Military investor eyeing Philly

[Paris Capers]

Hello All, I hope this finds you well!

We're taking some of the biggest steps to make our dreams reality, and we're looking at the market in Philadelphia, PA. As active duty Military and a Philly native, I'm familiar with the areas and sub markets and will be a long distance investor.

Our goal is to BRRR and return homes to communities around the 25th percentile for rent, passing some of the post-brrr profit and income to the surrounding communities through local commubity outreach programs.

We've done some preliminary analysis and there appears to be deals in the market of many different types.

I'm in the searching and vetting phase of establishing our system. I'm calling a number of lenders, builders and PMS today, and so I turn to you, beautiful BP mafiosos, for insight and referrals.

Anyone having success in the market? Any flops we can reflect on? What works and what doesn't? Who's doing it BEST? Handyman? Agents? Lenders?

My wife and I are digging in, and we'd love to join forces with like minded (of similarly driven!) individuals and teams. 

Thanks for your time and consideration. 

[Jimmy O'Connor]

Hey @Paris Capers ! Welcome to the community. Philly has a pretty active forums group, I would check that out. You'll see a lot of familiar faces. A couple hazards I always suggest to new players in the market:

1) Know closing costs as @Zachary Paul said above. Transfer tax is huge but also keep in mind this is a title closing state, not attorney closing state, which usually saves a couple of grand off closing costs. 

2) Have a couple of different contractors on standby. Many of the good deals go within the first day so having some backup contractors to give you a bid that can get out to the property ASAP is huge. Also be aware that contractors can change their prices depending on how busy they are. Always good to have a few in rotation to have someone who is hungry for work.

3) Make sure your comps are appropriate for the neighborhood. Many agents that work strictly retail do not exactly know how to comp like an investor. You do not comp on zip code and you really shouldn't zoom a full 0.25 miles out for most row homes. ( Get's a little different when you talk about Twins or Multis). If your realtor can spot the differences in finishes and truly assess the value or necessity of adding in HVAC vs window units or hardwood vs laminate or finished basement vs not then you have a keeper. On that same note, just because someone has a license does not mean they are a CMA guru. It took me two weeks to get my license. I did not really learn anything until I was in the field and started drinking from the firehose of experience.

4) BE CAUTIOUS OF MANY LENDERS. There are a few good ones and then a few who will promise you the world and either not actually close on time (in which case you lose your deposit to at no loss to the lender), or hit you with sneaky fees on loan origination, draw process, or penalties. Be sure they do not broker the hard money loan! When a person does this, they have no control over pushing deals through the underwriting or the rest of the process. 

5) Have your ducks in a row and be ready for that closing date. This means having your LLC docs set up and account with the cash in it and the ability to wire already set up. If you have an LLC with multiple partners, have an operating agreement as many lenders and title companies will not request this until the last second, often times jeopardizing closings. I ran into this issue the day before closing with investors based out of Isreal (7 hours ahead) that required my contact having to knock on a door super late at night to wake up a 87-year-old man just to sign and scan a document back (thank god this was a Thursday and not Friday). They would have lost a 10k deposit if they did not get this signature as the seller had ALL the leverage with this deal and could have had someone else close on it the next day that was chomping at the bit. Know within a couple of days of being in contract which LLC you want to take it under. Leading up to closing, the title company has to do a bring down which can take a full day (sometimes more). These little things are actually big and something I feel is lost even on some of my investors with multiple commas in their bank accounts. HAVE YOUR SIDE READY, delays should come from title issues or the city moving slow, it can't come from the buyer because many sellers of the best-valued deals do not think logically. If you are at the finish line and are delayed 24 hours for some silly reason, A logical seller may say "If it is something that simple, I do not mind waiting an extra day." But many of this distressed situations have distressed sellers that do not think rationally (if they did then I don't imagine they would be living in a shell of a property). I have had to juggle plenty of chainsaws on behalf of my investors who procrastinated.

5) KNOW WHAT YOU WANT- so when the opportunity strikes you can jump on it. Rely on your criteria and try your best to not let the emotions prevent you from jumping in. If you want to follow up in PM I can offer you insight on which pockets mirror your returns or what may be realistic of the areas you are interested in.