All Forum Posts by: Anthony Angotti

Pittsburgh is a good market with good cash flow however the buildings are older so there will be a decent amount of maintenance over time. The more you spend up front on renovation will help you to reduce your expenses later. 

Do you have any specific questions about the market? 

There aren’t many awful neighborhoods, but if you hear anyone talking big cashflow it’s usually a D/c- type neighborhood, though there are still a few places with decent opportunities.  

 If he is working full time on real estate you’ll qualify as real estate professional for tax purposes. So you should talk to a CPA. 

Really in my opinion you’re overthinking it. You don’t need to make many changes other than filing your taxes differently and just budgeting differently due to the lack of one W2 income. 

Moving forward you might want to buy new properties in an LLC but for the original ones I don't think you need to go crazy making changes other than making sure you're protected well with insurance. A lawyer will likely want you to split them up to protect assets, but more so to make some money making entities.

For any new acquisitions though you'll likely want to buy in a new LLC just to create some separation between your personal liability and your rental properties.

There’s tons of things you can do, but you probably don’t NEED to do anything other than look for more deals to buy and likely buy those in a new entity. 

What are you looking for specifically. People are going to give you a lot of specifics on population growth, numbers, etc, but in my opinion the real answer with investing out of state is where can I invest in a place that helps me achieve my financial goals without increasingly my headaches dramatically. 

Also be wary of people who give you big numbers on deals. If you see big numbers in a true metro area it generally means that property is going to require a bit more attention (D class)

 In Pittsburgh the out of state investors I work tend to have the least amount of turnover and headache by investing in single family rentals in B class areas. 

The arguments for multifamily over single family make sense however you lose a lot of these advantages when you have to have a property manager for everything. 

A normal 2-4 unit has drastically more turnover than a single family house. This means that you are going to pay leasing fees more often and you’ll generally have more downtime since it usually takes longer to rent an apartment out than a full house in my experience. 

You get SOME advantage of economy of scale on a 2-4 units like sharing the roof, one foundation, etc, however single family tenants are generally more caring of the house. They generally feel like it is their home over just somewhere they are living. To the last point this means they stay longer. To this second point it generally means that the take a lot better care of the mechanicals and sometimes even fix minor things on their own.

These are all generalizations and with the hundreds of tenants I manage across my portfolio and property management there are obviously exceptions, but over time I’ve started to direct out of state investors more towards single family unless they have a good bit of experience managing out of state and know how to manage the manager so to speak. 

In Pittsburgh you can get a 2 bedroom house or a condo in a C/B- type area

 I once bought an apartment building that I should have known had a pest problem, but never saw any.

Turns out there was a roach problem. 

I called around to different pest companies but none of them would clean up the dead bugs, only treat. Since there were only reports of roaches and I never actually saw them I figured it was no big deal, but oh it was. 

The first treatment was the worst. Every time I moved something in the basement there would be carcasses under the item. Basically in an outline of the thing. I cleaned up maybe 1000-2000 carcasses that day and trashed my clothes. 

We had to treat for maybe 6 months to totally eliminate the problem. So that was 6 months of cleaning up roach carcasses. 

I’m not desensitized to them, but man that was the stuff of nightmares at first. 

Worse almost witnessed thing, was that I went into a building once as an agent. There was a gross oily puddle on the ground and leaking from the ceiling with a bad smell. I just left and reported it to the listing agent. Found out later that there was a dead body above that had literally been decaying so long it had liquified. That explains why they couldn’t get confirmation from the tenant to show the unit, but since then that one is part of my real estate nightmares. So glad I didn’t go in. 

 There’s lots of reasons NOT to use leverage. It may not work as part of the math problem, but buying cash can provide a lot of peace of mind during a changing economy. Also more monthly money coming in helps with supporting repairs in 100 year old houses like we have in Pittsburgh. 

I use leverage to grow but understand when people want to use cash. In some ways I wish I owned more properties outright even though it’s not the best on the spreadsheet. 

