I bought my rowhome here in Philadelphia back in the real estate craze of 2021. I intended to live here for at least five years, but some life circumstances have changed, and I am likely moving in a year or two.

Upon purchase, my place was a fixer upper that needed a lot of (and still needs some) cosmetic updates. However, it did come with some pretty decent bones. Upon purchase, the foundation, roof, and plumbing are were all in good condition/recently updated, plus the basement is finished - all of which are a rarity in my neighborhood where most properties are over 100 years old. Comparable properties with ideal cosmetic updates were going for $60 - 90K more than my purchase price. Prices seem to have pretty much stabilized in my neighborhood.

I have already put about 30K into this place to install an HVAC system, restore the hardwood floors (formerly covered by old carpet), and install new windows. I’ve also done a few DIY cosmetic projects which cost me a few hundred bucks. The biggest updates the places needs from here are a kitchen and bathroom rehab, both of which are small, so I estimate it’d cost about $35K.

If I sell in a year or two, I think I’d almost definitely had been better off renting. However, I have been real estate investment-curious for awhile now, and I wonder if I can turn this situation around to make it work for me.

Here’s the monthly math I am looking at – am I missing anything (I used dealcheck.io to help guide me):

Avg rental of my specs (3 br, 1 ba, ~1K sq ft): $1,760/mo

Vacancy(10%): $176/mo

Operating expense estimate (taxes, insurance, maintenance, property management, etc) : $717/mo

Loan: $714/mo (I purchased at 2.875 interest rate)

Cash flow estimate: $153/mo

My neighborhood has a high demand from renters - Manayunk (19127 zip) for those who are familiar. Relative to the rest of the city, it is very safe, plus walkable to amenities, nightlife, and transit. From another post here on BP, the neighborhood is rated an “A:” “A: Only new construction and rehabs, with very very few shells and opportunity left, young trendy bars and coffee shops on every other corner.” I have read on here and elsewhere from landlords who experience consistent 0% vacancy – but I still budgeted for 10% to be conservative. It is filled with college kids, and young professionals / families, so the tenant base is pretty nice.

I’d especially love to hear from anyone with investment experience, and especially those familiar with the Philadelphia market. Do you think this is a good opportunity? Are there details I’ve overlooked in my considerations? I feel like this could be a great entry point for me to get into real estate investment, but I would love other opinions.

Philadelphia, Pennsylvania

2 Votes