Newbie - Philadelphia RE

[Kishan Korsapati]

Hello Everyone,

I recently joined BP and am looking to invest in Phily. When my agent sends a listing, I look at the neighborhood (Mt. Airy, East Falls etc) and check if it is relatively safe. Then, I am using Rent Property Calculator and mortgage payment to estimate if the property can yield a positive cash flow. If both the criteria make sense, I am looking at the property in person and planning to make an offer if within my budget. Please suggest if I am missing anything.

Thanks a lot for the help!

[Stuart Udis]

@Kishan Korsapati There should be a better articulated investment thesis than buying a home that is deemed to be in a safe area and cash flows. Fundamentals change neighborhood to neighborhood (i.e. appreciation potential), inventory/absorption issues may exist, rogue city council members and/or registered community organizations can make neighborhoods less appealing with little oversight which impacts value and marketability. These are examples of how you could still be comparing apples to oranges focusing on safety and cash flow alone. I am not saying they are not important considerations but there should be more to your analysis.

You also rattled off two NW Philadelphia neighborhoods in East Falls and Mount Airy. Are you focused on NW Philadelphia neighborhoods or is this just a coincidence? NW Philadelphia neighborhoods are some of the most challenging neighborhoods to vet because they are geographically very large. Mount Airy in particular is probably the most difficult neighborhood in Philadelphia to learn and there's no way you can do so from a computer reviewing rental rates and crime assessments. 

By using your current approach in Mount Airy I am certain you are going to disqualify opportunities that shouldn't and move properties to the top of the list that aren't deserving.  I believe the neighborhood has some of the strongest fundamentals in the entire city but its incredibly easy to make the wrong assumptions when investing in Mount Airy if you don't truly know the market and the only way to do this is by spending considerable time in the neighborhood. 

My investment partners and I have made considerable investments in Mount Airy over  the past few years, worked with a number of brokers on acquisitions and can honestly say not a single one has been able to effectively articulate our neighborhood investment thesis which tells you how challenging the neighborhood is. 

[Kishan Korsapati]

@Stuart Udis Thanks for your response.

Got it. Will try to check up on appreciation potential and inventory issues. Shall try to get an indepth idea of Mt. Airy neighborhood.

I decided on Mt-Airy and East falls as they seemed to be good places to invest in. Not looking to be restricted to NW Philadelphia. Please feel free to suggest if anything else. Thanks again.

Regards,

[Alan Asriants]

Mount airy can definitely be a very difficult area to navigate and I actually turned to Stuart and ask him about his expertise because sometimes even as a professional I am not 100% proficient in the neighborhood. The suburbs in Philadelphia also great investments but typically the price points are a bit higher. 

I will add that Upper Northeast Philadelphia is one of the more consistent neighborhoods over a large span area wise. That neighborhood has low inventory, but very high rental demand and the tenant class is typically pretty solid. Also, the price points tend to be in line with that East Falls Mount Airy area.

Happy to discuss the market anytime.