 I’d target a 2 bedroom house for under 130k in Brentwood, Avalon, Bellevue, Beechview, etc or any of the C+/B- type neighborhoods where you’ll get solid applicants without needing to make exceptions on credit or whatever. 

Definitely 2 bedroom houses as you’ll be able to be within your budget and have a pretty turnkey house. With 150k most 3 bed houses or larger will need repairs in that price range or be in neighborhoods where they will likely require more hands on management. And I don’t love hiring a property manager for those types of areas because it takes the effort of someone invested in the success of the property to succeed there, typically the owner or an owner with a staff on payroll. 

Good luck. 

 Where’s you get that 12 number? Most that invest in 1 don’t even get to 2! 

For me I think as I’ve expanded I’d love to have less lol.

I’d base it more on income. Really it depends what you want. Do you want wealth generation, income replacement, etc. 

If income replacement is the goal you’d almost be better with less doors and more paid off properties. Less headache and a lot of buffer for repairs. 

If you want to generate bigger wealth and leverage and grow wide but not tall, then multifamily is a good goal. But it comes with more active management and more headaches. The more doors you get the more problems you have. 

 Yea, however not with the EXPECTATION that they will pull out 100% of the cash after only a year. Over the past nearly 10 years I’ve talked to what feels like hundreds of people interested in investing in Pittsburgh. Of those people I’ve ended up working with maybe 1/25. I normally tell customers that you can pull cash out but that you’ll end up leaving some in either because you got an unpredictable appraisal OR because you can’t pull 100% of the cash out and expect to have enough cash flow/buffer in your budget to pay for the full value cash out loan payment. Usually the latter. Or you can wait 3-5 years and as long as values go up refinance then. 

I tell people up front that the BRRRR strategy is a great thing to keep in mind and a great thing to aspire too, but I've found it to be all sizzle and no steak and to be honest it bothers me how much it is pitched by online sites and seminars and all that. It sets unrealistic expectations that you can execute it as a newbie from anywhere with not much cash, and because I'm honest about that I see a lot of investors go to other agents to buy houses that when I see what they bought I know it doesn't work (see their posts on FB forums usually asking for advice because they are having problems with the $30,000 house they bought in a bad area and their property manager/contractor/etc won't give champagne service for sparkling water prices).

The internet tries to sell the get rich quick idea, stack and stack and stack, and it’s easy to see why. Because selling the real estate dream makes money fast, not actually living it. 

After almost 10 years of investing I’ve built a nice little portfolio for myself that sometime in the next couple years should pay off ok. I’ve done a little bit of BRRRR, a little bit of house hacking, a little bit of traditional buy and hold, but think about that. I’m local, I do this full time, I have worked really hard at it, I have my own staff, I have had to deal with a lot of drama/stressful situations in my time, AND I really only invest in B class neighborhoods and it’s just NOW getting to the point where it’s starting to pay off. After almost 10 years of really having real estate be my main focus.
Buy and hold real estate is one of the few ways an average person can actually live out the American dream still. Work hard, live frugally, invest wisely, and eventually with enough time you can jump a socioeconomic tier, but it doesn’t happen quick, and it doesn’t happen for free, and it’s really hard. None of what I said should be discouraging per se, but anyone new and reading should take it more as a disclaimer. Rental real estate as a small player will long term make you a richer person if you do it wisely, but it’s a long path, with a lot of big and small problems to solve. And I can guarantee that you won’t do it in 3 years by BRRRRing every property perfectly. That shift in the expectations of the community is a big part of why I don’t post on BP as much as I used to, because as the economy went up and some of these strategies that I knew weren’t viable long term became more and more popular too many threads turned into hard eye rolls. So I just got kind of tired of it. Trying to be back on BP more because I got so much value from it when I was starting, but I agree that where the marketing for real estate investing has gone feels somewhat disingenuous.