the court date. Then I had to file again. They paid to vacate before the court date. They became very cagey, not responding to e-mails/calls. Always nice, apologetic, some sob story. This went on for the last 7 months of their year lease. Finally as we came up to the end I said no more -- we're not renewing for another year. They did a "broom clean" but the house was a mess.

Their dog, I guess with their problems, started to crap all over brand new hardwoods (5 year old install). There was a distinct poop smell when you walked into the house. For months I tried to get it out myself. HUGE flies would appear in the window every day...there must have been some small opening...somewhere...attracting them in. I must have tried to reclean that floor 10 times. All new paint needed, bathroom was disgusting...OH, and as I was editing, I just remembered that the pipe for the bathroom sink had a giant crack horizontally just above the tile. It had to have been there a month or so, and looked deliberate. So water would run down the floor into the first floor and hit a spot on my hardwoods, which were warped in that area due to water damage. Not enough to be replaced, but enough to know water had hit it and nobody did jack-all about it when it did.

Then, my upstairs unit on my duplex in NJ was vacant for about 4 months. Also, due to some plumbing issues before I purchased the place, and general wear and tear, we had to replace the bathroom vanity, mirror, and tub, as well as add a shutoff valve in the entry way and do some light copper work. So I had about 4 months of vacancy and another $1500 or so in a light bathroom remodel.

This stuff happens. That's why when you evaluate properties, unless its a fantastic situation going after $100 a month in cash flow per door sometimes just isn't enough. It's a good number to strive for, but if your other estimates don't face reality, you'll lose money.

Also keep in mind at that dollar range ($550-$600) most of those people will be blue collar workers with some debt, living paycheck to paycheck.

I would not relax your requirements - you want a good tenant that can comfortably pay their rent. Look at your marketing (I personally have had zero luck with FB marketplace but people SWEAR by it) and for younger tenants social media is the name of the game. See if a local broker with a ton of followers could promote the unit for you, especially if it shows well. Seems like FB and Instagram could attract a younger crowd.

If your numbers can hold it, consider lowering the rent a bit as well. I'd rather lose $25 a month but have a good solid tenant than $550 a month because nobody is renting -- don't lose dollars chasing pennies.

Some heavy hitters in this thread with some great advice, but I've got to second the point made by @Brett B. because his advice is the best in my opinion. I've bolded it, underlined it, and italicized it for you..."You have to think about what your goals are"

If you haven't done this, this is step 1. You are actually in a terrible, dangerous spot with 30k to burn -- you're a real estate dog chasing real estate cars. You have no idea what you're doing and you'll go anywhere and everywhere if you aren't careful.

I've been on a real kick with telling people to visualize their real estate goals; as much as it would help smarter investors to get stupid money into the market, you need something to hang your hat on. 

You want to be in RE. But that's not a goal.

As I told folks in a different thread, a goal should be SMART (specific, measurable, attainable, relevant and time-bound). My RE goal right now is to have 10 doors by 2030; acquiring approximately 1 door per year with CF of at least $100 in a BRRRR setting and between $200-$300 in conventional purchase. This means by 2030, I should have 10 doors total, cash flow of at least $1000 per month across 10 doors. I also believe in local investing and having my eyes on the property, so I want to be within 25 miles of Philadelphia or less.

Some of the heavy hitters might laugh at my goal because its conservative, it's counting on relatively modest returns, and doesn't make me a millionaire overnight (or even in 10 years). But for me, I love my job and its going to be my primary source of income, so I can keep saving and doing what I want to do. RE is a business for me, a business I enjoy, but a small business. My goal is in-line with my investment theory and long-term plan.

So, I implore you to o this first, before you start investing in turnkeys, rehabs, OOS, syndications, etc...because your investment vehicle(s) should match your goals.

Hi @Joe Delgrosso good question -- same boat as you. Just put an offer today on a property that needs a ton of work but is a good BRRRR candidate.

For me the trick is to get a cash flowing property with many of the big-ticket items taken care of, bought and then "sold" via refinancing, leaving me hopefully around net-even with a cash flowing property at the end of the day.

