All Forum Posts by: Jeremy Taggart

@Michael Shenouda you can take a 401k loan of up to $50,000. That's enough to do a flip or BRRRR in the Pittsburgh market if you are borrowing hard money for the rest. You pay the retirement account the interest so essentially are paying interest to yourself.

I have also used 0% interest for 12-14 month credit cards as well to pay for rehabs to limit the amount I had to bring out of pocket. Then pay the credit card off at the refi or sale of the flip. Pretty sure the first business card I got using that strategy the credit limit was like $50-$60k.

Other option is if you have any Roth accounts, you can pull the contributions out tax/penalty free.

Just some ways you might not have thought of that I know could be options without paying the penalty on the retirement accounts.

Outside of that I would focus on finding good deals. If you can find a really good deal it will make it much easier to get a partner/money on it. 

@Steven Le just gotta make sure you are working with people that know the area inside and out. They are your eyes and ears when you are investing out of state. Ideally someone with years of boots on the ground area knowledge that knows the neighborhoods down to a street level. Visiting helps give you a good general overall feel of the area on a high level though for sure. 

@Steven Le I tend to prefer B class areas for out of state investors just because you are relying on third party property management. It will greatly reduce the risk of the property not performing. You tend to just have to wait a bit to get significant cash flow from them. I also like nice pockets of C class areas since you can get some of the same benefits of class B, but better rent/price ratios in a lot of cases. You really have to know the area you are buying in though to succeed with this strategy. Can never go wrong with a little value add as well if you have a contractor you can trust.  

@Jamie Dietz can help you with short term lending. Feel free to send me the property details if you want me to chime in on if it's a good deal or not as well. 

@Dustin Brubaker Just gotta make sure you're working with the right people. If the agent is experienced they should be pointing out everything during the video walk through. Main thing you gain from that is seeing the layout of the place which you obviously can't see from the photos. Outside of that any capex items that might need replaced now or in the future. Really any big ticket items. If you are getting a home inspection inspector will do this too but it's always useful to know up front so you can make a more educated offer. Or if it's a rehab a good agent that's done rehabs themselves can help you pinpoint rehab budget so you have that knowledge too. 

@Gp G. We have 2% here in Pittsburgh but 99% of the time they are areas that I probably would only invest in if you are here local and can self manage. Relying on third party property management in those areas will be tough. 1.5% is doable here though for turnkey/close to turnkey multis in decent neighborhoods. Won't be areas I would expect to appreciate a ton or have rapid rent growth (unless it's a transitional area that gentrifies), but will cash flow well from day 1. 

@Gp G. We have 2% here in Pittsburgh but 99% of the time they are areas that I probably would only invest in if you are here local and can self manage. Relying on third party property management in those areas will be tough. 1.5% is doable here though for turnkey/close to turnkey multis in decent neighborhoods. Won't be areas I would expect to appreciate a ton or have rapid rent growth (unless it's a transitional area that gentrifies), but will cash flow well from day 1. 

 If the units are quirky layout wise, on a busy street, lack parking, have a lot of steps, etc they will likely turn over more often so that might be something I would factor in a higher vacancy rate for. Or if the location is a more rural area where it takes long to find tenants I would skew higher. That or if it's in a tough section of a neighborhood where it might take longer to find a qualified application that can be approved. Baseline is 5% vacancy but would skew towards 10% if any of those factors were in play. Single family homes historically will have longer tenant duration as well so vacancy on those can be lower than apartment units in most instances. 

@Frank Wei I personally use about $80-$120/unit/month each for both maintenance and capex here in Pittsburgh for multi family properties. Where it falls in that range will depend on the age of the building (early 1900's versus say 1970's build), unit sizes, class of tenant, current age of capex items, if there's any deferred maintenance or not, and the total # of units under one roof.

Single family I will do probably more like $150/unit since there is somewhat of a floor there. 

I like to use flat amounts rather than percentages for those items since it can vary so much depending on the rents. For example a 2BR in a tertiary C class neighborhood here might be renting for $800-$900 versus a 2BR in a B class neighborhood in the city could be pulling $1,300-$1,400. If you use a percentage for maintenance and capex you will likely be under estimating for the cheaper area and potentially over estimating for the more expensive rent area.

Then for vacancy I generally use about 5-10% depending on the neighborhood/property itself and 8-10% for property management.

Also don't forget to factor in any lawncare, owner paid utilities, common area/shared utilities, rental license fees, etc. I find a lot of newer investors forget about these fees especially on multi units. Single family is a little more straight forward since typically tenant is handling all.  

@Corey Bogaski Subject to or not seems like the deal doesn't make sense numbers wise. Maybe if you are getting it at $155k and don't have to bring any add'l funds to the table. What is the interest rate on the loan and how far is it on the amortization schedule? Also would depend on location. I think sometimes it's easy to get sidetracked on the deal itself when subject to or seller finance is involved but you still want to make sure it's a good deal at the end of the day.