New Investor trying to Estimate Maintenance/Repair Costs

[Yariel Levin]

Hi I am a new investor in the Philadelphia area. I found a triplex approx. 3k sq ft total -(2bed/1bath each unit) built in the early 1900s and began running the numbers on it. The property has a relatively new roof (<10 years old), does not have a backyard and is in a desirable neighborhood in the City of Philadelphia (so I expect less wear and tear than a less desirable neighborhood).

I was wondering if anyone had any experience with a similar type of property in the Philadelphia area and what kind of % of the purchase price you typically use for yearly maintenance  when running the numbers on a deal. 

[Alan Asriants]

Hey Yariel,

I have some experience renovating and gutting homes in Phila. Generally speaking it depends on the cap ex required. A lot of new buyers really overlook things like plumbing, windows, electrical, heating/cooling as those items can really jack up your costs. Also, was the propertly recently gutted? Is it plaster walls everywhere? Generally with this older 1900 Row triplexes - they were converted at some point (50s,60s etc) and often times utilities arent properly separated (no way of really knowing), reminisce of knob and tube electrical (must be converted/fire hazard), older plumbing. Plaster walls make it a B**** to work with. I ran into this with my first rental. It was an older Triplex that was poorly converted. Ended up gutting the whole thing - cost me about 180k (2020) - so likely these construction costs could be higher. 

Unless it has been recently gutted, has new plumbing (PEX), and new electrical, I wouldn't recommend. Also, once you start renovating, depending on where you are in the city, you can find yourself facing L&I. It is now required to install sprinkler systems in triplex (another 30k approx).

I recommend going for built as cookie cutter duplexes. You can find them in Northeast Phila (strong rental market right now), and roxborough. Hope this helps