North Philadelphia Off-Market Property. Deal or No Deal?

[Frank Nouma]

Hello BP Family, I would like to get your opinion on this. I recently found a "Deal" in Strawberry Mansion Philadelphia (19121). This is a fully gutted property that will need a complete rehab. Here are the details:

1,074 sq 3b/1ba Rowhouse 2 stories + basement, zoned RSA-5

Asking = $28,000.00

Rehab -> $80,000.00 - $90,000.00

ARV -> $155,000.00 - $180,000.00

Average Rent (3/1) => $1,221 (Per Philadelphia Housing Authority)

Deal or No Deal? Please explain why.

[Neal A.]

Assuming you have done this before and have experience I would consider this a viable deal. Not an AMAZING deal, but something very workable. You need to determine what you want to do with the property though. If you have the intent to rent this out and manage it you need to comb through your numbers again. Your rehab numbers for rent and flip should be different. Your quality of a fix in a rental condition should be different than a flip condition. I would hope that in a rent scenario you could bring the rehab number down 15k. This (for me) would make a reasonable amount of return. Make sure that your rental income number is also viable. Assuming you are all in for 100k for a RENT situation, after you collect $12,000 a year in rent and pay normal expenses, factor in vacany, repairs, yadda yadda, you should be floating around a 8-9% annual net return (assuming you had paid cash). That's a number that can be challenging to get sometimes. If you are going rehab to flip I think clearing 20-40k is ok. As long as you have the experience to do it. You really need to turn that property quick, if you can't do that or aren't capable of doing it. Then it's not worth the time for 20-40k. Our last project was only viable because we moved FAST. We had so many trades in that they were stepping overtop of one another to get their work done. If I could reliably land the conditions of the last deal I'd be ok grinding out those numbers all year long...