1st Deal in Philly done w/ a 598 credit score cashflowing over 1k

[Ricardo S.]

I closed on this property back in August 2019. This post was long overdue so here you go;

Last year I was determined to get my first property so after doing some research and calling over 35 banks and mortgage companies finally I found a mortgage company that was willing to work with me and my credit score. The thing is FHA min credit requirement is 580 but most lenders have an overlay requirement of at least 620 for 3.5% down. But the company I found through a mortgage broker, my agent referred me to charged me 1 point to get the loan. I hope this information helps someone. Bad credit means you pay extra in life. Keep in mind I was 26 with zero debt making 75k a year. My credit score was due to 3 charge offs back in 2015. At the time of writing this all three were disputed and removed from my credit report after using a credit repair company. Now onto the deal:

Duplex in West Philadelphia:

Price $319,000 

offered $325,000 with 5% seller assist. It was accepted.

Unit 1: 6bed/3baths 

rent by the room house hack: Room Tenants paid First, Last and security deposit to move in (3x rent) month to month

room A $700

room B $400

room C $400

room D $550

room E I stay here

room F $550

All utilities included in rent:  [ Electric, GAS, Water/Sewer, Trash, Wifi, Monthly Cleaning Service for common areas] average $550 per month so far.

Unit 2: 4bed/2 bath

$1400 per month. Tenant pays own utilities except: water/sewer & trash. First and security deposit to move in ( 2x rent) 1 yr lease

Gross rents: $4,000 

Mortgage payment: $2180.65 

Monthly Expenses:  $550

Reserves $150 

Net Cashflow: $1,119.35

Rent payments are collected using Cozy. I will move out soon and rent room E for $350 per month.

P.S I closed on August 30th 2019. The house was fully rented by October 24th 2019.

The 1st of the month is my new favorite day :)

[Jake Washburn]

Is it legally zoned for a rooming house? If not it brings its own challenges with regards to leases and evictions not to mention rental licenses. If it doesn't cashflow as a regular duplex be careful. What kinds of tenants are you getting there and are you North or South of Market Street? Have you thought about AirBnB? If it's already setup as a rooming house you'll probably get much better visitors via AirBnB. There are a lot of nightmare stories about rooming houses so if it works great I'm just saying be careful.