Philly - Yay or Nay?

Question

My partner and I are interested in exploring this market and would love to hear a little more about the neighborhoods that you think do well and how competitive the market is right now.

Jimmy O'Connor · Answer

Hey Account Closed! I recently made a pretty comprehensive breakdown of neighborhoods and outsell values for rehabbed properties ranging from cosmetic to full on rehabs : A Breakdown of Philadelphia Neighborhoods and Values.Philly has several submarkets, it is important to get a better idea of what your strategy is before one can start pointing you in the right direction. What are you looking to do?

Rich O'Neill · Answer

Account Closed's write up is outstanding. Definitely dig into that if you haven't already. Overall risks to consider, that I am sure are the same in many other cities, but worth noting. Everything is block by block. One block could be all new construction, and 2 blocks over will be littered with crack houses. It's fascinating to see in person. The city L&I is a disaster. Getting permits can be a nightmare, and the sentiment in government seems to be leaning more and more towards anti-development. Sound's counterproductive to me, but that's a different conversation. Light rehab's (no major structural changes or additions. Full gut and rehabs fall under this level as long as none of the former is done) are manageable with permits though. Dumpsters are almost a non-starter. Generally we use "haul out" crews to come at the end of the day and load a truck with garbage to take to the dump. Obviously this is more expensive, so expect demo costs to be higher. Lots of contractors don't like to work in the city because they require a separate license with higher insurance requirements than the state, so the cost of doing business is higher. They also get taxed additionally on any income they generate within the city. It is also much more work when you have to park a block away and lug all of your tools on and off the job every day. All of this means that the costs of rehabs are usually higher in the city. All of that being said, from an investor's standpoint, Philadelphia is one of the lowest priced major cities in the Northeast, it has easy access to other major cities and industry hubs (NYC and DC), amenities are amazing (access to hospitals, beaches, parks, rivers, museums, restaurants, etc.) and the market is booming (Expats from NYC and other high priced cities). Best of luck and let me know if we can help at all!

Jimmy O'Connor · Answer

@Kimia Dargahi when it comes to contractor / rehab opinions please look no further than @Rich O'Neill. Getting into this market and trouble shooting the weird varieties and niches of the market I would look to his expertise. All of the following conversation comes down to what you’re looking to do. In today’s lumber market, the difference between cosmetic and not touching the framing versus a full gut can be rather stark. I’ve used rich a number of times with happy clients who want to focus more time on finding opportunity and less on managing subs

Rich O'Neill · Answer

Account Closed so does NYC but people love it there. Both are pretty big places and any city has rough areas, so you can’t pass that judgement on the whole city. You can pay $500/sqft in some parts of Philly, but you can pay $50/sqft in others. Just depends on what kind of market you are looking for. Side bar, Funny part is that those two places aren’t too far apart.

Leonard Brown · Answer

@Mike Hern You may want to take a deeper look at the market if “rough” is a concern. Philly is no different than any other major market when come to neighborhood classes except maybe where boundaries of the neighborhood class begins and ends. What’s your investment goal? That determines whether or not you’ll ever have to deal with the rough parts of Philly, which isn’t recommended for OOS investors. Development is everywhere in the city right now, so it’s very doable regardless of the area. What it comes down to is the investor.

Scott Saladik · Answer

Hi Kimia - I'd be willing to talk with you to understand your plans and help you accomplish them. -Scott

Account Closed · Answer

The Part of Philly I visited is where the Cheese Steaks Sandwhiches are ( S 9th street?) and it was a little intimidating. Then I saw this video https: //www.youtube.com/watch?v=o1wBG1... Driving Tour Philadelphia’s Most Disturbing Hoods In 4K UHD | Kensington to Badlands (Narrated)

Account Closed · Answer

Philadelphia has a bit of a reputation for being pretty rough. Just curious how you deal with that.