I plan on buying a turn key investment property in the Philadelphia/South Jersey area and am wondering if anyone would share their strategy in gauging rental market (interest, price, etc) locally. I have only been using Zumper and Zillow but it doesn't really give me an idea of demand or whether the listed price is fair. I would like to buy in the Bella Vista/Queen Village area in Philly or in Collingswood area in SJ specifically.
Realtor · Cherry Hill, NJ · Member since 2015 · 33 posts · 87 votes
6y
@Chris Spespy if we’re talking turnkey, I would tend to agree with Eileen that it’ll be tough to find a property that cash flows. If you do, you’ll need to go further down the “Class” list to the C properties. I personally have one in Lindenwold that cash flowed decently when I bought it, and cash flows much better now that I’ve put *some* work into it. You can find some gems up and down the 30 (White Horse Pike) corridor.
I’d love to know more about why you’re aiming for turnkey - are you planning to househack? Are you Reno-averse?
Rental Property Investor · Philadelphia, PA · Member since 2018 · 10 posts · 5 votes
6y
Hi Chris,
I'm new to real estate investing, but I tend to look at similar properties that sold within the zip code or area of my choice and average them against each other to get a better idea. Hope this helps!
Investor · Collingswood, NJ · Member since 2014 · 6 posts · 1 vote
6y
Chris, single family rentals in Collingswood and the surrounding areas (other than Camden City) can be difficult to get to cash flow mainly because taxes in Camden County can be pretty steep. But the acquisition cost will be lower compared to Queen Village/Bella Vista. Burlington County and Gloucester County, both of which adjoin Camden County, generally have lower taxes (depending on the area). Both areas you identified are in high demand though, so finding tenants shouldn't be an issue (at least under normal circumstances). Since I also have my license, I typically look in the MLS to gauge inventory, demand, comps, etc. I can send you some info from the MLS if you'd like.
Realtor · Cherry Hill, NJ · Member since 2015 · 33 posts · 87 votes
6y
@Chris Spespy upvote for both of the previous posts. I would add Rentometer.com and Craigslist. Rentometer aggregates rental prices so it will give you information from many different sources . Demand is a tougher one to gauge and has many variables involved - season, pricing, competition, etc. The two areas you specifically mention will ALWAYS have interested renters - the real question is what are they willing to pay at the time you need to find a tenant. That, in my experience, is more art than science.
What I'll typically do is reference Rentometer first and keep that in mind while I consider whether my unit is above, below, or right at average quality. Then, I get the unit up on marketplaces as fast as possible and begin taking appointments to show it ASAP also. I try to do two open houses per week for a unit. If I am not receiving applications within that first 7-10 days (and mind you, I follow up aggressively with the folks who attend), I'll begin dropping the price, driving larger numbers of folks to the unit, until I meet the price folks are comfortable with.
Bear in mind, all of this is done with a number in mind that I am not willing to go below. I do not waiver from that number, and I do not waiver from my criteria (credit score, income reqs, etc.).
EDIT: I realize now that your question is more centered around how to know you're getting a "fair price," and that's based solely on comparables. Get with an agent well-versed in the market in question, and they will lead you to the promised land. Fair warning: none of the areas you mention are going to come close to cash flowing when buying turnkey property.
Realtor · Cherry Hill, NJ · Member since 2015 · 33 posts · 87 votes
6y
@Chris Spespy if we’re talking turnkey, I would tend to agree with Eileen that it’ll be tough to find a property that cash flows. If you do, you’ll need to go further down the “Class” list to the C properties. I personally have one in Lindenwold that cash flowed decently when I bought it, and cash flows much better now that I’ve put *some* work into it. You can find some gems up and down the 30 (White Horse Pike) corridor.
I’d love to know more about why you’re aiming for turnkey - are you planning to househack? Are you Reno-averse?
@Dillon Y. I would love to renovate but I have a full time job and don't have a lot of time to devote to RE renovation. Also, updating/renovating means tying up more of my cash into RE on top of the 25% DP for investment property.
Let me know if my thought is faulty or if you have any input. I just don't have a lot of experience with home ownership and this would be my first investment property (I do have a primary home already).
Investor · Collingswood, NJ · Member since 2014 · 6 posts · 1 vote
6y
Dillon's suggestions are good. We tend to personally focus on small multi-families in Camden County. We can get better cash flow on those because rents are higher in areas with higher taxes. Pricing/comping them can be tricky, but at the end of the day, the cash flow is a more important metric (as long as the purchase price is in the ball park with comps).