Couple of things to keep in mind:

• Not every BRRRR will be a slam dunk. If your numbers are tight to begin with, anything going wrong at any stage -- purchase, rehab, renting, refinancing -- can put a strain on the deal.
• Don't do the deal if you don't have reserves and can cover holding costs.
• Expect 8 months of holding costs because typically you can't refinance until 180 days post-close, and then it takes maybe a month or so to actually refinance from there start to finish.
• If you can't BRRRR comfortably (e.g. leaving money in the deal or not cashing out) then it may not be a good idea until you're ready.
• Most lenders will be around 70% LTV, not 75%. You may be able to refinance with higher LTV but your rates will suffer.
• Using the info above, your purchase and rehab costs really shouldn't exceed 70% LTV unless you don't mind leaving cash in the deal (e.g. not being able to refinance all your money out to do the last "R" - repeat)

So in general, I don't think you're doing anything wrong. Decide where your goals are for BRRRR and then properties either will or won't meet the criteria. For a good cash flowing property, e.g. $200 a month per door or better, then you still want to be good with cash on cash, so 10% is 20k overall paid. Some people want to refinance cash back and have even better cash flow...also fine if you can find those properties. The real trick is finding the really distressed properties and fitting the rehab in. Those two numbers (purchase and rehab) should be 70% or less of ARV to make BRRRR work, in my opinion...and then everything else has to fall in line, too.

What I would do, if I was in your shoes...is come up with a GOAL. You have no goal stated. You want to be in RE. But that's not a goal.

A goal should be SMART (specific, measurable, attainable, relevant and time-bound). My RE goal right now is to have 10 doors by 2030; acquiring approximately 1 door per year with CF of at least $100 in a BRRRR setting and between $200-$300 in conventional purchase. This means by 2030, I should have 10 doors total, cash flow of at least $1000 per month across 10 doors. I also believe in local investing and having my eyes on the property, so I want to be within 25 miles of Philadelphia or less.

Now that I have my goal in place -- I can focus on acquisition and avenues. My finances are in order to allow me to do achieve this.

Once you do this -- everything will fall into place. You'll need to see how you can obtain money for investments, if you have enough cash on hand/reserves to do so, if you have the time to do so, etc.

Specifically as it relates to your finance information, credit score is good. Don't touch your IRA - in fact continue to direct funds there if you can. Save, save, save. Continue to pay down your debts diligently and on-time.

Also, whats your monthly rent? Boston rents are sky high -- anything you can do to reduce your expenses (your living expense is your greatest expense right now, probably) go do it. Move back home, house hack may be an option with your available cash as well.

Yes. :D

@George W. is correct -- your cash on hand isn't strong enough yet (in my opinion). Start to bring down your debt, increase your credit scores, and start saving for reserves (160k combined is excellent, in Slidell (wow, Live PD reference...) that should take you super far and paying 1k a month in mortgage/rent is good at your combined salaries.

HELOC is probably not an option at 190k appraisal -- most will let you HELOC about 80% of your appraisal minus your mortgage. Well 80% for you is 152,000 and your mortgage is 135,000 -- nowhere near enough to even bother especially with low cash reserves.

Also look at your overall RE goals and refine them..."We plan to buy and hold single and multi family for cash flow."  -- this is a vehicle, not a goal. It's open ended, has no finite date to achieve, and no number to hit.

Decide what you and the missus truly want out of RE -- e.g. my personal RE goal (has changed over the last few years) would be to pick up 1 door per year, either 200-300 CF off the purchase or a BRRRR with 100 CF, to give me around 1000-1500 per month in CF after 10 years. This is a defined, finite, measurable, attainable goal for me. The goal can change...but defining what I wanted has confirmed the vehicle, confirmed how I put my personal finances in order, and has driven my focus to the said goal. Once you know what you want to do, truly, the options narrow and the things you need to do to get there become far more clear.

Mortgage is around $437 a month, correct? Income is $1400 a month, correct, except where you've raised it thanks to some work completed? What are the annual taxes?

You're right...assuming low taxes and not a lot of issues, and not a lot of expenses, it can definitely cash flow well. Good luck.

Are you guys talking about HELOC or just a personal LOC? If you HELOC your primary, if you have enough equity, you should be able to take out 80% of your available equity and use that HELOC to DP or pay for rehab on an investment property.