New investor from nyc, looking into philly

[Steven Ocampo]

My name is Steven. I reside in New York. I am 28 looking to make my first deal. I currently work full time in a hospital doing patient registration. I have been reading many articles on BiggerPockets for the past two years now that I decided to get my real estate license. I just finished the classes for NYC, during quarantining during the pandemic. I took the time to take the courses and will be taking the exams soon. Long story short I am currently trying to acquire my first investment property. I am looking to invest in Philly, certain zip codes are hot right now and prices have been rising. I am in New York. A property I found which is an hour and forty minutes away from me was listed for 450k, 2688 feet, built in 1915. it is a single family home. However I went to see the property and realized the rehab might be a bit expensive somewhere around 80k. There seems to be water marks on all 3 floors on the walls, bathrooms need to be redone, there is 2 bathrooms. Kitchen needs to be redone. the floors on the second and third floor in the bedroom look a bit uneven. The basement ceiling is low. I am about 5'8 and my head nearly touches the ceiling. The kitchen needs to be redone, granite would be my choice for countertops, stainless steel appliances. The place needs floors redone and paint. I have not gotten it inspected yet. So typically in this neighborhood properties have been on the market for only 2-3 months. This property has been on the market for more than 6 months. My guess is that it is priced to high, and the person who bought it before paid too much, property was purchased late 2018 and not much was done to it. After hearing that I inquired about it and stated I wouldn't pay 450k, I noticed a price drop of 25k. It is now going for 425k. My goal however is to pay between 315-375. I know the current owner would be taking quite a hit. I am puzzled as to why he didn't fix it up himself and rent it out or sell it. I am new to this, haven't even gotten the financing in place. I have a credit score of 675, and a 1000 in cash to my name. What should I do?

[Michael Marrero]

@Steven Ocampo . I am also from NY and looking in Philadelphia right now. I would say your best bet right now is to continue to learn as much as you can about how the deals get structured when it comes to financing as well as what you should be looking for in regards to estimating rehab costs and ARV etc. You are going to want to make relationships with some local contractors as well as a realtor. For financing you are going to need to bring more to the table when working with a HML or using a commercial loan. You will likely need 20-25% of the purchase price upfront, plus closing costs, plus your first construction draw (the money paid to the contractor to get the work started), plus you should have your debt service covered. What this all means even if you picked up that house for 350k, your down payment will likely be around 70k, plus another 10k or so in closing costs/fees, plus another 5-10k for construction draw, plus some debt service/reserves. So you should liekly have 100k+ on hand to do that deal. You can find a private lender to fund that portion and use two loans, but as a beginner I would focus on saving up some more funds and learning as much as you can about the local market and real estate investing in general. Good Luck!